[Federal Register Volume 87, Number 53 (Friday, March 18, 2022)]
[Proposed Rules]
[Pages 15698-15805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05346]



[[Page 15697]]

Vol. 87

Friday,

No. 53

March 18, 2022

Part III





 Department of Labor





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Office of the Secretary





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29 CFR Parts 1, 3, and 5





Updating the Davis-Bacon and Related Acts Regulations; Proposed Rule

  Federal Register / Vol. 87 , No. 53 / Friday, March 18, 2022 / 
Proposed Rules  

[[Page 15698]]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Parts 1, 3, and 5

RIN 1235-AA40


Updating the Davis-Bacon and Related Acts Regulations

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Labor (Department) proposes to amend 
regulations issued under the Davis-Bacon and Related Acts that set 
forth rules for the administration and enforcement of the Davis-Bacon 
labor standards that apply to Federal and federally assisted 
construction projects. As the first comprehensive regulatory review in 
nearly 40 years, the Department believes that revisions to these 
regulations are needed to provide greater clarity and enhance their 
usefulness in the modern economy.

DATES: Interested persons are invited to submit written comments on 
this notice of proposed rulemaking (NPRM) on or before May 17, 2022.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1235-AA40, by either of the following methods:
     Electronic Comments: Submit comments through the Federal 
eRulemaking Portal at https://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Address written submissions to: Division of 
Regulations, Legislation, and Interpretation, Wage and Hour Division, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210.
    Instructions: Response to this NPRM is voluntary. The Department 
requests that no business proprietary information, copyrighted 
information, or personally identifiable information be submitted in 
response to this NPRM. Commenters submitting file attachments on 
https://www.regulations.gov are advised that uploading text-recognized 
documents--i.e., documents in a native file format or documents which 
have undergone optical character recognition (OCR)--enable staff at the 
Department to more easily search and retrieve specific content included 
in your comment for consideration.
    Anyone who submits a comment (including duplicate comments) should 
understand and expect that the comment will become a matter of public 
record and will be posted without change to https://www.regulations.gov, including any personal information provided. The 
Wage and Hour Division (WHD) posts comments gathered and submitted by a 
third-party organization as a group under a single document ID number 
on https://www.regulations.gov. All comments must be received by 11:59 
p.m. on May 17, 2022, for consideration in this rulemaking; comments 
received after the comment period closes will not be considered.
    The Department strongly recommends that commenters submit their 
comments electronically via https://www.regulations.gov to ensure 
timely receipt prior to the close of the comment period, as the 
Department continues to experience delays in the receipt of mail. 
Please submit only one copy of your comments by only one method.
    Docket: For access to the docket to read background documents or 
comments, go to the Federal eRulemaking Portal at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Director, Division of 
Regulations, Legislation, and Interpretation, Wage and Hour Division, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this proposal may be obtained in alternative 
formats (Rich Text Format (RTF) or text format (txt), a thumb drive, an 
MP3 file, large print, braille, audiotape, compact disc, or other 
accessible format), upon request, by calling (202) 693-0675 (this is 
not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-
5627 to obtain information or request materials in alternative formats.
    Questions of interpretation or enforcement of the agency's existing 
regulations may be directed to the nearest WHD district office. Locate 
the nearest office by calling the WHD's toll-free help line at (866) 
4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time 
zone, or log onto WHD's website at https://www.dol.gov/agencies/whd/contact/local-offices for a nationwide listing of WHD district and area 
offices.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    In order to provide greater clarity and enhance their usefulness in 
the modern economy, the Department proposes to update and modernize the 
regulations at 29 CFR parts 1, 3, and 5, which implement the Davis-
Bacon Act and the Davis-Bacon Related Acts (collectively, the DBRA). 
The Davis-Bacon Act (DBA or Act), enacted in 1931, requires the payment 
of locally prevailing wages and fringe benefits on Federal contracts 
for construction. See 40 U.S.C. 3142. The DBA applies to workers on 
contracts entered into by Federal agencies and the District of Columbia 
that are in excess of $2,000 and for the construction, alteration, or 
repair of public buildings or public works. Congress subsequently 
incorporated DBA prevailing wage requirements into numerous statutes 
(referred to as ``Related Acts'') under which Federal agencies assist 
construction projects through grants, loans, loan guarantees, 
insurance, and other methods.
    The Supreme Court has described the DBA as ``a minimum wage law 
designed for the benefit of construction workers.'' United States v. 
Binghamton Constr. Co., 347 U.S. 171, 178 (1954). The Act's purpose is 
``to protect local wage standards by preventing contractors from basing 
their bids on wages lower than those prevailing in the area.'' 
Universities Research Ass'n, Inc. v. Coutu, 450 U.S. 754, 773 (1981) 
(quoting H. Comm. on Educ. and Lab., Legislative History of the Davis-
Bacon Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)). By requiring 
the payment of minimum prevailing wages, Congress sought to ``ensure 
that Government construction and federally assisted construction would 
not be conducted at the expense of depressing local wage standards.'' 
Determination of Wage Rates Under the Davis-Bacon & Serv. Cont. Acts, 5 
Op. O.L.C. 174, 176 (1981) (citation and internal quotation marks 
omitted).\1\
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    \1\ Available at: https://www.justice.gov/sites/default/files/olc/opinions/1981/06/31/op-olc-v005-p0174_0.pdf.
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    Congress has delegated authority to the Department to issue 
prevailing wage determinations and prescribe rules and regulations for 
contractors and subcontractors on DBA-covered construction projects.\2\ 
See 40 U.S.C. 3142, 3145. It has also directed the Department, through 
Reorganization Plan No. 14 of 1950, to ``prescribe appropriate 
standards, regulations and procedures'' to be observed by Federal 
agencies responsible for the administration of the Davis-Bacon and 
Related Acts. 5 U.S.C. app. 1, effective May 24, 1950, 15 FR 3176, 64 
Stat. 1267. These regulations, which have been updated and revised 
periodically over time, are primarily located in parts 1, 3,

[[Page 15699]]

and 5 of title 29 of the Code of Federal Regulations.
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    \2\ The DBA and the Related Acts apply to both prime contracts 
and subcontracts of any tier thereunder. In this NPRM, as in the 
regulations themselves, where the terms ``contracts'' or 
``contractors'' are used, they are intended to include reference to 
subcontracts and subcontractors of any tier.
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    The Department last engaged in a comprehensive revision of the 
regulations governing the DBA and the Related Acts in a 1981-1982 
rulemaking.\3\ Since that time, Congress has expanded the reach of the 
Davis-Bacon labor standards significantly, adding numerous new Related 
Act statutes to which these regulations apply. The Davis-Bacon Act and 
now 71 active Related Acts \4\ collectively apply to an estimated $217 
billion in Federal and federally assisted construction spending per 
year and provide minimum wage rates for an estimated 1.2 million U.S. 
construction workers.\5\ The Department expects these numbers to 
continue to grow as Federal and State governments seek to address the 
significant infrastructure needs of the country, including, in 
particular, the energy and transportation infrastructure necessary to 
mitigate climate change.\6\
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    \3\ See 46 FR 41444 (NPRM); 47 FR 23644 (final rule); 48 FR 
19532 (revised final rule).
    \4\ The Department maintains a list of the Related Acts at [cite 
website address].
    \5\ These estimates are discussed below in section V (Executive 
Order 12866, Regulatory Planning and Review et al.).
    \6\ See Executive Order 14008, Tackling the Climate Crisis at 
Home and Abroad, Sec.  206 (Jan. 27, 2021), available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/.
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    In addition to the expansion of the prevailing wage rate 
requirements of the DBA and the Related Acts, the Federal contracting 
system itself has undergone significant changes since the 1981-1982 
rulemaking. Federal agencies have dramatically increased spending 
through interagency Federal schedules such as the Multiple Award 
Schedule (MAS). Contractors have increased their use of single-purpose 
entities, such as joint ventures and teaming agreements, in 
construction contracts with Federal, State and local governments. 
Federal procurement regulations have been overhauled and consolidated 
in the Federal Acquisition Regulation (FAR), which contains a 
subsection on the Davis-Bacon Act and related contract clauses. See 48 
CFR 22.400 et seq. Court and agency administrative decisions have 
developed and clarified myriad aspects of the laws governing Federal 
procurement.
    During the past 40 years, the Department's DBRA program also has 
continued to evolve. Where the program initially was focused on 
individual project-specific wage determinations, contracting agencies 
now incorporate the Department's general wage determinations for the 
construction type in the locality in which the construction project is 
to occur. The program also now uniformly uses wage surveys to develop 
general wage determinations, eliminating an earlier practice of 
developing wage determinations based solely on other evidence about the 
general level of unionization in the targeted area. In a 2006 decision, 
the Department's Administrative Review Board (ARB) identified several 
survey-related wage determination procedures then in effect as 
inconsistent with the regulatory language that had resulted from the 
1981-1982 rulemaking. See Mistick Construction, ARB No. 04-051, 2006 WL 
861357, at *5-7 (Mar. 31, 2006).\7\ As a consequence of these 
developments, the use of averages of wage rates from survey responses 
has increasingly become the methodology used to issue new wage 
determinations--notwithstanding the Department's long-held 
interpretation that the DBA allows the use of such averages only as a 
methodology of last resort.
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    \7\ Decisions of the ARB from 1996 to the present are available 
on the Department's website at https://www.dol.gov/agencies/arb/decisions.
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    The Department has also received significant feedback from 
stakeholders and others since the last comprehensive rulemaking. In a 
2011 report, the Government Accountability Office (GAO) reviewed the 
Department's wage survey and wage determination process and found that 
the Department was often behind schedule in completing wage surveys, 
leading to a backlog of wage determinations and the use of out-of-date 
wage determinations in some areas.\8\ The report also identified 
dissatisfaction among regulated parties regarding the rigidity of the 
Department's county-based system for identifying prevailing rates,\9\ 
and missing wage rates requiring an overuse of ``conformances'' for 
wage rates for specific job classifications.\10\ A 2019 report from the 
Department's Office of the Inspector General (OIG) made similar 
findings regarding out-of-date wage determinations.\11\
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    \8\ See Gov't Accountability Office, GAO-11-152, Davis-Bacon 
Act: Methodological Changes Needed to Improve Wage Survey (2011) 
(2011 GAO Report), at 12-19, available at: https://www.gao.gov/products/gao-11-152.
    \9\ Id. at 23-24.
    \10\ Id. at 32-33.
    \11\ See Department of Labor, Office of the Inspector General, 
Better Strategies Are Needed to Improve the Timeliness and Accuracy 
of Davis-Bacon Act Prevailing Wage Rates (2019) (OIG Report), at 10, 
available at: https://www.oversight.gov/sites/default/files/oig-reports/04-19-001-Davis%20Bacon.pdf.
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    Ensuring that construction workers are paid the wages required 
under the DBRA also requires effective enforcement in addition to an 
efficient wage determination process. In the last decade, enforcement 
efforts at the Department have resulted in the recovery of more than 
$213 million in back wages for over 84,000 workers.\12\ But the 
Department has also encountered significant enforcement challenges. 
Among the most critical of these is the omission of DBRA contract 
clauses from contracts that are clearly covered by the DBRA. In one 
recent case, a contracting agency agreed with the Department that a 
blanket purchase agreement (BPA) it had entered into with a contractor 
had mistakenly omitted the Davis-Bacon clauses and wage determination--
but the contracting agency's struggle to rectify the situation led to a 
delay of 8 years before the workers were paid the wages they were owed.
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    \12\ Gov't Accountability Office, GAO-21-13, Fair Labor 
Standards Act: Tracking Additional Complaint Data Could Improve 
DOL's Enforcement (2020) (2020 GAO Report), at 39, available at: 
https://www.gao.gov/assets/gao-21-13.pdf.
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    The Department now seeks to address a number of these outstanding 
challenges in the program while also providing greater clarity in the 
DBRA regulations and enhancing their usefulness in the modern economy. 
In this rulemaking, the Department proposes to update and modernize the 
regulations implementing the DBRA at 29 CFR parts 1, 3, and 5. In some 
of these revisions, the Department has determined that changes it made 
in the 1981-1982 rulemaking were mistaken or ultimately resulted in 
outcomes that are increasingly in tension with the DBA statute itself. 
In others, the Department seeks to expand further on procedures that 
were introduced in that last major revision, or to propose new 
procedures that will increase efficiency of administration of the DBRA 
and enhance protections for covered construction workers. On all the 
proposed changes, the Department seeks comment and participation from 
the many stakeholders in the program.
    The proposed rule includes several elements targeted at increasing 
the amount of information available for wage determinations and 
speeding up the determination process. In a proposal to amend Sec.  1.3 
of the regulations, the Department outlines a new methodology to 
expressly give the WHD Administrator authority and discretion to adopt 
State or local wage determinations as the Davis-Bacon prevailing wage 
where certain specified criteria are satisfied. Such a change would 
help improve the currentness and accuracy of wage determinations, as 
many states and localities conduct

[[Page 15700]]

surveys more frequently than the Department and have relationships with 
stakeholders that may facilitate the process and foster more widespread 
participation. This proposal would also increase efficiency and reduce 
confusion for the regulated community where projects are covered by 
both DBRA and local or State prevailing wage laws and contractors are 
already familiar with complying with the local or State prevailing wage 
requirement.
    The Department also proposes changes, in Sec.  1.2, to the 
definition of ``prevailing wage,'' and, in Sec.  1.7, to the scope of 
data considered to identify the prevailing wage in a given area. To 
address the overuse of weighted average rates, the Department proposes 
to return to the definition of ``prevailing wage'' in Sec.  1.2 that it 
used from 1935 to 1983.\13\ Currently, a single wage rate may be 
identified as prevailing in the area only if it is paid to a majority 
of workers in a classification on the wage survey; otherwise a weighted 
average is used. The Department proposes to return instead to the 
``three-step'' method that was in effect before 1983. Under that method 
(also known as the 30-percent rule), in the absence of a wage rate paid 
to a majority of workers in a particular classification, a wage rate 
will be considered prevailing if it is paid to at least 30 percent of 
such workers. The Department also proposes to return to a prior policy 
on another change made during the 1981-1982 rulemaking related to the 
delineation of wage survey data submitted for ``metropolitan'' or 
``rural'' counties in Sec.  1.7(b). Through this change, the Department 
seeks to more accurately reflect modern labor force realities, to allow 
more wage rates to be determined at smaller levels of geographical 
aggregation, and to increase the sufficiency of data at the statewide 
level.
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    \13\ The 1981-1982 rulemaking went into effect on April 29, 
1983. 48 FR 19532.
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    Proposed revisions to Sec. Sec.  1.3 and 5.5 are aimed at reducing 
the need for the use of ``conformances'' where the Department has 
received insufficient data to publish a prevailing wage for a 
classification of worker--a process that currently is burdensome on 
contracting agencies, contractors, and the Department. The proposed 
revisions would create a new procedure through which the Department may 
identify (and list on the wage determination) wage and fringe benefit 
rates for certain classifications for which WHD received insufficient 
data through its wage survey program. The procedure should reduce the 
need for conformances for classifications for which conformances are 
often required.
    The Department also proposes to revise Sec.  1.6(c)(1) to provide a 
mechanism to regularly update certain non-collectively bargained 
prevailing wage rates based on the Bureau of Labor Statistics 
Employment Cost Index.\14\ The mechanism is intended to keep such rates 
more current between surveys so that they do not become out-of-date and 
fall behind prevailing rates in the area.
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    \14\ Available at: https://www.bls.gov/news.release/eci.toc.htm.
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    The Department also seeks to strengthen enforcement in several 
critical ways. The proposed rule seeks to address the challenges caused 
by the omission of contract clauses. In a manner similar to its rule 
under Executive Order 11246 (Equal Employment Opportunity), the 
Department proposes to designate the DBRA contract clauses in Sec.  
5.5(a) and (b), and applicable wage determinations, as effective by 
``operation of law'' notwithstanding their mistaken omission from a 
contract. This proposal is an extension of the retroactive modification 
procedures that were put into effect in Sec.  1.6 by the 1981-1982 
rulemaking, and it promises to expedite enforcement efforts to ensure 
the timely payment of prevailing wages to all workers who are owed such 
wages under the relevant statutes.
    In addition, the Department proposes to include new anti-
retaliation provisions in the Davis-Bacon contract clauses in new 
paragraphs at Sec. Sec.  5.5(a)(11) (DBRA) and 5.5(b)(5) (Contract Work 
Hours and Safety Standards Act), and in a new section of part 5 at 
Sec.  5.18. The new language is intended to ensure that workers who 
raise concerns about payment practices or assist agencies or the 
Department in investigations are protected from termination or other 
adverse employment actions.
    Finally, to reinforce the remedies available when violations are 
discovered, the Department proposes to clarify and strengthen the 
cross-withholding procedure for recovering back wages. The proposal 
does so by including new language in the withholding contract clauses 
at Sec. Sec.  5.5(a)(2) (DBRA) and 5.5(b)(3) (Contract Work Hours and 
Safety Standards Act) to clarify that cross-withholding may be 
accomplished on contracts held by agencies other than the agency that 
awarded the contract. The proposal also seeks to create a mechanism 
through which contractors will be required to consent to cross-
withholding for back wages owed on contracts held by different but 
related legal entities in appropriate circumstances--if, for example, 
those entities are controlled by the same controlling shareholder or 
are joint venturers or partners on a Federal contract. The proposed 
revisions include, as well, a harmonization of the DBA and Related Act 
debarment standards.

II. Background

A. Statutory and Regulatory History

    The Davis-Bacon Act, as enacted in 1931 and subsequently amended, 
requires the payment of minimum prevailing wages determined by the 
Department of Labor to laborers and mechanics working on Federal 
contracts in excess of $2,000 for the construction, alteration, or 
repair, including painting and decorating, of public buildings and 
public works. See 40 U.S.C. 3141 et seq. Congress has also included the 
Davis-Bacon requirements in numerous other laws, known as the Davis-
Bacon Related Acts (the Related Acts and, collectively with the Davis-
Bacon Act, the DBRA), which provide Federal assistance for construction 
projects through grants, loans, loan guarantees, insurance, and other 
methods. Congress intended the Davis-Bacon Act to ``protect local wage 
standards by preventing contractors from basing their bids on wages 
lower than those prevailing in the area.'' Coutu, 450 U.S. at 773 
(quoting H. Comm. on Educ. and Lab., Legis. History of the Davis-Bacon 
Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)).
    The Copeland Act, enacted in 1934, added the requirement that 
contractors working on Davis-Bacon projects must submit weekly 
certified payrolls for work performed on the contract. See 40 U.S.C. 
3145. The Copeland Act also prohibited contractors from inducing any 
worker to give up any portion of the wages due to them on such 
projects. See 18 U.S.C. 874. In 1962, Congress passed the Contract Work 
Hours and Safety Standards Act, which, as amended, requires an overtime 
payment of additional half-time for hours worked over forty in the 
workweek by laborers and mechanics, including watchmen and guards, on 
Federal contracts or federally assisted contracts containing Federal 
prevailing wage standards. See U.S.C. 3701 et seq.
    As initially enacted, the DBA did not take into consideration the 
provision of fringe benefits to workers. In 1964, Congress expanded the 
Act to require the Department to include an analysis of fringe benefits 
as part of the wage determination process. The amendment

[[Page 15701]]

requires contractors and subcontractors to provide fringe benefits 
(such as vacation pay, sick leave, health insurance, and retirement 
benefits), or the cash equivalent thereof, to their workers at the 
level prevailing for the labor classification on projects of a similar 
character in the locality. See Act of July 2, 1964, Public Law 88-349, 
78 Stat 238.
    Congress has delegated broad rulemaking authority under the DBRA to 
the Department of Labor. The DBA, as amended, contemplates regulatory 
and administrative action by the Department to determine the prevailing 
wages that must be paid and to ``prescribe reasonable regulations'' for 
contractors and subcontractors. 40 U.S.C. 3142(b); 40 U.S.C. 3145. 
Congress also, through Reorganization Plan No. 14 of 1950, directed the 
Department to ``prescribe appropriate standards, regulations and 
procedures'' to be observed by Federal agencies responsible for the 
administration of the Davis-Bacon and Related Acts. 5 U.S.C. app. 1.
    The Department promulgated its initial regulations implementing the 
Act in 1935 and has since periodically revised them. See U.S. 
Department of Labor, Regulations No. 503 (Sept. 30, 1935). In 1938, 
these initial regulations, which set forth the procedures for the 
Department to follow in determining prevailing wages, were included in 
part 1 of Title 29 of the new Code of Federal Regulations. See 29 CFR 
1.1 et seq. (1938). The Department later added regulations to implement 
the payroll submission and anti-kickback provisions of the Copeland 
Act--first in part 2 and then relocated to part 3 of Title 29. See 6 FR 
1210 (Mar. 1, 1941); 7 FR 687 (Feb. 4, 1942); 29 CFR part 2 (1942); 29 
CFR part 3 (1943). After Reorganization Plan No. 14 of 1950, the 
Department issued regulations setting forth procedures for the 
administration and enforcement of the Davis-Bacon and Related Acts in a 
new part 5. 16 FR 4430 (May 12, 1951); 29 CFR part 5. The Department 
made significant revisions to the regulations in 1964, and again in the 
1981-1982 rulemaking.\15\
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    \15\ See 29 FR 13462 (Sept. 30, 1964); 46 FR 41444-70 (NPRM 
parts 1 and 5) (Aug. 14, 1981); 47 FR 23644-79 (final rule parts 1, 
3, and 5) (May 28, 1982). The Department also proposed a significant 
revision of parts 1 and 5 of the regulations in 1979 and issued a 
final rule in 1981. See 44 FR 77026 (NPRM Part 1); 44 FR 77080 (NPRM 
part 5); 46 FR 4306 (final rule part 1); 46 FR 4380 (final rule part 
5). That 1981 final rule, however, was delayed and subsequently 
replaced by the 1981-1982 rulemaking. The 1982 final rule was 
delayed by litigation and re-published with amendments in 1983. 48 
FR 19532 (Apr. 29, 1983).
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    While the Department has made periodic revisions to the regulations 
in recent years, such as to better protect the personal privacy of 
workers, 73 FR 77511 (Dec. 19, 2008); to remove references to the 
``Employment Standards Administration,'' 82 FR 2225 (Jan. 9, 2017); and 
to adjust Federal civil money penalties, 81 FR 43450 (July 1, 2016), 83 
FR 12 (Jan. 2, 2018), 84 FR 218 (Jan. 23, 2019), the Department has not 
engaged in a comprehensive review and revision since the 1981-1982 
rulemaking.

B. Overview of the Davis-Bacon Program

    The Wage and Hour Division (WHD), an agency within the U.S. 
Department of Labor, administers the Davis-Bacon program for the 
Department. WHD carries out its responsibilities in partnership with 
the Federal agencies that enter into direct DBA-covered contracts for 
construction and/or administer Federal assistance that is covered by 
the Related Acts to State and local governments and other funding 
recipients. The State and local governmental agencies and authorities 
also have important responsibilities in administering Related Act 
program rules, as they manage programs through which covered funding 
flows or the agencies themselves directly enter into covered contracts 
for construction.
    The DBRA program includes three basic components in which these 
government entities have responsibilities: (1) Wage surveys and wage 
determinations; (2) contract formation and administration; and (3) 
enforcement and remedies.
1. Wage Surveys and Determinations
    The DBA delegates to the Secretary of Labor the responsibility to 
determine the wage rates that are ``prevailing'' for each 
classification of covered laborers and mechanics on similar projects 
``in the civil subdivision of the State in which the work is to be 
performed.'' 40 U.S.C. 3142(b). WHD carries out this responsibility for 
the Department through its wage survey program, and derives the 
prevailing wage rates from survey information that responding 
contractors and other interested parties voluntarily provide. The 
program is carried out in accordance with the program regulations in 
part 1 of Title 29, see 29 CFR 1.1 through 1.7, and its procedures are 
described in guidance documents such as the ``Davis-Bacon Construction 
Wage Determinations Manual of Operations'' (1986) (Manual of 
Operations) and ``Prevailing Wage Resource Book'' (2015) (PWRB).\16\ 
Although part 1 of the regulations provides the authority for WHD to 
create project-specific wage determinations, such project wage 
determinations, once more common, now are rarely employed. Instead, 
nearly all wage determinations are general wage determinations issued 
for general types of construction (building, residential, highway, and 
heavy) and applicable to a specific geographic area. General wage 
determinations can be incorporated into the vast majority of contracts 
and create uniform application of the DBRA for that area.
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    \16\ The Manual of Operations is a 1986 guidance document that 
is still used internally for reference within WHD. The Prevailing 
Wage Resource Book is a 2015 document that is intended to provide 
practical information to contracting agencies and other interested 
parties, and is available at https://www.dol.gov/agencies/whd/government-contracts/prevailing-wage-resource-book.
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2. Contract Formation and Administration
    The Federal agencies that enter into DBA-covered contracts or 
administer Related Act programs have the initial responsibility to 
determine whether a contract is covered by the DBA or one of the 
Related Acts and identify the contract clauses and the applicable wage 
determinations that must be included in the contract. See 29 CFR 
1.6(b). In addition to the Department's regulations, this process is 
also guided by parallel regulations in part 22 of the Federal 
Acquisition Regulation (FAR) for those contracts that are subject to 
the FAR. See 48 CFR part 22. Federal agencies also maintain their own 
regulations and guidance governing agency-specific aspects of the 
process. See, e.g., 48 CFR subpart 222.4 (Defense); 48 CFR subpart 
622.4 (State); U.S. Department of Housing and Urban Development, HUD 
Handbook 1344.1, Federal Labor Standards Requirements in Housing and 
Urban Development Programs (2013).\17\
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    \17\ Available at: https://www.hud.gov/sites/dfiles/OCHCO/documents/Work-Schedule-Request.pdf.
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    Where contracting agencies or interested parties have questions 
about such matters as coverage under the DBRA or the applicability of 
the appropriate wage determination to a specific contract, they are 
directed to submit those questions to the Administrator of WHD (the 
Administrator) for resolution. See 29 CFR 5.13. The Administrator 
provides periodic guidance on this process, as well as other aspects of 
the DBRA program, to contracting agencies and other interested parties, 
particularly through All Agency Memoranda (AAMs) and ruling letters. In 
addition,

[[Page 15702]]

the Department maintains a guidance document, the Field Operations 
Handbook (FOH), to provide external and internal guidance for the 
regulated community and for WHD investigators and staff on contract 
administration and enforcement policies.\18\
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    \18\ The Field Operations Handbook reflects policies established 
through changes in legislation, regulations, significant court 
decisions, and the decisions and opinions of the WHD Administrator. 
It is not used as a device for establishing interpretive policy. 
Chapter 15 of the FOH covers the DBRA, including CWHSSA, and is 
available at https://www.dol.gov/agencies/whd/field-operations-handbook/Chapter-15.
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    During the administration of a DBRA-covered contract, contractors 
and subcontractors are required to provide certified payrolls to the 
contracting agency to demonstrate their compliance with the 
incorporated wage determinations on a weekly basis. See generally 29 
CFR part 3. Contracting agencies have the duty to ensure compliance by 
engaging in periodic audits or investigations of contracts, including 
examinations of payroll data and confidential interviews with workers. 
See 29 CFR 5.6. Prime contractors have the responsibility for the 
compliance of all the subcontractors on a covered prime contract. 29 
CFR 5.5(a)(6). WHD conducts investigations of covered contracts, which 
include determining if the DBRA contract clauses or appropriate wage 
determinations were mistakenly omitted from the contract. See 29 CFR 
1.6(f). If WHD determines that there was such an omission, it will 
request that the contracting agency either terminate and resolicit the 
contract or modify it to incorporate the required clauses or wage 
determinations retroactively. Id.
3. Enforcement and Remedies
    In addition to WHD, contracting agencies have enforcement authority 
under the DBRA. When a contracting agency's investigation reveals 
underpayments of wages of the DBA or one of the Related Acts, the 
Federal agency generally is required to provide a report of its 
investigation to WHD, and to seek to recover the underpayments from the 
contractor responsible. See 29 CFR 5.6(a)(1), 5.7. If violations 
identified by the contracting agency or by WHD through its own 
investigation are not promptly remedied, contracting agencies are 
required to suspend payment on the contract until sufficient funds are 
withheld to compensate the workers for the underpayments. 29 CFR 5.9. 
The DBRA contract clauses also provide for ``cross-withholding'' if 
sufficient funds are no longer available on the contract under which 
the violations took place. Under this procedure, funds may be withheld 
from any other covered Federal contract held by the same prime 
contractor in order to remedy the underpayments on the contract at 
issue. See 29 CFR 5.5(a)(2), (b)(3). Contractors that violate the DBRA 
may also be subject to debarment from future Federal contracts. See 29 
CFR 5.12.
    Where WHD conducts an investigation and finds that violations have 
occurred, it will notify the affected prime contractor and 
subcontractors of the findings of the investigation--including any 
determination that workers are owed wages and whether there is 
reasonable cause to believe the contractor may be subject to debarment. 
See 29 CFR 5.11(b). Contractors can request a hearing regarding these 
findings through the Department's Office of Administrative Law Judges 
(OALJ) and may appeal any ruling by the OALJ to the Department's 
Administrative Review Board (ARB). Id.; see also 29 CFR parts 6 and 7 
(OALJ and ARB rules of practice for Davis-Bacon proceedings). Decisions 
of the ARB are final agency actions that may be reviewable under the 
Administrative Procedure Act in Federal district court. See 5 U.S.C. 
702, 704.\19\
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    \19\ In addition to reviewing liability determinations and 
debarment, the ARB and the courts also have jurisdiction to review 
general wage determinations. Judicial review, however, is strictly 
limited to any procedural irregularities, as there is no 
jurisdiction to review the substantive correctness of a wage 
determination under the DBA. See Binghamton Constr. Co., 347 U.S. at 
177.
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III. Discussion of Proposed Rule

A. Legal Authority

    The Davis-Bacon Act, as enacted in 1931 and subsequently amended, 
requires the payment of certain minimum ``prevailing'' wages determined 
by the Department of Labor to laborers and mechanics working on Federal 
contracts in excess of $2,000 for the construction, alteration, or 
repair, including painting and decorating, of public buildings and 
public works. See 40 U.S.C. 3141 et seq. The DBA authorizes the 
Secretary of Labor to develop a definition for the term ``prevailing'' 
wage and a methodology for setting it based on similar projects in the 
civil subdivision of the State in which a covered project will occur. 
See 40 U.S.C. 3142(b); Bldg. & Constr. Trades' Dep't, AFL-CIO v. 
Donovan, 712 F.2d 611, 616 (D.C. Cir. 1983).
    The Secretary of Labor has the responsibility to ``prescribe 
reasonable regulations'' for contractors and subcontractors on covered 
projects. 40 U.S.C. 3145. The Secretary, through Reorganization Plan 
No. 14 of 1950, also has the responsibility to ``prescribe appropriate 
standards, regulations and procedures'' to be observed by Federal 
agencies responsible for the administration of the Davis-Bacon and 
Related Acts ``[i]n order to assure coordination of administration and 
consistency of enforcement of the labor standards provisions'' of the 
DBRA. 5 U.S.C. app. 1.
    The Secretary has delegated authority to promulgate these 
regulations to the Administrator of the WHD and to the Deputy 
Administrator of the WHD if the Administrator position is vacant. See 
Secretary's Order No. 01-2014, 79 FR 77527 (Dec. 24, 2014); Secretary's 
Order No. 01-2017, 82 FR 6653 (Jan. 19, 2017).

B. Overview of the Proposed Rule

1. 29 CFR Part 1
    The procedural rules providing for the payment of minimum wages, 
including fringe benefits, to laborers and mechanics engaged in 
construction activity covered by the Davis-Bacon and Related Acts are 
set forth in 29 CFR part 1. The regulations in this part also set forth 
the procedures for making and applying such determinations of 
prevailing wage rates and fringe benefits.
i. Section 1.1 Purpose and Scope
    The Department proposes technical revisions to Sec.  1.1 to update 
the statutory reference to the Davis-Bacon Act, now recodified at 40 
U.S.C. 3141 et seq. The Department also proposes to eliminate outdated 
references to the Deputy Under Secretary of Labor for Employment 
Standards at the Employment Standards Administration. The Employment 
Standards Administration was eliminated as part of an agency 
reorganization in 2009 and its authorities and responsibilities were 
devolved into its constituent components, including the WHD. See 
Secretary's Order No. 09-2009 (Nov. 6, 2009), 74 FR 58836 (Nov. 13, 
2009), 82 FR 2221 (Jan. 9, 2017). The Department further proposes to 
revise Sec.  1.1 to reflect the removal of Appendix A of part 1, as 
discussed further below. The Department also proposes to add new 
paragraph (a)(1) to reference the WHD website (https://www.dol.gov/agencies/whd/government-contracts) on which a listing of laws requiring 
the payment of wages at rates predetermined by the Secretary of Labor 
under the Davis-Bacon Act is currently found.

[[Page 15703]]

ii. Section 1.2 Definitions

(A) Prevailing Wage

    The Department proposes to redefine the term ``prevailing wage'' in 
Sec.  1.2 to return to the original methodology for determining whether 
a wage rate is prevailing. This original methodology has been referred 
to as the ``three-step process.''
    Since 1935, the Secretary has interpreted the word ``prevailing'' 
in the Davis-Bacon Act to be consistent with the common understanding 
of the term as meaning ``predominant'' or ``most frequent.'' From 1935 
until the 1981-1982 rulemaking, the Department employed a three-step 
process to identify the most frequently used wage rate for each 
classification of workers in a locality. See Regulation 503 section 2 
(1935); 47 FR 23644.\20\ This three-step process identified as 
prevailing: (1) Any wage rate paid to a majority of workers; and, if 
there was none, then (2) the wage rate paid to the greatest number of 
workers, provided it was paid to at least 30 percent of workers, and, 
if there was none, then (3) the weighted average rate. The second step 
is referred to as the ``30-percent rule.''
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    \20\ Implemented Apr. 29, 1983. See 48 FR 19532.
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    The three-step process relegated the average rate to a final, 
fallback method of determining the prevailing wage. In 1962 
congressional testimony, Solicitor of Labor Charles Donahue explained 
the reasoning for this sequence in the determination: An average rate 
``does not reflect a true rate which is actually being paid by any 
group of contractors in the community being surveyed.'' Instead, ``it 
represents an artificial rate which we create ourselves, and which does 
not reflect that which a predominant amount of workers are paid.'' \21\
---------------------------------------------------------------------------

    \21\ Administration of the Davis Bacon Act: Hearings before the 
Spec. Subcomm. of Lab. of the H. Comm. on Educ. and Lab., 87th Cong. 
811-12 (1962) (testimony of Charles Donahue, Solicitor of Labor).
---------------------------------------------------------------------------

    In 1982, the Department published a final rule that amended the 
definition of ``prevailing wage'' by eliminating the second step in the 
three-step process--the 30-percent rule. See 47 FR 23644. The new 
process required only two steps: First identifying if there was a 
single wage rate paid to more than 50 percent of workers, and then, if 
not, relying on a weighted average of all the wage rates paid. Id. at 
23644-45.
    In eliminating the 30-percent rule, however, the Department did not 
change its underlying interpretation of the word ``prevailing''--that 
it means ``the most widely paid rate'' must be the ``definition of 
first choice'' for the prevailing wage. 47 FR 23645. While the 1982 
rule continued to allow the Department to use an average rate as a 
fallback, the Department rejected commenters' suggestions that the 
weighted average could be used in all cases. See 47 FR 23644-45. As the 
Department explained, this was because the term ``prevailing'' 
contemplates that wage determinations mirror, to the extent possible, 
those rates ``actually paid'' to workers. 47 FR 23645.
    This interpretation--that the definition of first choice for the 
term ``prevailing wage'' should be an actual wage rate that is most 
widely paid--has now been shared across administrations for over 85 
years. In the intervening decades, Congress has amended and expanded 
the reach of the Act's prevailing wage requirements dozens of times 
without altering the term ``prevailing'' or the grant of broad 
authority to the Secretary of Labor to define it.\22\ In addition, the 
question was also reviewed by the Office of Legal Counsel (OLC) at the 
Department of Justice, which independently reached the same 
conclusions: ``prevailing wage'' means the current and predominant 
actual rate paid, and an average rate should only be used as a last 
resort. See 5 Op. O.L.C. at 176-77.\23\
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    \22\ See, e.g., Act of Mar. 23, 1941, ch. 26, 55 Stat. 53 (1941) 
(applying the Act to alternative contract types); Contract Work 
Hours and Safety Standards Act of 1962, Public Law 87-581, 76 Stat. 
357 (1962) (requiring payment of overtime on contracts covered by 
the Act); Act of July 2, 1964, Public Law 88-349, 78 Stat. 238 
(1964) (extending the Act to cover fringe benefits); 29 CFR 5.1 
(referencing 57 Related Acts into which Congress incorporated Davis-
Bacon Act requirements between 1935 and 1978).
    \23\ See note 1, supra.
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    In the 1982 final rule, when the Department eliminated the 30-
percent rule, it anticipated that this change would increase the use of 
artificial average rates. 47 FR 23648-49. Nonetheless, the Department 
believed a change was preferable because the 30-percent threshold could 
in some cases not account for up to 70 percent of the remaining 
workers. See 46 FR 41444. The Department also stated that it agreed 
with the concerns expressed by certain commenters that the 30-percent 
rule was ``inflationary'' and gave ``undue weight to collectively 
bargained rates.'' 47 FR 23644-45.
    Now, however, after reviewing the development of the Davis-Bacon 
Act program since the 1981-1982 rulemaking, the Department concludes 
that eliminating the 30-percent rule ultimately resulted in an overuse 
of average rates. On paper, the weighted average remains the fallback 
method to be used only when there is no majority rate. In practice, 
though, it has become a central mechanism to set the prevailing wage 
rates included in Davis-Bacon wage determinations and covered 
contracts.
    Prior to the 1982 rule change, the use of averages was relatively 
rare. In a Ford Administration study of Davis-Bacon Act prevailing wage 
rates in commercial-type construction in 19 cities, none of the rates 
were based on averages because all of the wage rates were 
``negotiated'' rates, i.e., based on CBAs that represented a 
predominant wage rate in the locality.\24\ The Department estimates 
that prior to the 1982 final rule, as low as 15 percent of 
classification rates across all wage determinations were based on 
averages. After the 1982 rule was implemented, the use of averages may 
have initially increased to approximately 26 percent of all wage 
determinations.\25\
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    \24\ See Robert S. Goldfarb & John F. Morrall, ``An Analysis of 
Certain Aspects of the Administration of the Davis-Bacon Act,'' 
Council on Wage and Price Stability (May 1976), reprinted in Bureau 
of Nat'l Affs., Construction Labor Report, No. 1079, D-1, D-2 
(1976).
    \25\ See Oversight Hearing on the Davis-Bacon Act, Before the 
Subcomm. on Lab. Standards of the H. Comm. on Educ. and Lab., 96th 
Cong. 58 (1979) (statement of Ray Marshall, Secretary of Labor) 
(discussing study of 1978 determinations showing only 24 percent of 
classification rates were based on the 30-percent rule); Jerome 
Staller, ``Communications to the Editor,'' Policy Analysis, Vol. 5, 
No. 3 (Summer 1979), pp. 397-98 (noting that 60 percent of 
determinations in the internal Department 1976 and 1978 studies were 
based on the 30-percent rule or the average-rate rule). The authors 
of the Council on Wage and Price Stability study, however, pointed 
out that the Department's figures were for rates that had been based 
on survey data, while 57 percent of rates in the mid-1970's were 
based solely on CBAs without the use of surveys (a practice that the 
Department no longer uses to determine new rates). See Robert S. 
Goldfarb & John F. Morrall II., ``The Davis-Bacon Act: An Appraisal 
of Recent Studies,'' 34 Indus. & Lab. Rel. Rev. 191, 199-200 & n.35 
(1981). Thus, the actual percentage of annual classification 
determinations that were based on average rule before 1982 may have 
been as low as 15 percent, and the percent based on the average rule 
after 1982 would have been expected to be around 26 percent.
---------------------------------------------------------------------------

    The Department's current use of weighted averages is now 
significantly higher than this 26 percent figure. To analyze the 
current use of weighted averages and the potential impacts of this 
rulemaking, the Department compiled data for select classifications for 
17 recent wage surveys--nearly all of the completed surveys that WHD 
began in 2015 or later. The data show that the Department's reliance on 
average rates has increased significantly, and now accounts for 64 
percent of the observed classification determinations in this recent 
time period.\26\
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    \26\ See below section V (Executive Order 12866, Regulatory 
Planning and Review et al.).
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    The Department believes that such an overuse of weighted averages 
is

[[Page 15704]]

inconsistent with both the text and the purpose of the Act. It is 
inconsistent with the Department's longstanding interpretation of 
Congress's use of the word ``prevailing'' in the text of the Act--
including the Department's statements in the preamble to the 1982 rule 
itself that the definition of first choice for the ``prevailing'' wage 
should be the most widely paid rate that is actually paid to workers in 
the relevant locality. If nearly two-thirds of rates that are now being 
published based on recent surveys are based on a weighted average, it 
is no longer fair to say that it is a fallback method of determining 
the prevailing wage.
    The use of averages as the dominant methodology for issuing wage 
determinations is also inconsistent with the recognized purpose of the 
Act ``to protect local wage standards by preventing contractors from 
basing their bids on wages lower than those prevailing in the area.'' 
Coutu, 450 U.S. at 773 (internal quotation marks and citation omitted). 
Using an average to determine the minimum wage rate on contracts allows 
a single low-wage contractor in the area to depress wage rates on 
Federal contracts below the higher rate that may be generally more 
prevalent in the community--by factoring into (and lowering) the 
calculation of the average that is used to set the minimum wage rates 
on local Federal contracts.\27\
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    \27\ For example, the 2001 wage determination for electricians 
in Eddy County, New Mexico was an average rate based on responses 
that included lower-paid workers that had been brought in from Texas 
by a Texas electrical contractor to work on a single job. As the ARB 
noted in reviewing a challenge to the wage determination, the result 
was that ``contract labor from Texas, where wages reportedly are 
lower, effectively has determined the prevailing wage for 
electricians in this New Mexico county.'' New Mexico Nat. Elec. 
Contractors Ass'n, ARB No. 03-020, 2004 WL 1261216, at * 8 (May 28, 
2004).
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    To address the increasing tension between the current methodology 
and the purpose and definition of ``prevailing,'' the Department 
proposes to return to the original three-step process. The Department 
expects that re-introducing the 30-percent rule will reduce the use of 
average rates roughly by half--from 63 percent to 31 percent. The data 
from the regulatory impact analysis included with this NPRM below in 
section V suggests that returning to the three-step process will 
continue to result in 36 percent of prevailing wage rates based on the 
majority rule, with the balance of 33 percent based on the 30-percent 
rule, and 31 percent based on the weighted average.
    This estimated distribution illustrates why the Department is no 
longer persuaded, as it stated in the 1981 NPRM, that the majority rule 
is more appropriate than the three-step process (including the 30-
percent rule) because the 30-percent rule ``ignores the rate paid to up 
to 70 percent of the workers.'' See 46 FR 41444.\28\ That 
characterization ignores that the first step in the three-step process 
is still to adopt the majority rate if there is one. Under both the 
three-step process and the current majority rule, any wage rate that is 
paid to a majority of workers would be identified as prevailing. Under 
either method, the weighted average will be used whenever there is no 
wage rate that is paid to more than 30 percent of employees in the 
survey response.
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    \28\ The 30-percent rule can only be characterized as 
``ignoring'' rates because it is a rule that applies a mathematical 
``mode,'' in which the only relevant value is the value of the 
number that appears most frequently--instead of a mean (average), in 
which the values of all the numbers are averaged together. Both the 
30-percent rule and the majority rule are modal rules in which the 
values of the non-prevailing wage rates do not factor into the final 
analysis.
---------------------------------------------------------------------------

    The difference between the majority and the three-step 
methodologies is solely in how a wage rate is determined when there is 
no majority, but there is a significant plurality wage rate paid to 
between 30 and 50 percent of workers. In that circumstance, the current 
``majority'' rule uses averages instead of the rate that is actually 
paid to that significant plurality of the survey population. This is 
true, for example, even where the same wage rate is paid to 45 percent 
of workers and no other rate is paid to as high a percentage of 
workers. In such circumstances, the Department believes that a wage 
rate paid to between 30 and 50 percent of workers is clearly more of a 
``prevailing'' wage rate than an average.
    The Department has also considered the other explanations it 
provided in 1982 for eliminating the 30-percent rule, including any 
possible upward pressure on wages or prices and a perceived ``undue 
weight'' given to collectively bargained rates. These explanations are 
no longer persuasive for two fundamental reasons. First, the concerns 
appear to be unrelated to the text of the statute, and, if anything, 
contrary to its legislative purpose. Second, the Department's estimates 
of the effects of a return to the 30-percent rule suggest that the 
concerns are misplaced.
    The concerns about inflation at the time of the 1982 rule were 
based in part on a criticism of the Act itself.\29\ A fundamental 
purpose of the Davis-Bacon Act was to limit low-bid contractors from 
depressing local wage rates. See 5 U.S. O.L.C. at 176.\30\ This purpose 
necessarily contemplates an increase in wage rates over what could 
otherwise be paid without the enactment of the statute. Moreover, the 
effect of maintaining such a prevailing rate can just as easily be seen 
as guarding against deflationary effects of the use of low-wage 
contractors--instead of resulting in inflation. Staff of the H. 
Subcomm. on Lab., 88th Cong., Administration of the Davis-Bacon Act, 
Rep. of the Subcomm. on Lab. of the Comm. on Educ. and Lab. (Comm. 
Print 1963) (1963 House Committee Report), at 2-3.
---------------------------------------------------------------------------

    \29\ The GAO issued a report in 1979 urging Congress to repeal 
the Act because of ``inflationary'' concerns. See Gov't 
Accountability Office, HRD-79-18, The Davis Bacon Act Should be 
Repealed, (1979) (1979 GAO Report). Available at: https://www.gao.gov/assets/hrd-79-18.pdf. The report argued that even using 
only weighted averages for prevailing rates would be inflationary 
because they could increase the minimum wage paid on contracts and 
therefore result in wages that were higher than they otherwise would 
be. The House Subcommittee on Labor Standards reviewed the report 
during oversight hearings in 1979, but Congress did not amend or 
repeal the Act, and instead continued to expand its reach. See, 
e.g., Cranston-Gonzalez National Affordable Housing Act, Public Law 
101-625, Sec. 811(j)(6), 104 Stat. 4329 (1990); Energy Independence 
and Security Act of 2007, Public Law. No, 110-140, Sec. 491(d), 121 
Stat. 1651 (2007); American Recovery and Reinvestment Act, Public 
Law 111-5, Sec. 1606, 123 Stat. 303 (2009); Consolidated 
Appropriations Act of 2021, Public Law 116-260, Sec. 9006(b), 134 
Stat. 1182 (2021).
    \30\ See note 1, supra.
---------------------------------------------------------------------------

    The 1982 final rule contained an economic analysis that suggested 
that the elimination of the 30-percent rule could save $120 million (in 
1982 dollars) in construction costs per year through reduced contract 
costs. However, the Department does not believe that this 40-year old 
analysis is reliable or accurate.\31\ For example, the analysis did not 
consider labor market forces that could prevent contractors from 
lowering wage rates in the short run. The analysis also did not attempt 
to address productivity losses or other costs of setting a lower 
minimum wage. For these reasons, the Department does not believe that 
the analysis in the 1982 final rule implies that the current proposed 
reversion to the 30-percent rule would have a significant impact on

[[Page 15705]]

contract costs. Even if the Department were to rely on this analysis as 
an accurate measure of impact, such savings (adjusted to 2019 dollars) 
would only amount to approximately two-tenths of a percent of total 
estimated covered contract costs.
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    \31\ The Department has not attempted to assess the relative 
accuracy of this estimate over the decades, which would be 
challenging given the dynamic nature of the construction industry 
and the relatively small impact of even $120 million in savings. The 
Department at the time acknowledged that its estimate had been 
heavily criticized by commenters and was only a ``best guess''--in 
part because it could not foresee how close a correlation there 
would be between the wage rates that are actually paid on covered 
contracts and the wage determinations that set the Davis-Bacon 
minimum wages. 47 FR 23648.
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    The Department also does not believe that the proposed reversion to 
the 30-percent rule would have any noticeable impact on overall 
national inflation numbers.\32\ An illustrative analysis in section 
V.D. shows returning to the 30-percent rule will significantly reduce 
the reliance on the weighted average method to produce prevailing wage 
rates. Under the 30-percent rule, some prevailing wage determinations 
may increase and others decrease, but the magnitude of these changes 
will, overall, be negligible. Additionally, recent research shows that 
wage increases, particularly at the lower end of the distribution, do 
not cause significant economy-wide price increases.\33\ The Department 
thus does not believe that any limited net wage increase for the 
approximately 1.2 million covered workers (less than 1 percent of the 
total national workforce) will significantly increase prices or have 
any appreciable effect on the macro economy.
---------------------------------------------------------------------------

    \32\ The 1979 GAO report about the DBA noted that ``minimum wage 
rates [such as the Davis-Bacon Act prevailing wage requirements] 
tend to have an inflationary effect on . . . the national economy as 
a whole.'' 1979 GAO Report, HRD-79-18 at 76, 83-84.
    \33\ See, e.g., J.P. Morgan, Why Higher Wages Don't Always Lead 
to Inflation (Feb. 7, 2018), available at: https://www.jpmorgan.com/commercial-banking/insights/higher-wages-inflation; Daniel MacDonald 
& Eric Nilsson, The Effects of Increasing the Minimum Wage on 
Prices: Analyzing the Incidence of Policy Design and Context, Upjohn 
Institute working paper; 16-260 (June 2016), available at https://research.upjohn.org/up_workingpapers/260/; Nguyen Viet Cuong, Do 
Minimum Wage Increases Cause Inflation? Evidence from Vietnam, ASEAN 
Economic Bulletin Vol. 28, No. 3 (2011), pp. 337-59, available at: 
https://www.jstor.org/stable/41445397; Magnus Jonsson & Stefan 
Palmqvist, Do Higher Wages Cause Inflation?, Sveriges Riksbank 
Working Paper Series 159 (Apr. 2004), available at: http://archive.riksbank.se/Upload/WorkingPapers/WP_159.pdf; Kenneth M. 
Emery & Chih-Ping Chang, Do Wages Help Predict Inflation?, Federal 
Reserve Bank of Dallas, Economic Review First Quarter 1996 (1996), 
available at: https://www.dallasfed.org/~/media/documents/research/
er/1996/er9601a.pdf.
---------------------------------------------------------------------------

    Further, since the DBA legislates that minimum wages must be paid 
to workers on construction projects, the effect of such requirement is 
not a permissible basis for departing from the longstanding 
interpretation of the plain meaning of the term ``prevailing.'' The 
``basic purpose of the Davis-Bacon Act is to protect the wages of 
construction workers even if the effect is to increase costs to the 
[F]ederal [G]overnment.'' Bldg. & Constr. Trades Dep't, AFL-CIO v. 
Donovan, 543 F. Supp. 1282, 1290 (D.D.C. 1982). Congress has considered 
cost concerns, and enacted and expanded the DBA notwithstanding them. 
Id. at 1290-91; 1963 House Committee Report at 2-3; Reorganization Plan 
No. 14 of 1950, 5 U.S.C. app. 1.\34\ Thus, even if concerns about an 
inflationary effect on government contract costs or speculative effects 
on the national macro economy were used to justify eliminating the 30-
percent rule, the Department does not believe such reasoning now 
provides either a factual or legal basis to maintain the current 
majority rule.
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    \34\ In his message accompanying Reorganization Plan No. 14, 
President Truman noted that ``[s]ince the principal objective of the 
plan is more effective enforcement of labor standards, it is not 
probable that it will result in savings. But it will provide more 
uniform and more adequate protection for workers through the 
expenditures made for the enforcement of the existing legislation.'' 
5 U.S.C. app. 1.
---------------------------------------------------------------------------

    The Department is also no longer persuaded that the 30-percent rule 
gives undue weight to collectively bargained rates. The underlying 
concern at the time was that identification of a single prevailing wage 
could give more weight to union rates that more often tend to be the 
same across companies. If this occurs, however, it is a function of the 
plain meaning of the statutory term ``prevailing,'' which, as both the 
Department and OLC have concluded, refers to a predominant single wage 
rate, or a modal wage rate. The same weight is given to collectively 
bargained rates whether the Department chooses a 50-percent or 30-
percent threshold. The Department accordingly now understands the 
concerns voiced at the time to be concerns about the potential outcome 
(of more wage determinations based on union rates) instead of concerns 
about any actual weight given to union rates by the choice of the modal 
threshold. To choose a threshold because the outcome would be more 
beneficial to non-union contractors--as the Department seems to have 
suggested it was doing in 1982--does not have any basis in the statute. 
Donovan, 543 F. Supp. at 1291, n.16 (noting that the Secretary's 
concern about weight to collectively bargained rates ``bear[s] no 
relationship to the purposes of the statute'').
    Regardless, the Department's regulatory impact analysis does not 
suggest that a return to the 30-percent rule would give undue weight to 
collectively bargained rates. Among a sample of rates considered in an 
illustrative analysis, one-third of all rates (or about half of rates 
currently established based on weighted averages) would shift to a 
different method. Among these rates that would be set based on a new 
method, the majority would be based on non-collectively bargained 
rates. Specifically, in the V.D. illustration, Department estimates 
that the use of single wage rates that are not the product of 
collective bargaining agreements would increase from 12 percent to 36 
percent of all wage rates--an overall increase of 24 percentage points. 
The use of single wage rates that are based on collective bargaining 
agreements will increase from 25 percent to 34 percent--an overall 
increase of 9 percentage points.\35\
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    \35\ See below section V (Executive Order 12866, Regulatory 
Planning and Review et al.). As discussed in the regulatory impact 
analysis, the Department found that fringe benefits currently do not 
prevail in slightly over half of the classification-county 
observations it reviewed--resulting in no required fringe benefit 
rate for that classification. This would be largely unchanged under 
the proposed reversion to the 3-step process, with nearly half of 
classification rates still not requiring the payment of fringe 
benefits. Only about 13 percent of fringe rates would shift from no 
fringes or an average rate to a modal prevailing fringe rate. 
Overall under the estimate, the percentage of fringe benefit rates 
based on collective bargaining agreements would increase from 25 
percent to 34 percent. The percentage of fringe benefit rates not 
based on collective bargaining rates would increase from 3 percent 
to 7 percent.
---------------------------------------------------------------------------

    The Department has also considered, but decided against, proposing 
to use the median wage rate as the ``prevailing'' rate. The median, 
like the average (mean), is a number that can be unrelated to the wage 
rate paid with the greatest frequency to employees working in the 
locality. Using either the median or the average as the primary method 
of determining the prevailing rate is not consistent with the meaning 
of the term ``prevailing.'' Accord 47 FR 23645. The Department is 
therefore proposing to return to the three-step process and the 30-
percent rule, and is not proposing as alternatives the use of either 
the median or mean as the primary or sole methods for making wage 
determinations.
(1) Former Subsection Sec.  1.2(a)(2)
    In a non-substantive change, the Department proposes to move the 
language currently at Sec.  1.2(a)(2) that explains the interaction 
between the definition of prevailing wage and the sources of 
information in Sec.  1.3. Under the proposed rule, that language 
(altered to update the cross-reference to the definition of prevailing 
wage) would now appear in Sec.  1.3.

[[Page 15706]]

(2) Variable Rates That Are Functionally Equivalent
    The Department also proposes to amend the regulations on compiling 
wage rate information at Sec.  1.3 to allow for variable rates that are 
functionally equivalent to be counted together for the purpose of 
determining whether a single wage rate prevails under the proposed 
definition of ``prevailing wage'' in Sec.  1.2. The Department 
generally followed this proposed approach until after the 2006 decision 
of the ARB in Mistick Construction. 2006 WL 861357.
    Historically, the Department has considered wage rates included in 
survey data that may not be exactly the same to be functionally 
equivalent--and therefore counted as the same--as long as there was an 
underlying logic that explained the difference between them. For 
example, some workers may perform work under the same labor 
classification for the same contractor or under the same collective 
bargaining agreement (CBA) on projects in the same geographical area 
being surveyed and get paid different wages based on the time of day 
that they performed work--e.g., a ``night premium.'' In that 
circumstance, the Department would count the normal and night-premium 
wage rates to be the ``same wage'' rate for purposes of calculating 
whether that wage rate prevailed under the majority rule that is 
discussed in the section above. Similarly, where workers in the same 
labor classification were paid different ``zone rates'' for work on 
projects in different zones covered by the same CBA, the Department 
considered those rates as compensating workers for the burden of 
traveling or staying away from home and did not reflect fundamentally 
different underlying wage rates for the work actually completed. 
Variable zone rates would therefore be considered the ``same wage'' for 
the purpose of determining the prevailing wage rate.
    In another example, the Department took into consideration 
``escalator clauses'' in CBAs that may have increased wage rates across 
the board at some point during the survey period. Wages for workers 
working under the same CBA could be reported differently on a survey 
based on the week their employer used in responding to the wage survey 
rather than an actual difference in prevailing wages. The Department 
has historically treated such variable rates the same for the purposes 
of determining the prevailing wages paid to laborers or mechanics in 
the survey area. The Department has also considered wage rates to be 
the same where workers made the same combination of basic hourly rates 
and fringe rates, even if the basic hourly rates (and also the fringe 
rates) differed slightly.
    In these circumstances, where the Department has treated certain 
variable rates as the same, it has generally chosen one of the variable 
rates to use as the prevailing rate. In the case of rates that are 
variable because of an escalator-clause issue, it uses the most current 
rate under the collective bargaining agreement. Similarly, where the 
Department identified combinations of hourly and fringe rates as the 
``same,'' the Department identified one specific hourly rate and one 
specific fringe rate that prevailed, following the guidelines in 29 CFR 
5.24, 5.25, and 5.30.
    In 2006, the ARB strictly interpreted the regulatory language of 
Sec.  1.2(a) in a way that has limited some of these practices. See 
Mistick Constr., 2006 WL 861357, at *5-7. The decision affirmed the 
Administrator's continued use of the escalator-clause rule, but found 
the use of the same combination of basic hourly and fringe rates did 
not amount to exactly the ``same'' wage and thus violated the use of 
the term ``same wage'' in Sec.  1.2(a). The ARB also viewed the 
flexibility shown to collective bargaining agreements as inconsistent 
with the ``purpose'' of the 1982 final rule, which the Administrator 
had explained was in part to avoid giving ``undue weight'' to 
collectively bargained rates. The ARB held that the Administrator could 
not consider variable rates under a collective bargaining agreement to 
be the ``same wage'' under Sec.  1.2(a) as written--and therefore, if 
there was no strictly ``same wage'' that would prevail under the 
majority rule, the Administrator would have to use the fallback 
weighted average on the wage determination.
    The ARB's conclusion in Mistick--particularly its determination 
that even wage data reflecting the same aggregate compensation but 
slight variations in the basic hourly rate and fringe benefit rates did 
not reflect the ``same wage'' as that term was used under the current 
regulations--could be construed as a determination that wage rates need 
to be identical ``to the penny'' in order to be regarded as the ``same 
wage,'' and that nearly any variation in wage rates, no matter how 
small and regardless of the reason for the variation, might need to be 
regarded as reflecting different, unique wage rates.
    The ARB's decision in Mistick limited the Administrator's 
methodology for determining a prevailing rate, thus contributing to the 
increased use of weighted average rates. As noted above, however, both 
the Department and OLC have agreed that averages should generally only 
be used as a last resort. As the OLC opinion noted, the use of an 
average is difficult to justify ``particularly in cases where it 
coincides with none of the actual wage rates being paid.'' 5 Op. O.L.C. 
at 177 (emphasis in original).\36\ In discussing those cases, OLC 
quoted from the 1963 House Report summarizing extensive congressional 
oversight hearings of the Act. The report had concluded that ``[u]se of 
an average rate would be artificial in that it would not reflect the 
actual wages being paid in a local community,'' and ``such a method 
would be disruptive of local wage standards if it were utilized with 
any great frequency.'' Id.\37\ To the extent that an inflexible, ``to 
the penny'' approach to determining if wage data reflects the ``same 
wage'' promotes the use of average rates even when wage rate variations 
are exceedingly slight and are based on practices reflecting that the 
rates, while not identical, are functionally equivalent, such an 
approach would be inconsistent with these authorities and the statutory 
purpose they reflect.
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    \36\ See note 1, supra.
    \37\ See 1963 House Committee Report, supra, at 7-8.
---------------------------------------------------------------------------

    For these reasons, and particularly because a mechanical, ``to the 
penny'' approach ultimately undermines rather than promotes the 
determination of actual prevailing wage rates, the Department believes 
that it is consistent with the language and purpose of the statute to 
treat slight variations in wages as the same rate in appropriate 
circumstances.
    As reflected in Mistick, the existing regulation does not clearly 
authorize the use of functionally equivalent wages to determine the 
local prevailing wage. See 2006 WL 861357, at *5-7. Accordingly, the 
Department proposes to amend Sec.  1.3 to include a new paragraph at 
Sec.  1.3(e) that would permit the Administrator to count wage rates 
together--for the purpose of determining the prevailing wage--if the 
rates are functionally equivalent and the variation can be explained by 
a CBA or the written policy of a contractor.
    Such flexibility would not be unlimited. Some variations within the 
same CBA clearly amount to different rates. For example, when a CBA 
authorizes the use of ``market recovery rates'' that are lower than the 
standard rate in order to win a bid, under certain circumstances those 
rates may not be appropriate to combine together with the CBA's 
standard rate as ``functionally equivalent'' because frequent use of 
such a rate could suggest (though does

[[Page 15707]]

not necessarily compel) a conclusion that the CBA's regular rate may 
not be prevailing in the area.
    The Department welcomes comments on all aspects of this proposal 
regarding proposed changes to the definition of ``prevailing wage'' in 
Sec.  1.2 and to the regulation governing the obtaining and compiling 
of wage rate information in Sec.  1.3.
(B) Area
    The core definition of ``area'' in Sec.  1.2 largely reproduces the 
specification in the Davis-Bacon Act statute, prior to its 2002 re-
codification, that the prevailing wage should be based on projects of a 
similar character in the ``city, town, village, or other civil 
subdivision of the State in which the work is to be performed.'' See 40 
U.S.C. 276a(a) (2002).
    The rule's geography-based definition of area applies to federally 
assisted projects covered by the Davis-Bacon Related Acts as well as 
projects covered by the DBA itself. Some of the Related Acts have used 
different terminology to identify the appropriate ``area'' for a wage 
determination, including the terms ``locality'' and ``immediate 
locality.'' \38\ However, the Department has long concluded that these 
terms are best interpreted and applied consistent with the methodology 
for determining the area under the original DBA. See Virginia Segment 
C-7, METRO, WAB 71-4, 1971 WL 17609, at *3-4 (Dec. 7, 1971).\39\
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    \38\ See, e.g., National Housing Act, 12 U.S.C. 1715c(a) 
(locality); Housing and Community Development Act of 1974, 42 U.S.C. 
1440(g), 5310(a) (locality); Federal Water Pollution Control Act, 33 
U.S.C. 1372 (immediate locality); Federal-Aid Highway Acts, 23 
U.S.C. 113(a) (immediate locality).
    \39\ The Wage Appeals Board (WAB) was the Department's 
administrative appellate entity from 1964 until 1996, when it was 
eliminated and the Administrative Review Board was created and 
provided jurisdiction over appeals from decisions of the 
Administrator and the Department's Administrative Law Judges (ALJs) 
under a number of statutes, including the Davis-Bacon and Related 
Acts. 61 FR 19978 (May 3, 1996). WAB decisions from 1964 to 1996 are 
available on the Department's website at https://www.dol.gov/agencies/oalj/public/dba_sca/references/caselists/wablist.
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    The Department proposes to revise the definition of area to address 
projects that span multiple counties and to address highway projects 
specifically. Under WHD's current methodology, if a project spans more 
than one county, the contracting officer is instructed to attach wage 
determinations for each county to the project and contractors may be 
required to pay differing wage rates to the same employees when their 
work crosses county lines. This policy was reinforced in 1971 when the 
Wage Appeals Board (WAB) found that, under the terms of the then-
applicable regulations, there was no basis to provide a single 
prevailing wage rate for a project occurring in Virginia, the District 
of Columbia, and Maryland. See Virginia Segment C-7, METRO, 1971 WL 
17609.
    Critics of this policy have pointed out that workers are very often 
hired and paid a single wage rate for a project, and--unless there are 
different city or county minimum wage laws--workers' pay rates often do 
not change as they move between tasks in different counties. The 2011 
report by the GAO, for example, quoted a statement from a contractor 
association representative that requiring different wage rates for the 
same workers on the same multi-county project is ``illogical.'' See 
2011 GAO Report at 24.\40\
---------------------------------------------------------------------------

    \40\ See note 8, supra.
---------------------------------------------------------------------------

    While requiring different prevailing wage rates for work by the 
same worker on the same project may be consistent with the current 
regulations, the DBA and Related Act statutes themselves do not address 
multi-jurisdictional projects. Issuing and applying a single project 
wage determination for such projects is not inconsistent with the text 
of the DBA. Nor is it inconsistent with the purpose of the DBA, which 
is to protect against the depression of local wage rates caused by 
competition from low-bid contractors from outside of the locality.
    Accordingly, the Department proposes adding language in the 
definition of ``area'' in Sec.  1.2 that would expressly authorize WHD 
to issue project wage determinations with a single rate for each 
classification, using data from all of the relevant counties in which a 
project will occur. The Department solicits comments on whether this 
procedure should be mandatory for multi-jurisdictional projects or 
available at the request of the contracting agency or an interested 
party, if WHD determines that such a project wage determination would 
be appropriate.
    The Department's other proposed change to the definition of 
``area'' in Sec.  1.2 is to allow the use of State highway districts or 
similar transportation subdivisions as the relevant wage determination 
area for highway projects. Although there is significant variation 
between states, most states maintain civil subdivisions responsible for 
certain aspects of transportation planning, financing, and 
maintenance.\41\ These districts tend to be organized within State 
departments of transportation or otherwise through State and County 
governments.
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    \41\ See generally Am. Assoc. of State Highway and Transp. 
Offs., Transportation Governance and Financing: A 50-State Review of 
State Legislatures and Departments of Transportation (2016), 
available at: https://www.financingtransportation.org/pdf/50_state_review_nov16.pdf.
---------------------------------------------------------------------------

    Using State highway districts as a geographic unit for wage 
determinations would be consistent with the Davis-Bacon Act's 
specification that wage determinations should be tied to a ``civil 
subdivision of a State.'' State highway districts were considered to be 
``subdivisions of a State'' at the time the term was used in the 
original Davis-Bacon Act. See Wight v. Police Jury of Par. of 
Avoyelles, La., 264 F. 705, 709 (5th Cir. 1919) (describing the 
creation of highway districts as ``governmental subdivisions of the 
[S]tate'').
    In identifying the appropriate geographic area of a wage 
determination, the Federal-Aid Highway Act of 1956 (FAHA), one of the 
Related Acts, uses the term ``immediate locality'' instead of ``civil 
subdivision.'' 23 U.S.C. 113. However, the FAHA requires the 
application of prevailing wage rates in the immediate locality to be 
``in accordance with'' the DBA, id., and, as noted above, WHD has long 
applied these alternative definitions of area in the Related Acts in a 
manner consistent with the ``civil subdivision'' language in the 
original Act.
    The Department also notes that Congress, in enacting the FAHA, 
envisioned that the Federal aid would be provided in a manner that 
sought to complement and cooperate with State departments of 
transportation. See Frank Bros. v. Wisconsin Dep't of Transp., 409 F.3d 
880, 887-89 (7th Cir. 2005). As State highway or transportation 
districts often plan, develop, and oversee federally financed highway 
projects, the provision of a single wage determination for each 
district would simplify the procedure for incorporating Federal 
financing into these projects.
    As such, the Department proposes to authorize WHD to adopt State 
highway districts as the geographic area for determining prevailing 
wages on highway projects, where appropriate.
(C) Type of Construction (or Construction Type)
    The Department proposes to define ``type of construction'' or 
``construction type'' to mean the general category of construction as 
established by the Administrator for the publication of general wage 
determinations. The proposed language also provides examples of types 
of construction,

[[Page 15708]]

including building, residential, heavy, and highway, consistent with 
the four construction types the Department currently uses in general 
wage determinations, but does not exclude the possibility of other 
types. The terms ``type of construction'' or ``construction type'' are 
already used elsewhere in part 1 to refer to these general categories 
of construction, as well as in wage determinations themselves. As used 
in this part, the terms ``type of construction'' and ``construction 
type'' are synonymous and interchangeable. The Department believes that 
including this definition would provide additional clarity for these 
references, particularly for members of the regulated community who 
might be less familiar with the term.
(D) Other Definitions
    The Department proposes additional conforming edits to 29 CFR 1.2 
in light of proposed changes to 29 CFR 5.2. As part of these conforming 
edits, the Department proposes to revise the definition of ``agency'' 
(and add a sub-definition of ``Federal agency'') to mirror the 
definition proposed and discussed below in Sec.  5.2. The Department 
also proposes to add to Sec.  1.2 new defined terms also proposed in 
parts 3 and 5, including ``employed'', ``type of construction (or 
construction type),'' and ``United States or the District of 
Columbia.'' For further discussion on these proposed terms, see the 
corresponding discussion in Sec.  3.2 and 5.2 below.
(E) Paragraph Designations
    The Department is also proposing to amend Sec. Sec.  1.2, 3.2, and 
5.2 to remove paragraph designations of defined terms and instead to 
list defined terms in alphabetical order. The Department proposes to 
make conforming edits throughout parts 1, 3, and 5 in any provisions 
that currently reference lettered paragraph definitions.
iii. Section 1.3 Obtaining and Compiling Wage Rate Information
(A) 29 CFR 1.3(b)
    The Department proposes to switch the order of Sec.  1.3(b)(4) and 
(5) for clarity. This nonsubstantive change would simply group together 
the subparagraphs in Sec.  1.3(b) that apply to wage determinations 
generally, and follow those subparagraphs with one that applies only to 
Federal-aid highway projects under 23 U.S.C. 113.
(B) 29 CFR 1.3(d)
    As part of its effort to modernize the regulations governing the 
determination of Davis-Bacon prevailing wage rates, the Department is 
considering whether to revise Sec.  1.3(d), regarding when survey data 
from Federal or federally assisted projects subject to Davis-Bacon 
prevailing wage requirements (hereinafter ``Federal project data'') may 
be used in determining prevailing wages for building and residential 
construction wage determinations. The Department is not proposing any 
specific revisions to Sec.  1.3(d) in this NPRM, but rather is seeking 
comment on whether this regulatory provision--particularly its 
limitation on the use of Federal project data in determining wage rates 
for building and residential construction projects--should be revised.
    For approximately 50 years (beginning shortly after the DBA was 
enacted in 1931 and continuing until the 1981-1982 rulemaking), the 
Department used Federal project data in determining prevailing wage 
rates for all categories of construction, including building and 
residential construction. The final rule promulgated in May 1982 
codified this practice with respect to heavy and highway construction, 
providing in new Sec.  1.3(d) that ``[d]ata from Federal or federally 
assisted projects will be used in compiling wage rate data for heavy 
and highway wage determinations.'' \42\ The Department explained that 
``it would not be practical to determine prevailing wages for `heavy' 
and `highway' construction projects if Davis-Bacon covered projects are 
excluded in making wage surveys because such a large portion of those 
types of construction receive Federal financing.'' \43\
---------------------------------------------------------------------------

    \42\ See Final Rule, Procedures for Predetermination of Wage 
Rates, 47 FR 23644 (May 28, 1982).
    \43\ Id.
---------------------------------------------------------------------------

    With respect to building and residential construction, however, the 
1982 final rule concluded that such construction often occurred without 
Federal financial assistance subject to Davis-Bacon prevailing wage 
requirements, and that to invariably include Federal project data in 
calculating prevailing wage rates applicable to building and 
residential construction projects therefore would ``skew[ ] the results 
upward,'' contrary to congressional intent.\44\ The final rule 
therefore provided in Sec.  1.3(d) that ``in compiling wage rate data 
for building and residential wage determinations, the Administrator 
will not use data from Federal or federally assisted projects subject 
to Davis-Bacon prevailing wage requirements unless it is determined 
that there is insufficient wage data to determine the prevailing wages 
in the absence of such data.'' 29 CFR 1.3(d). In subsequent litigation, 
the D.C. Circuit upheld Sec.  1.3(d)'s limitation on the use of Federal 
project data as consistent with the DBA's purpose and legislative 
history--if not necessarily its plain text--and therefore a valid 
exercise of the Administrator's broad discretion to administer the 
Act.\45\
---------------------------------------------------------------------------

    \44\ See Donovan, 712 F.2d at 620.
    \45\ Id. at 621-22.
---------------------------------------------------------------------------

    As a result of Sec.  1.3(d)'s limitation on the use of Federal 
project data in calculating prevailing wage rates applicable to 
building and residential construction, WHD first attempts to calculate 
a prevailing wage based on non-Federal project survey data at the 
county level--i.e., survey data that includes data from private 
projects or projects funded by State and local governments without 
assistance under the DBRA, but excludes data from Federal or federally 
assisted projects subject to Davis-Bacon prevailing wage requirements. 
See 29 CFR 1.3(d), 1.7(a); Manual of Operations at 38; Coal. for 
Chesapeake Hous. Dev., ARB No. 12-010, 2013 WL 5872049, at *4 (Sept. 
25, 2013) (Chesapeake Housing). If there is insufficient non-Federal 
project survey data for a particular classification in that county, 
then WHD considers survey data from Federal projects in the county if 
such data is available.
    Under the current regulations, WHD expands the geographic scope of 
data that it considers when it is making a county wage determination 
when data is insufficient at the county level. This procedure is 
described below in the discussion of the ``scope of consideration'' 
regulation at Sec.  1.7. For wage determinations for federally funded 
building and residential construction projects, WHD currently 
integrates Federal project data into this procedure at each level of 
geographic aggregation in the same manner it is integrated at the 
county level: If the combined Federal and non-Federal survey data 
received from a particular county is insufficient to establish a 
prevailing wage rate for a classification in a county, then WHD 
attempts to calculate a prevailing wage rate for that county based on 
non-Federal wage data from a group of surrounding counties. See 29 CFR 
1.7(a), (b). If non-Federal project survey data from the surrounding-
county group is insufficient, then WHD includes Federal project data 
from all the counties in that county group. If both non-Federal project 
and Federal project data for a surrounding-county group is still 
insufficient to determine a prevailing wage rate, then, for 
classifications that have been designated as ``key''

[[Page 15709]]

classifications, WHD may expand to a ``super group'' of counties or 
even to the statewide level. See Chesapeake Housing, 2013 WL 5872049, 
at *6; PWRB, Davis-Bacon Surveys, at 6.\46\ At each stage of data 
expansion for building and residential wage determinations, WHD first 
attempts to determine prevailing wages based on non-Federal project 
data; however, if there is insufficient non-Federal data, WHD will 
consider Federal project data.
---------------------------------------------------------------------------

    \46\ See note 16, supra.
---------------------------------------------------------------------------

    As reflected in the plain language of Sec.  1.3(d) as well as WHD's 
implementation of that regulatory provision, the current formulation of 
Sec.  1.3(d) does not prohibit all uses of Federal project data in 
establishing prevailing wage rates for building and residential 
construction projects subject to Davis-Bacon requirements; rather it 
limits the use of such data to circumstances where ``there is 
insufficient wage data to determine the prevailing wages in the absence 
of such data.'' 29 CFR 1.3(d). WHD often uses Federal project data in 
calculating prevailing wage rates applicable to residential 
construction due to insufficient non-Federal project survey data 
submissions. By contrast, because WHD's surveys of building 
construction typically have a higher participation rate than 
residential surveys, WHD uses Federal project data less frequently in 
calculating prevailing wage rates applicable to building construction 
projects covered by the DBRA. For example, the 2011 GAO Report analyzed 
4 DBA surveys and found that over two-thirds of the residential rates 
for 16 key job classifications (such as carpenter and common laborer) 
included Federal project data because there was insufficient non-
Federal project data, while only about one-quarter of the building wage 
rates for key classifications included Federal project data. 2011 GAO 
Report, at 26.\47\
---------------------------------------------------------------------------

    \47\ See note 8, supra.
---------------------------------------------------------------------------

    Notwithstanding the use of Federal project data in calculating 
prevailing wage rates for building and residential construction, the 
Department recognizes that some interested parties may believe that 
Sec.  1.3(d) imposes an absolute barrier to the use of Federal project 
data in determining prevailing wage rates. As a result, survey 
participants may not submit Federal project data in connection with 
WHD's surveys of building and residential construction--thereby 
reducing the amount of data that WHD receives in response to its 
building and residential surveys. The Department strongly encourages 
robust participation in Davis-Bacon prevailing wage surveys, including 
building and residential surveys, and it therefore urges interested 
parties to submit Federal project data in connection with building and 
residential surveys with the understanding that such data will be used 
in calculating prevailing wage rates if insufficient non-Federal 
project data is received. In the absence of such Federal project data, 
for example, a prevailing wage rate may be calculated at the 
surrounding-county group or even statewide level when it would have 
been calculated based on a smaller geographic area if more Federal 
project data had been submitted.
    Although increased submission of such Federal project data thus 
could be expected to contribute to more robust wage determinations even 
without any change to Sec.  1.3(d), the Department recognizes that 
revisions to Sec.  1.3(d) may nonetheless be warranted. Specifically, 
the Department is interested in comments regarding whether to revise 
Sec.  1.3(d) in a way that would permit WHD to use Federal project data 
more frequently when it calculates building and residential prevailing 
wages. For example, particularly given the challenges that WHD has 
faced in achieving high levels of participation in residential wage 
surveys--and given the number of residential projects that are subject 
to Davis-Bacon labor standards under Related Acts administered by the 
U.S. Department of Housing and Urban Development--it may be appropriate 
to expand the amount of Federal project data that is available to use 
in setting prevailing wage rates for residential construction.
    There may also be other specific circumstances that particularly 
warrant greater use of Federal project data. More generally, if the 
current limitation on the use of Federal project data were removed from 
Sec.  1.3(d), WHD could in all circumstances establish Davis-Bacon 
prevailing wage rates for building and residential construction based 
on all usable wage data in the relevant county or other geographic 
area, without regard to whether particular wage data was ``Federal'' 
and whether there was ``insufficient'' non-Federal project data. 
Alternatively, Sec.  1.3(d) could be revised in order to provide a 
definition of ``insufficient wage data,'' thereby providing increased 
clarity regarding when Federal project data may and may not be used in 
establishing prevailing wage rates for building or residential 
construction. The Department specifically invites comments on these and 
any other issues regarding the use of Federal project data in 
developing building and residential wage determinations.
(C) 29 CFR 1.3(f)--Frequently Conformed Rates
    The Department is also proposing changes relating to the 
publication of rates for labor classifications for which conformance 
requests are regularly submitted when such classifications are missing 
from wage determinations. The Department's proposed changes to this 
subsection are discussed below in part III.B.1.xii (``Frequently 
conformed rates''), together with proposed changes to Sec.  5.5(a)(1).
(D) 29 CFR 1.3(g)-(j)--Adoption of State/Local Prevailing Wage 
Determinations
    The Department proposes to add new paragraphs (g), (h), (i), and 
(j) to Sec.  1.3 to permit the Administrator, under specified 
circumstances, to determine Davis-Bacon wage rates by adopting 
prevailing wage rates set by State and local governments.
    About half of the States, as well as many localities, have their 
own prevailing wage laws (sometimes called ``little'' Davis-Bacon 
laws).\48\ Additionally, a few states have processes for determining 
prevailing wages in public construction even in the absence of such 
State laws.\49\ Accordingly, the Administrator has long taken 
prevailing wage rates set by States and localities into account when 
making wage determinations. Under the current regulations, one type of 
information that the Administrator may ``consider[ ]'' in determining 
wage rates is ``[w]age rates determined for public construction by 
State and local officials pursuant to State and local prevailing wage 
legislation.'' 29 CFR 1.3(b)(3). Additionally, for wage determinations 
on federally-funded highway construction projects, the Administrator is 
required by statute and regulation to ``consult[ ]'' with ``the highway 
department of the State'' in which the work is to be performed, and to 
``give due regard to the information thus obtained.'' 23 U.S.C. 113(b); 
29 CFR 1.3(b)(4).
---------------------------------------------------------------------------

    \48\ A list of such states, and the thresholds for coverage, can 
be found here: Dollar Threshold Amount for Contract Coverage, U.S. 
Dep't of Lab., Wage and Hour Div., https://www.dol.gov/agencies/whd/state/prevailing-wages (last updated Jan. 2021).
    \49\ These states include Iowa, North Dakota, and South Dakota.
---------------------------------------------------------------------------

    In reliance on these provisions, WHD has sometimes adopted and 
published certain states' highway wage determinations in lieu of 
conducting wage surveys in certain areas. According to a 2019 report by 
the Department's Office of the Inspector General (OIG), WHD used 
highway wage

[[Page 15710]]

determinations from 15 states between fiscal years 2013 and 2017. See 
2019 OIG Report at 10.\50\
---------------------------------------------------------------------------

    \50\ See note 11, supra.
---------------------------------------------------------------------------

    The OIG report expressed concern about the high number of out-of-
date Davis-Bacon wage rates, particularly non-union rates, noting, for 
example, that some published wage rates were as many as 40 years old. 
Id. at 5. The OIG report further noted that at the time, 26 states and 
the District of Columbia had their own prevailing wage laws, and 
recommended that WHD ``should determine whether it would be statutorily 
permissible and programmatically appropriate to adopt [S]tate or local 
wage rates other than those for highway construction.'' Id. at 10-11. 
WHD indicated to OIG that in the absence of a regulatory revision, it 
viewed adoption of State rates for non-highway construction as in 
tension with the definition of prevailing wage in Sec.  1.2(a) and the 
ARB's Mistick decision. Id. at 10.
    The Department shares OIG's concern regarding outdated wage rates. 
Outdated and/or inaccurate wage determinations are inconsistent with 
the intent of the Davis-Bacon labor standards, which aim to ensure that 
laborers and mechanics on covered projects are paid locally prevailing 
wages and fringe benefits. Wage rates that are significantly out-of-
date do not reflect this intent and could even have the effect of 
depressing wages if covered contractors pay no more than an 
artificially-low prevailing wage rate that has not been adjusted over 
time to continue to reflect the wages paid to workers in a geographic 
area. Accordingly, the Department agrees with OIG that, where 
appropriate, adoption of more current wage determinations made by 
states and localities would be consistent with the DBA's purpose. 
States often conduct wage surveys far more frequently than WHD.\51\ 
Furthermore, if a State or locality is already engaged in efforts to 
determine prevailing wages--and if the State's methods are reliable, 
rigorous, and transparent--similar activities conducted by WHD on a 
less regular basis can be duplicative and an inefficient use of survey 
respondents' efforts and WHD's scarce resources. Relatedly, states and 
localities that regularly update their own wage determinations may have 
ongoing relationships with stakeholders in the relevant geographic 
areas that facilitate that process. In contrast, WHD may lack similarly 
strong relationships with those stakeholders given the relative 
infrequency with which it surveys any given area. Thus, many states and 
localities may be in a position to ensure greater participation in wage 
surveys, which can improve wage survey accuracy.
---------------------------------------------------------------------------

    \51\ Some states, such as Minnesota, conduct surveys annually. 
See Prevailing Wage: Annual Statewide Survey, Minn. Dep't of Labor & 
Indus., https://www.dli.mn.gov/business/employment-practices/prevailing-wage-annual-statewide-survey (last visited Nov. 17, 
2021). Others use a different frequency; for example, Nevada 
conducts a survey every 2 years. See Nevada's 2021-2023 Prevailing 
Wage Survey Released, Nev. Dep't of Bus. & Indus., https://business.nv.gov/News_Media/Press_Releases/2021/Labor_Commissioner/Nevada%E2%80%99s_2021-2023_Prevailing_Wage_Survey_Released/ (last 
visited Nov. 17, 2021).
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    The Department believes that a regulatory revision would best 
ensure that WHD can incorporate State and local wage determinations 
where doing so would further the purposes of the Davis-Bacon labor 
standards. As noted above, the current regulations permit WHD to 
``consider'' State or local prevailing wage rates among a variety of 
sources of information used to make wage determinations, and require 
WHD to give ``due regard'' to information obtained from State highway 
departments for highway wage determinations. See 29 CFR 1.3(b)(3)-(4). 
However, they also provide that any information WHD considers when 
making wage determinations must ``be evaluated in the light of [the 
prevailing wage definition set forth in] Sec.  1.2(a).'' 29 CFR 1.3(c). 
While some States and localities' definitions of prevailing wage mirror 
the Department's regulatory definition, many others' do not.\52\ 
Because the current regulations at Sec. Sec.  1.2(a) and 1.3(c), as 
well as the ARB's decision in Mistick, suggest that any information 
(such as State or local wage rates) that WHD obtains and 
``consider[s]'' under Sec.  1.3(b) must be filtered through the 
definition of ``prevailing wage'' in Sec.  1.2, the Department is 
proposing a regulatory change to clarify that WHD may adopt State or 
local prevailing wage determinations under certain circumstances even 
where the State or locality's definition of prevailing wage differs 
from the Department's.
---------------------------------------------------------------------------

    \52\ For example, Washington uses a definition similar to the 
Department's current majority rule. See Wash. Rev. Code Sec.  
39.12.010(1) (2021). Wyoming, in contrast, uses a method that 
mirrors the three-step process in this proposed rule. Wyo. Stat. 
Ann. Sec. Sec.  27-4-401-413 (2021). Other states use CBA rates as a 
starting point. N.M. Stat. Ann. Sec. Sec.  13-4-10-17 (2021); N.M. 
Code R. Sec.  11.1.2.12 (2021); N.Y. Lab. Law Sec. Sec.  220-224 
(McKinney 2021).
---------------------------------------------------------------------------

    Additionally, the Department's regulations apply numerous 
requirements and constraints to WHD's own wage determinations, such as 
those concerning geographic scope, see Sec.  1.7, and the type of 
project data that may be used, see Sec.  1.3(d). Like the definition of 
prevailing wage, analogous requirements under State and local 
prevailing wage laws vary. Although, as noted above, the Department's 
regulations permit WHD to ``consider'' State and local determinations 
and to give ``due regard'' to State rates for highway construction, the 
current regulations do not specifically address whether WHD may adopt 
State or local rates derived using methods and requirements that differ 
from those used by WHD.
    Accordingly, and in light of the advantages of adopting State and 
local rates discussed above, the Department is proposing to add a new 
paragraph, Sec.  1.3(g), which would explicitly permit WHD to adopt 
prevailing wage rates set by State or local officials, even where the 
methods used to derive such rates, including the definition of the 
prevailing wage, may differ in some respects from the methods the 
Administrator uses under the DBA and the regulations in 29 CFR part 1. 
The proposal would permit WHD to adopt such wage rates provided that 
the Administrator, after reviewing the rate and the processes used to 
derive the rate, concludes that they meet certain listed criteria. The 
criteria, which are explained further below, are intended to allow WHD 
to adopt State and local prevailing wage rates where appropriate while 
also ensuring that adoption of such rates is consistent with the 
statutory requirements of the Davis-Bacon Act and does not create 
arbitrary distinctions between jurisdictions where WHD makes wage 
determinations by using its own surveys and jurisdictions where WHD 
makes wage determinations by adopting adopt State or local rates.
    Importantly, the proposed rule requires the Administrator to make 
an affirmative determination that the enumerated criteria have been met 
in order to adopt a State or local wage rate, and to do so only after 
careful review of both the rate and the process used to derive the 
rate. This makes clear that if the proposed rule is finalized, the 
Department may not simply accept State or local data with little or no 
review. Such actions would be inconsistent with the Secretary's 
statutory responsibility to ``determine[ ]'' the wages that are 
prevailing. 40 U.S.C. 3142(b). Adoption of State or local rates after 
appropriate review, however, is consistent with the authority Congress 
granted to the Department in the Davis-Bacon Act. The DBA ``does not 
prescribe a method for determining prevailing wages.'' Chesapeake 
Housing, 2013 WL 5872049, at *4.

[[Page 15711]]

Rather, the statute ``delegates to the Secretary, in the broadest terms 
imaginable, the authority to determine which wages are prevailing.'' 
Donovan, 712 F.2d at 616. The D.C. Circuit has explained that the DBA's 
legislative history reflects that Congress ``envisioned that the 
Secretary could establish the method to be used'' to determine DBA 
prevailing wage rates. Id. (citing 74 Cong. Rec. 6,516 (1931) (remarks 
of Rep. Kopp) (``A method for determining the prevailing wage rate 
might have been incorporated in the bill, but the Secretary of Labor 
can establish the method and make it known to the bidders.'')).
    Reliance on prevailing wage rates calculated by State or local 
authorities for similar purposes is a permissible exercise of this 
broad statutory discretion. In areas where states or localities are 
already gathering reliable information about prevailing wages in 
construction, it may be inefficient for the Department to use its 
limited resources to perform the same tasks. As a result, the 
Department is proposing to use State and local wage determinations 
under specified circumstances where, based on a review and analysis of 
the processes used in those wage determinations, the Administrator 
determines that such use would be appropriate and consistent with the 
DBA. Such resource-driven decisions by Federal agencies are 
permissible. See, e.g., Hisp. Affs. Project v. Acosta, 901 F.3d 378, 
392 (D.C. Cir. 2018) (upholding Department's decision not to collect 
its own data but instead to rely on a ``necessarily . . . imprecise'' 
estimate given that data collection under the circumstances would have 
been ``very difficult and resource-intensive''); Dist. Hosp. Partners, 
L.P. v. Burwell, 786 F.3d 46, 61-62 (D.C. Cir. 2015) (agency's use of 
``imperfect[ ]'' data set was permissible under the Administrative 
Procedure Act).
    The Department is proposing to permit the adoption of State and 
local rates for all types of construction. The FHWA's independent 
statutory obligation for the Department to consider and give ``due 
regard'' to information obtained from State highway agencies for 
highway wage determinations does not prohibit WHD from adopting State 
or local determinations, either for highway construction or for other 
types of construction, where appropriate. Rather, this language imposes 
a minimum requirement for the Secretary to consult with states and 
consider their wage determinations for highway construction. See 
Virginia, ex rel., Comm'r, Virginia Dep't of Highways and Transp. v. 
Marshall, 599 F.2d 588, 594 (4th Cir. 1979) (``Section 113(b) requires 
that the Secretary `consult' and give `due regard' to the information 
thus obtained.''). In sum, the FHWA's requirement sets a floor for 
reliance on State data for highway construction, not a ceiling, and 
does not foreclose reliance on State or local data for other types of 
construction.
    The criteria the Department proposes for the adoption of State or 
local rates, which are included in proposed new paragraph Sec.  1.3(h), 
are as follows:
    First, the State or local government must set prevailing wage 
rates, and collect relevant data, using a survey or other process that 
generally is open to full participation by all interested parties. This 
requirement ensures that WHD will not adopt a prevailing wage rate 
where the process to set the rate artificially favors certain entities, 
such as union or non-union contractors. Rather, the State or local 
process must reflect a good-faith effort to derive a wage that prevails 
for similar workers on similar projects within the relevant geographic 
area within the meaning of the Davis-Bacon Act statutory provisions. 
The use of the language ``survey or other process'' in the proposed 
regulatory text is intended to permit the Administrator to incorporate 
wage determinations from States or localities that do not necessarily 
engage in surveys but instead use a different process for gathering 
information and setting prevailing wage rates, provided that this 
process meets the required criteria.\53\
---------------------------------------------------------------------------

    \53\ For example, a few states determine prevailing wage rates 
through stakeholder negotiations that typically involve labor and 
employer groups. The proposed rule does not foreclose acceptance of 
rates set using such a process providing that the process is 
generally open to full participation by all interested parties and 
that the other required criteria are met.
---------------------------------------------------------------------------

    Second, the State or local wage rate must reflect both a basic 
hourly rate of pay as well as any locally prevailing bona fide fringe 
benefits, each of which can be calculated separately. Thus, under the 
proposed rule, WHD must be able to confirm during its review process 
that both figures are prevailing for the relevant classification(s), 
and must be able to list each figure separately on its wage 
determinations. This reflects the statutory requirement that a 
prevailing wage rate under the Davis-Bacon Act must include fringe 
benefits, 40 U.S.C. 3141(2)(B); 29 CFR 5.20, and that ``the Secretary 
is obligated to make a separate finding of the rate of contribution or 
cost of fringe benefits.'' 29 CFR 5.25(a). This requirement also would 
ensure that WHD could determine the basic or regular rate of pay in 
order to determine compliance with the Contract Work Hours and Safety 
Standards Act (CWHSSA) and the Fair Labor Standards Act (FLSA).
    Third, the State or local government must classify laborers and 
mechanics in a manner that is recognized within the field of 
construction. The Department recognizes that differences in industry 
practices mean that the precise types of work done and tools used by 
workers in particular classifications may not be uniform across states 
and localities. For example, in some areas, a significant portion of 
work involving the installation of heating, ventilation, and air-
conditioning (HVAC) duct work may be done by an HVAC Technician, 
whereas in other areas such work may be more typically performed by a 
Sheet Metal Worker. Indeed, unlike in the case of the Service Contract 
Act (SCA), WHD does not maintain a directory of occupations for the 
Davis-Bacon Act. However, under this proposed rule, in order for WHD to 
adopt a State or locality's wage rate, the State or locality's 
classification system must be in a manner recognized within the field 
of construction. This standard is intended to ensure that the 
classification system does not result in lower wages than are 
appropriate by, for example, assigning duties associated with skilled 
classifications to a classification for a general laborer.
    Finally, the State or local government's criteria for setting 
prevailing wage rates must be substantially similar to those the 
Administrator uses in making wage determinations under 29 CFR part 1. 
The proposed regulation provides a non-exclusive list of factors to 
guide this determination, including, but not limited to, the State or 
local government's definition of prevailing wage; the types of fringe 
benefits it accepts; the information it solicits from interested 
parties; its classification of construction projects, laborers, and 
mechanics; and its method for determining the appropriate geographic 
area(s). Thus, the more similar a State or local government's methods 
are to those used by WHD, the greater likelihood that their 
corresponding wage rate(s) will be accepted. While the proposed 
regulation lists the above factors as guidelines, it ultimately directs 
that the Administrator's determination in this regard will be based on 
the totality of the circumstances. The reservation of such discretion 
in the Administrator intends to preserve the Administrator's ability to 
make an overall determination regarding whether adoption of a State or 
local wage rate is consistent with both

[[Page 15712]]

the language and purpose of the DBA, and thereby is consistent with the 
statutory directive for the Secretary (in this case, via delegation to 
the Administrator), to determine the prevailing wage. See 40 U.S.C. 
3142(b).
    Proposed Sec.  1.3(g) permits the Administrator to adopt State or 
local wage rates with or without modification. This is intended to 
encompass situations where the Administrator reviews a State or local 
wage determination and determines that although the State or local wage 
determination might not satisfy the above criteria as initially 
submitted, it would satisfy those criteria with certain modifications. 
For example, the Administrator may obtain from the State or local 
government the State or locality's wage determinations and the wage 
data underlying those determinations, and, provided the data was 
collected in accordance with the criteria set forth earlier (such as 
that the survey was fully open to all participants) may determine, 
after review and analysis, that it would be appropriate to use the 
underlying data to adjust or modify certain classifications or 
construction types, or to adjust the wage rate for certain 
classifications. Consistent with the Secretary's authority to make wage 
determinations, the regulation permits the Administrator to modify a 
State or local wage rate as appropriate while still generally relying 
on it as the primary source for a wage determination. For instance, 
before using State or local government wage data to calculate 
prevailing wage rates under the DBA, the Administrator could regroup 
counties, apply the definition of ``prevailing wage'' set forth in 
Sec.  1.2, disregard data for workers who do not qualify as laborers or 
mechanics under the DBA, and/or segregate data based on the type of 
construction involved. It is anticipated that the Administrator would 
cooperate with the State or locality to make the appropriate 
modifications to any wage rates.
    The Department also proposes to add a new paragraph Sec.  1.3(i), 
which would explain that in order for WHD to adopt a State or local 
government prevailing wage rate, the Administrator must obtain the wage 
rates and any relevant supporting documentation and data from the State 
or local entity, and provides instructions for submission.
    Finally, the Department proposes to add a new paragraph Sec.  
1.3(j), which would explain that nothing in the additional proposed 
sections described above precludes the Administrator from considering 
State or local prevailing wage rates in a more holistic fashion, 
consistent with Sec.  1.3(b)(3), or from giving due regard to 
information obtained from State highway departments, consistent with 
Sec.  1.3(b)(4), as part of the Administrator's process of making 
prevailing wage determinations under 29 CFR part 1. For example, under 
this proposed rule, as under the current regulations, if a State or 
locality were to provide the Department with the underlying data that 
it uses to determine wage rates, even if the Administrator determines 
not to adopt the wage rates themselves, the Administrator may consider 
or use the data as part of the process to determine the prevailing wage 
within the meaning of 29 CFR 1.2, provided that the data is timely 
received and otherwise appropriate. The purpose of the proposed 
additional language is to clarify that the Administrator may, under 
certain circumstances, adopt State or local wage rates, and use them in 
wage determinations, even if the process and rules for State or local 
wage determinations differs from the Administrator's. These proposed 
revisions therefore address the concerns WHD voiced to OIG that the 
current regulations, and in particular the definition of prevailing 
wage as interpreted by the ARB in Mistick, could preclude, or at least 
be in tension with, such an approach.
iv. Section 1.4 Report of Agency Construction Programs
    Section 1.4 currently provides that, to the extent practicable, 
agencies that use wage determinations under the DBRA shall submit an 
annual report to the Department outlining proposed construction 
programs for the coming year. The reports described in Sec.  1.4 assist 
WHD in its multi-year planning efforts by providing information that 
may guide WHD's decisions regarding when to survey wages for particular 
types of construction in a particular locality. These reports are an 
effective way for the Department to know where Federal and federally 
assisted construction will be taking place, and therefore where updated 
wage determinations will be of most use.
    Notwithstanding the importance of these reports to the program, 
contracting agencies have not regularly provided them to the 
Department. As a result, after careful consideration, the Department 
proposes to remove the language in the regulation that currently allows 
agencies to submit reports only ``to the extent practicable.'' Instead, 
as proposed, Sec.  1.4 would require Federal agencies to submit the 
construction reports.
    The Department also now proposes to adopt certain elements of two 
prior AAMs addressing these reports. In 1985, WHD updated its guidance 
regarding the agency construction reports, including by directing that 
Federal agencies submit the annual report by April 10 each year and 
providing a recommended format for such agencies to submit the report. 
See AAM 144 (Dec. 27, 1985). In 2017, WHD requested that Federal 
agencies include in the reports proposed construction programs for an 
additional 2 fiscal years beyond the upcoming year. See AAM 224 (Jan. 
17, 2017). The proposed changes to Sec.  1.4 would codify these 
guidelines as part of the regulations.
    The Department also proposes new language requiring Federal 
agencies to include notification of any expected options to extend the 
terms of current construction contracts. The Department is proposing 
this change because--like a new contract--the exercise of an option 
requires the incorporation of the most current wage determination. See 
AAM 157 (Dec. 9, 1992); see also 48 CFR 22.404-12(a). Receiving 
information concerning expected options to extend the terms of current 
construction contracts therefore will help the Department assess where 
updated wage determinations are needed for Federal and federally 
assisted construction, which will in turn contribute to the 
effectiveness of the overall Davis-Bacon wage survey program. The 
Department also proposes that Federal agencies include the estimated 
cost of construction in their reports, as this information also will 
help the Department prioritize areas where updated wage determinations 
will have the broadest effects.
    In addition, the Department proposes to require that Federal 
agencies include in the annual report a notification of any significant 
changes to previously reported construction programs. In turn, the 
Department proposes eliminating the current directive that agencies 
notify the Administrator mid-year of any significant changes in their 
proposed construction programs. Such notification would instead be 
provided in Federal agencies' annual reports.
    Finally, the Department proposes deleting the reference to the 
Interagency Reports Management Program as the requirements of that 
program were terminated by the General Services Administration (GSA) in 
2005. See 70 FR 3132 (Jan. 19, 2005).
    The Department does not believe that these proposed changes will 
result in significant burdens on contracting agencies, as the proposed 
provisions request only information already on

[[Page 15713]]

hand. Furthermore, any burden resulting from the new proposal should be 
offset by the proposed elimination of the current directive that 
agencies notify the Administrator of any significant changes in a 
separate mid-year report. However, the Department also seeks comment on 
any alternative methods through which the Department may obtain the 
information and eliminate the need to require the agency reports.
v. Section 1.5 Publication of General Wage Determinations and Procedure 
for Requesting Project Wage Determinations
    The Department proposes a number of revisions to Sec.  1.5 to 
clarify the applicability of general wage determinations and project 
wage determinations. Except as noted below, these revisions are 
consistent with longstanding Department practice and subregulatory 
guidance.
    First, the Department proposes to re-title Sec.  1.5, currently 
titled ``Procedure for requesting wage determinations,'' as 
``Publication of general wage determinations and procedure for 
requesting project wage determinations.'' The proposed revision better 
reflects the content of the section as well as the distinction between 
general wage determinations, which the Department publishes for broad 
use, and project wage determinations, which are requested by 
contracting agencies on a project-specific basis.
    Additionally, the Department proposes to add language to Sec.  
1.5(a) to explain that a general wage determination contains, among 
other information, a list of wage rates determined to be prevailing for 
various classifications of laborers and mechanics for specified type(s) 
of construction in a given area. Likewise, the Department proposes to 
add language to Sec.  1.5(b) to explain circumstances under which an 
agency may request a project wage determination, namely, where (1) the 
project involves work in more than one county and will employ workers 
who may work in more than one county; (2) there is no general wage 
determination in effect for the relevant area and type of construction 
for an upcoming project; or (3) all or virtually all of the work on a 
contract will be performed by one or more classifications that are not 
listed in the general wage determination that would otherwise apply, 
and contract award or bid opening has not yet taken place. The first of 
these three circumstances conforms to the proposed revision to the 
definition of ``area'' in Sec.  1.2 discussed above that would permit 
the issuance of project wage determinations for multi-county projects 
where appropriate. The latter two circumstances reflect the 
Department's existing practice. See PWRB, Davis-Bacon Wage 
Determinations, at 4-5.
    The Department also proposes to add language to Sec.  1.5(b) 
clarifying that requests for project wage determinations may be sent by 
means other than the mail, such as email or online submission, as 
directed by the Administrator. Additionally, consistent with the 
Department's current practice, the Department proposes to add language 
to Sec.  1.5(b) requiring that when requesting a project wage 
determination for a project that involves multiple types of 
construction, the requesting agency must attach information indicating 
the expected cost breakdown by type of construction. See PWRB, Davis-
Bacon Wage Determinations, at 5. The Department also proposes to 
clarify that in addition to submitting the information specified in the 
regulation, a party requesting a project wage determination must submit 
all other information requested in the Standard Form (SF) 308.
    Finally, the Department proposes to clarify the term ``agency'' in 
Sec.  1.5. In proposed Sec.  1.5(b)(2) (renumbered, currently Sec.  
1.5(b)(1)), which describes the process for requesting a project wage 
determination, the Department proposes to delete the word ``Federal'' 
that precedes ``agency.'' This proposed deletion, and the resulting 
incorporation of the definition of ``agency'' from Sec.  1.2, clarifies 
that, as already implied elsewhere in Sec.  1.5, non-Federal agencies 
may request project wage determinations. See, e.g., Sec.  1.5(b)(3) 
(proposed Sec.  1.5(b)(4)) (explaining that a State highway department 
under the Federal-Aid Highway Acts may be a requesting agency).
vi. Section 1.6 Use and Effectiveness of Wage Determinations
(A) Organizational, Technical and Clarifying Revisions
    The Department proposes to reorganize, rephrase, and/or re-number 
several regulatory provisions and text in Sec.  1.6. These proposed 
revisions include adding headings to paragraphs and subparagraphs for 
clarity; changing the order of some of the paragraphs and subparagraphs 
so that discussions of general wage determinations precede discussions 
of project wage determinations, reflecting the fact that general wage 
determinations are (and have been for many years) the norm, whereas 
project wage determinations are the exception; adding the word 
``project'' before ``wage determinations'' in locations where the text 
refers to project wage determinations but could otherwise be read as 
referring to both general and project wage determinations; using the 
term ``revised'' wage determination to refer both to cases where a wage 
determination is modified, such as due to updated CBA rates, and cases 
where a wage determination is re-issued entirely (referred to in the 
current regulatory text as a ``supersedeas'' wage determination), such 
as after a new wage survey; consolidating certain subsections that 
discuss revisions to wage determinations to eliminate redundancy and 
improve clarity; revising the regulation so that it references the 
publication of a general wage determination (consistent with the 
Department's current practice of publishing wage determinations 
online), rather than publication of notice of the wage determination 
(which the Department previously did in the Federal Register); and 
using the term ``issued'' to refer, collectively, to the publication of 
a general wage determination or WHD's provision of a project wage 
determination.
    The Department also proposes minor revisions to clarify that there 
is only one appropriate use for wage determinations that are no longer 
current--which are referred to in current regulatory text as 
``archived'' wage determinations, and the Department now proposes to 
describe as ``inactive'' to conform to the terminology currently used 
on the System for Award Management (SAM.gov). That permissible 
circumstance is when the contracting agency initially failed to 
incorporate the correct wage determination into the contract and 
subsequently must incorporate the correct wage determination after 
contract award or the start of construction (a procedure that is 
discussed in Sec.  1.6(f)). In that circumstance, even if the wage 
determination that should have been incorporated at the time of the 
contract award has since become inactive, it is still the correct wage 
determination to incorporate into the contract.
    The Department also proposes that agencies should notify the 
Administrator prior to engaging in incorporation of an inactive wage 
determination, and that agencies may not incorporate the inactive wage 
determination if the Administrator instructs otherwise. While the 
current regulation requires the Department to ``approv[e]'' the use of 
an inactive wage determination, the proposed change permits the 
contracting agency to use an inactive wage determination under these 
limited circumstances as long as it has notified the Administrator and 
has

[[Page 15714]]

not been instructed otherwise. The proposed change is intended to 
ensure that contracting agencies incorporate omitted wage 
determinations promptly rather than waiting for approval.
    The Department also proposes revisions to Sec.  1.6(b) to clarify 
when contracting agencies must incorporate multiple wage determinations 
into a contract. The proposed language states that when a construction 
contract includes work in more than one area (as the term is defined in 
Sec.  1.2), and no multi-county project wage determination has been 
obtained (as contemplated by the proposed revisions to Sec.  1.2), the 
applicable wage determination for each area must be incorporated into 
the contract so that all workers on the project are paid the wages that 
prevail in their respective areas, consistent with the DBA. The 
Department also proposes language stating that when a construction 
contract includes work in more than one type of construction (as the 
Department has proposed to define the term in Sec.  1.2), the 
contracting agency must incorporate the applicable wage determination 
for each type of construction where the total work in that category of 
construction is substantial. This accords with the Department's 
longstanding guidance published in AAM 130 (Mar. 17, 1978) and AAM 131 
(July 14, 1978).\54\ The Department intends to continue interpreting 
the meaning of ``substantial'' in subregulatory guidance.\55\ The 
Department requests comments on the above proposals, including 
potential ways to improve the standards for when and how to incorporate 
multiple wage determinations into a contract.
---------------------------------------------------------------------------

    \54\ AAM 130 states that where a project ``includes construction 
items that in themselves would be otherwise classified, a multiple 
classification may be justified if such construction items are a 
substantial part of the project . . . [but] a separate 
classification would not apply if such construction items are merely 
incidental to the total project to which they are closely related in 
function,'' and construction is incidental to the overall project. 
AAM 130, p. 2, n.1. AAM 131 similarly states that multiple schedules 
are issued if ``the construction items are substantial in relation 
to project cost[s].'' However, it, it further explains that ``[o]nly 
one schedule is issued if construction items are `incidental' in 
function to the overall character of a project . . . and if there is 
not a substantial amount of construction in the second category.'' 
AAM 131, p. 2.
    \55\ Most recently, on December 14, 2020, the Administrator 
issued AAM 236, which states that ``[w]hen a project has 
construction items in a different category of construction, 
contracting agencies should generally apply multiple wage 
determinations when the cost of the construction exceeds either $2.5 
million or 20 percent of the total project costs,'' but that WHD 
will consider ``exceptional situations'' on a case-by-case basis. 
AAM 236, pp. 1-2.
---------------------------------------------------------------------------

    The Department also proposes to add language to Sec.  1.6(b) 
clarifying and reinforcing the responsibilities of contracting 
agencies, contractors, and subcontractors with regard to wage 
determinations. Specifically, the Department proposes to clarify in 
Sec.  1.6(b)(1) that contracting agencies are responsible for making 
the initial determination of the appropriate wage determination(s) for 
a project. In Sec.  1.6(b)(2), the Department proposes to clarify that 
contractors and subcontractors have an affirmative obligation to ensure 
that wages are paid to laborers and mechanics in compliance with the 
DBRA labor standards.
    The Department also proposes to revise language in Sec.  1.6(b) 
that currently states that the Administrator ``shall give foremost 
consideration to area practice'' in resolving questions about ``wage 
rate schedules.'' In the Department's experience, this language has 
created unnecessary confusion because stakeholders have at times 
interpreted it as precluding the Administrator from considering other 
factors when resolving questions about wage determinations. 
Specifically, the Department has long recognized that when ``it is 
clear from the nature of the project itself in a construction sense 
that it is to be categorized'' as either building, residential, heavy, 
or highway construction, ``it is not necessary to resort to an area 
practice'' to determine the proper category of construction. AAM 130, 
at 2; see also AAM 131, at 1 (``area practice regarding wages paid will 
be taken into consideration together with other factors,'' when ``the 
nature of the project in a construction sense is not clear.''); 
Chastleton Apartments, WAB No. 84-09, 1984 WL 161751, at *4 (Dec. 11, 
1984) (because the ``character of the structure in a construction sense 
dictates its characterization for Davis-Bacon wage purposes,'' where 
there was a substantial amount of rehabilitation work being done on a 
project similar to a commercial building in a construction sense, it 
was ``not necessary to determine whether there [was] an industry 
practice to recognize'' the work as residential construction). The 
regulatory reference to giving ``foremost consideration to area 
practice'' in determining which wage determination to apply to a 
project arguably is in tension with the Department's longstanding 
position, and has resulted in stakeholders contending on occasion that 
WHD or a contracting agency must in every instance conduct an 
exhaustive review of local area practice as to how work is classified, 
even if the nature of the project in a construction sense is clear. The 
revised language would resolve this perceived inconsistency and would 
streamline determinations regarding construction types by making clear 
that while the Administrator should continue considering area practice, 
the Administrator may consider other relevant factors, particularly the 
nature of the project in a construction sense. This proposed regulatory 
revision also would better align the Department's regulations with the 
FAR, which does not call for ``foremost consideration'' to be given to 
area practice in all circumstances, but rather provides, consistent 
with AAMs 130 and 131, that ``[w]hen the nature of a project is not 
clear, it is necessary to look at additional factors, with primary 
consideration given to locally established area practices.'' 48 CFR 
22.404-2(c)(5).
    In Sec.  1.6(e), the Department proposes to clarify that if, prior 
to contract award (or, as appropriate, prior to the start of 
construction), the Administrator provides written notice that the 
bidding documents or solicitation included the wrong wage determination 
or schedule, or that an included wage determination was withdrawn by 
the Department as a result of an Administrative Review Board decision, 
the wage determination may not be used for the contract, without regard 
to whether bid opening (or initial endorsement or the signing of a 
housing assistance payments contract) has occurred. Current regulatory 
text states that under such circumstances, notice of such errors is 
``effective immediately'' but does not explain the consequences of such 
effect. The proposed language is consistent with the Department's 
current practice and guidance. See Manual of Operations at 35.
    In Sec.  1.6(g), the Department proposes to clarify that under the 
Related Acts, if Federal funding or assistance is not approved prior to 
contract award (or the beginning of construction where there is no 
contract award), the applicable wage determination must be incorporated 
retroactive to the date of the contract award or the beginning of 
construction; the Department proposes to delete language indicating 
that a wage determination must be ``requested,'' as such language 
appears to contemplate a project wage determination, which in most 
situations will not be necessary as a general wage determination will 
apply. The Department also proposes to revise Sec.  1.6(g) to clarify 
that it is the head of the applicable Federal agency who must request 
any waiver of the requirement that a wage determination

[[Page 15715]]

provided under such circumstances be retroactive to the date of the 
contract award or the beginning of construction. The current version of 
Sec.  1.6(g) uses the term ``agency'' and is therefore ambiguous as to 
whether it refers to the Federal agency providing the funding or 
assistance or the State or local agency receiving it. The proposed 
clarification that this term refers to Federal agencies reflects both 
the Department's current practice and its belief that it is most 
appropriate for the relevant Federal agency, rather than a State or 
local agency, to bear these responsibilities, including assessing, as 
part of the waiver request, whether non-retroactivity would be 
necessary and proper in the public interest based on all relevant 
considerations.
(B) Requirement To Incorporate Most Recent Wage Determinations Into 
Certain Ongoing Contracts
    The Department's longstanding position has been to require that 
contracts and bid solicitations contain the most recently issued 
revision to a wage determination to be applied to construction work to 
the extent that such a requirement does not cause undue disruption to 
the contracting process. See 47 FR 23644, 23646 (May 28, 1982); United 
States Army, ARB No. 96-133, 1997 WL 399373, at *6 (July 17, 1997) 
(``The only legitimate reason for not including the most recently 
issued wage determination in a contract is based upon disruption of the 
procurement process.''). Under the current regulations, a wage 
determination is generally applicable for the duration of a contract 
once incorporated. See 29 CFR 1.6(c)(2)(ii) and (c)(3)(vi). For 
clarity, the Department proposes to add language to Sec.  1.6(a) to 
state this affirmative principle.
    The Department also proposes to add a new section, Sec.  
1.6(c)(2)(iii), to clarify two circumstances where this general 
principle does not apply. First, the Department proposes to explain 
that the most recent version of any applicable wage determination(s) 
must be incorporated when a contract or order is changed to include 
additional, substantial construction, alteration, and/or repair work 
not within the scope of work of the original contract or order--or to 
require the contractor to perform work for an additional time period 
not originally obligated, including where an agency exercises an option 
provision to unilaterally extend the term of a contract. This proposed 
change is consistent with the Department's guidance, case law, and 
historical practice, under which such modifications are considered new 
contracts. See United States Army, 1997 WL 399373, at *6 (noting that 
DOL has consistently ``required that new DBA wage determinations be 
incorporated . . . when contracts are modified beyond the obligations 
of the original contract''); Iowa Dep't of Transp., WAB No. 94-11, 1994 
WL 764106, at *5 (Oct. 7, 1994) (``A contract that has been 
`substantially' modified must be treated as a `new' contract in which 
the most recently issued wage determination is applied.''); AAM 157 
(Dec. 9, 1992) (explaining that exercising an option ``requires a 
contractor to perform work for a period of time for which it would not 
have been obligated . . . under the terms of the original contract,'' 
and as such, ``once the option . . . is exercised, the additional 
period of performance becomes a new contract''). Under these 
circumstances, the most recent version of any wage determination(s) 
must be incorporated as of the date of the change or, where applicable, 
the date the agency exercises its option to extend the contract's term. 
These circumstances do not include situations where the contractor is 
simply given additional time to complete its original commitment or 
where the additional construction, alteration, and/or repair work in 
the modification is merely incidental.
    Additionally, modern contracting methods frequently involve a 
contractor agreeing to perform construction as the need arises over an 
extended time period, with the quantity and timing of the construction 
not known when the contract is awarded.\56\ Examples of such contracts 
would include, but are not limited to: A multi-year indefinite-
delivery-indefinite-quantity (IDIQ) contract to perform repairs to a 
Federal facility when needed; a long-term contract to operate and 
maintain part or all of a facility, including repairs and renovations 
as needed; \57\ or a schedule contract or blanket purchase agreement 
whereby a contractor enters into an agreement with a Federal agency to 
provide certain products or services (either of which may involve work 
subject to Davis-Bacon coverage, such as installation) or construction 
at agreed-upon prices to various agencies or other government entities, 
who can order from the schedule at any time during the contract. The 
extent of the required construction, the time, and even the place where 
the work will be performed may be unclear at the time such contracts 
are awarded.
---------------------------------------------------------------------------

    \56\ Depending on the circumstances, these types of contracts 
may be principally for services and therefore subject to the SCA, 
but contain substantial segregable work that is covered by the DBA. 
See 29 CFR 4.116(c)(2).
    \57\ The Department of Defense, for example, enters into such 
arrangements pursuant to the Military Housing Privatization 
Initiative, 10 U.S.C. 2871, et seq.
---------------------------------------------------------------------------

    Particularly when such contracts are lengthy, using an outdated 
wage determination from the time of the underlying contract award is 
contrary to the text and purpose of the DBA because it does not 
sufficiently ensure that workers are paid prevailing wages. 
Additionally, in the Department's experience, agencies are sometimes 
inconsistent as to how they incorporate wage determination revisions 
into these types of contracts. Some agencies do so every time 
additional Davis-Bacon work is obligated, others do so annually, others 
only incorporate applicable wage determinations at the time the 
original, underlying contract is awarded, and sometimes no wage 
determination is incorporated at all. This inconsistency can prevent 
the payment of prevailing wages to workers and can disrupt the 
contracting process.
    Accordingly, the Department proposes to require, for these types of 
contracts, that contracting agencies incorporate the most up-to-date 
applicable wage determination(s) annually on each anniversary date of a 
contract award or, where there is no contract, on each anniversary date 
of the start of construction, or another similar anniversary date where 
the agency has sought and received prior approval from the Department 
for the alternative date. This proposal is consistent with the rules 
governing wage determinations under the SCA, which require that the 
contracting agency obtain a wage determination prior to the ``[a]nnual 
anniversary date of a multi-year contract subject to annual fiscal 
appropriations of the Congress.'' See 29 CFR 4.4(a)(1)(v). 
Additionally, consistent with the discussion above, if an option is 
exercised for one of these types of contracts, the most recent version 
of any wage determination(s) would need to be incorporated as of the 
date the agency exercises its option to extend the contract's term 
(subject to the exceptions set forth in proposed Sec.  1.6(c)(2)(ii)), 
even if that date did not coincide with the anniversary date of the 
contract. When any construction work under such a contract is 
obligated, the most up-to-date wage determination(s) incorporated into 
the underlying contract must be included in each task order, purchase 
order, or any other method used to direct performance. Once an 
applicable wage determination revision is included in such an order, 
that revision would generally be applicable until the

[[Page 15716]]

construction items originally called for by that order are completed, 
even if the completion of that work extends beyond the twelve-month 
period following the most recent anniversary date of the underlying 
contract. By proposing this revision, the Department seeks to ensure 
that workers are being paid prevailing wages within the meaning of the 
Act, provide certainty and predictability to agencies and contractors 
as to when, and how frequently, wage rates in these types of contracts 
can be expected to change, and bring consistency to agencies' 
application of the DBA. The Department has also included language 
noting that contracting and ordering agencies remain responsible for 
ensuring that the applicable updated wage determination(s) is included 
in task orders, purchase orders, or other similar contract instruments 
that are issued under the master contract.
(C) 29 CFR 1.6(c)(1)--Periodic Adjustments
    The Department proposes to add a provision to 29 CFR 1.6(c)(1) to 
expressly provide a mechanism to regularly update certain non-
collectively bargained prevailing wage rates. Such rates (both base 
hourly wages and fringe benefits) would be updated between surveys so 
that they do not become out-of-date and fall behind wage rates in the 
area.
(1) Background
    Based on the data that it receives through its prevailing wage 
survey program, WHD generally publishes two types of prevailing wage 
rates on the Davis-Bacon wage determinations that it issues: (1) Modal 
rates (under the current majority rule, wage rates that are paid to a 
majority of workers in a particular classification), and (2) weighted 
average rates, which are published whenever the wage data received by 
WHD reflects that no single wage rate was paid to a majority of workers 
in the classification. See 29 CFR 1.2(a)(1).
    Under the current majority rule, modal majority wage rates 
typically reflect collectively bargained wage rates. When a CBA rate 
prevails on a general wage determination, WHD updates that prevailing 
wage rate based on periodic wage and fringe benefit increases in the 
CBA. Manual of Operations at 74-75; see also Mistick Construction, 2006 
WL 861357, at *7 n.4.\58\ However, when the prevailing wage is set 
through the weighted average method based on non-collectively bargained 
rates or a mix of collectively bargained rates and non-collectively 
bargained rates, or when a non-collectively bargained rate prevails, 
such wage rates (currently designated as ``SU'' rates) on general wage 
determinations are not updated between surveys, and therefore can 
become out-of-date. This proposal would expand WHD's practice of 
updating collectively bargained rates between surveys to include 
updating non-collectively bargained rates.
---------------------------------------------------------------------------

    \58\ WHD similarly updates weighted average rates based entirely 
on collectively bargained rates (currently designated as ``UAVG'' 
rates) using periodic wage and fringe benefit increases in the CBAs.
---------------------------------------------------------------------------

    While the goal of WHD is to conduct surveys in each area every 3 
years, because of the resource intensive nature of the wage survey 
process and the vast number of survey areas, many years can pass 
between surveys conducted in any particular area. The 2011 GAO Report 
found that, as of 2010, while 36 percent of ``nonunion-prevailing 
rates'' \59\ were 3 years old or less, almost 46 percent of these rates 
were 10 or more years old. 2011 GAO Report at 18.\60\ As a result of 
lengthy intervals between Davis-Bacon surveys, the real value of the 
effectively-frozen rates erodes as compensation in the construction 
industry and the cost of living rise. The resulting decline in the real 
value of prevailing wage rates may adversely affect construction 
workers the DBA was intended to protect. See Coutu, 450 U.S. at 771 
(``The Court's previous opinions have recognized that `[o]n its face, 
the Act is a minimum wage law designed for the benefit of construction 
workers.' '' (citations omitted)).
---------------------------------------------------------------------------

    \59\ ``Nonunion-prevailing rates,'' as used in the GAO report, 
is a misnomer, as it refers to weighted average rates that, as 
noted, are published whenever the same wage rate is not paid to a 
majority of workers in the classification, including when much or 
even most of the data reflects union wages, just not that the same 
union wage was paid to a majority of workers in the classification.
    \60\ See note 8, supra.
---------------------------------------------------------------------------

    This issue is one that program stakeholders raised with the GAO. 
According to several union and contractor officials interviewed in the 
2011 report, the age of the Davis-Bacon ``nonunion-prevailing rates'' 
means they often do not reflect actual prevailing wages. 2011 GAO 
Report at 18.\61\ As a result, the officials said it is ``more 
difficult for both union and nonunion contractors to successfully bid 
on Federal projects because they cannot recruit workers with 
artificially low wages but risk losing contracts if their bids reflect 
more realistic wages.'' Id. Regularly updating these rates would 
alleviate this situation and better protect workers' wage rates. The 
Department anticipates that updated rates would also better reflect 
construction industry compensation in communities where federally 
funded construction is occurring.
---------------------------------------------------------------------------

    \61\ See note 8, supra.
---------------------------------------------------------------------------

    This proposal to update non-collectively bargained rates is 
consistent with, and builds upon, the current regulatory text at 29 CFR 
1.6(c)(1), which provides that wage determinations ``may be modified 
from time to time to keep them current.'' This regulatory provision 
provides legal authority for updating wage rates, and it has been used 
as a basis for updating collectively bargained prevailing wage rates 
based on CBA submissions between surveys. See Manual of Operations at 
74-75. In this rule, the Department proposes to extend this practice to 
non-collectively bargained rates based on ECI data. The Department 
believes that ``chang[ed] circumstances''--including an increase in 
weighted average rates--and the lack of an express mechanism to update 
non-collectively bargained rates between surveys under the existing 
regulations support this proposed ``extension of current 
regulation[s]'' to better effectuate the DBRA's purpose. Motor Vehicle 
Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 
29, 42 (1983); see also In re Permian Basin Area Rate Cases, 390 U.S. 
747, 780 (1968) (Court ``unwilling to prohibit administrative action 
imperative for the achievement of an agency's ultimate purposes'' 
absent ``compelling evidence that such was Congress' intention'').
    This proposal is consistent with the Department's broad authority 
under the statute to ``establish the method to be used'' to determine 
DBA prevailing wage rates. Donovan, 712 F.2d at 63. The Department 
believes that the new periodic adjustment proposal will ``on balance 
result in a closer approximation of the prevailing wage'' for these 
rates and therefore is an appropriate extension of the current 
regulation. Id. at 630 (citing American Trucking Ass'ns v. Atchison, T. 
& S.F. Ry., 387 U.S. 397, 416 (1967)).
    This proposed new provision is particularly appropriate because it 
seeks to curb a practice the DBA and Related Acts were enacted to 
prevent: Payment of ``substandard'' wages (here, out-of-date non-
collectively bargained rates) on covered construction projects that are 
less than current wages for similar work prevailing in the private 
sector. Regularly increasing non-collectively bargained weighted 
average and prevailing rates that are more than 3 years old would be 
consistent with the DBA's purpose of protecting local wage standards.

[[Page 15717]]

    As proposed, the periodic adjustment provision would help 
effectuate the DBA's purpose by updating significantly out-of-date non-
collectively bargained wage rates, including thousands of wage rates 
that were published decades ago, that have not been updated since, and 
that therefore likely have fallen behind currently prevailing local 
rates. As of September 30, 2018, over 7,100 non-collectively bargained 
wage rates, or 5.3 percent of the 134,738 total unique published rates 
at that time, had not been updated in 11 to 40 years. See 2019 OIG 
Report at 3, 5. Updating such out-of-date construction wages would 
better align with the DBRA's main objective.
    Tethering the proposed periodic updates to existing non-
collectively bargained prevailing wage rates is intended to keep such 
rates more current in the interim period between surveys. It is 
reasonable to assume that non-collectively bargained rates, like other 
rates that the Secretary has determined to prevail, generally increase 
over time like other construction compensation measures. See, e.g., 
Table A (showing recent annual rates of union and non-union 
construction wage increases in the United States); Table B (showing 
Employment Cost Index changes from 2001 to 2020).

               Table A--Current Population Survey (CPS) Wage Growth by Union Status--Construction
----------------------------------------------------------------------------------------------------------------
                                                      Median weekly earnings
                                                 --------------------------------   Members of
                      Year                          Members of                      unions  (%)   Non-union  (%)
                                                      unions         Non-union
----------------------------------------------------------------------------------------------------------------
2015............................................          $1,099            $743  ..............  ..............
2016............................................           1,168             780               6               5
2017............................................           1,163             797               0               2
2018............................................           1,220             819               5               3
2019............................................           1,257             868               3               6
2020............................................           1,254             920               0               6
                                                 ---------------------------------------------------------------
    Average.....................................  ..............  ..............               3               4
----------------------------------------------------------------------------------------------------------------
Source: Current Population Survey, Table 43: Median weekly earnings of full-time wage and salary workers by
  union affiliation, occupation, and industry, Bureau of Labor Statistics, https://www.bls.gov/cps/cpsaat43.htm
  (last modified Jan. 22, 2021).
Note: Limited to workers in the construction industry.


 Table B--Employment Cost Index (ECI), 2001-2020, Total Compensation of
 Private Workers in Construction, and Extraction, Farming, Fishing, and
                          Forestry Occupations
    [Average 12-month percent changes (rounded to the nearest tenth)]
------------------------------------------------------------------------
                                                               Average %
                            Year                                change
------------------------------------------------------------------------
2001........................................................         4.5
2002........................................................         3.5
2003........................................................         3.9
2004........................................................         4.5
2005........................................................         3.1
2006........................................................         3.5
2007........................................................         3.5
2008........................................................         3.7
2009........................................................         1.7
2010........................................................         2.0
2011........................................................         1.6
2012........................................................         1.5
2013........................................................         1.8
2014........................................................         2.0
2015........................................................         2.0
2016........................................................         2.4
2017........................................................         2.7
2018........................................................         2.3
2019........................................................         2.3
2020........................................................         2.4
------------------------------------------------------------------------
Source: Bureau of Labor Statistics, https://www.bls.gov/web/eci/eci-constant-real-dollar.pdf.

(2) Periodic Adjustment Proposal
    This proposal seeks to update non-collectively bargained rates that 
are 3 or more years old by adjusting them regularly based on total 
compensation data to keep pace with current construction wages and 
benefits. Specifically, the Department proposes to add language to 
Sec.  1.6(c)(1) to expressly permit adjustments to non-collectively 
bargained rates on general wage determinations based on U.S. Bureau of 
Labor Statistics (BLS) Employment Cost Index (ECI) data or its 
successor data. The Department's proposal provides that non-
collectively bargained rates may be adjusted based on ECI data no more 
frequently than once every 3 years, and no sooner than 3 years after 
the date of the rate's publication, continuing until the next survey 
results in a new general wage determination. This proposed interval 
would be consistent with WHD's goal to increase the percentage of 
Davis-Bacon wage rates that are 3 years old or less. Under the 
proposal, non-collectively bargained rates (wages and fringe benefits) 
would be adjusted from the date the rate was originally published and 
brought up to their present value. Going forward under the proposed 30-
percent rule, any non-collectively bargained prevailing or weighted 
average rates published after this rule became effective would be 
updated if they were not re-surveyed within 3 years after publication. 
The Department anticipates implementing this new regulatory provision 
by issuing general wage determination modifications.
    The Department believes that ECI data is appropriate for these 
proposed rate adjustments because the ECI tracks both wages and 
benefits, and may be used as a proxy for construction compensation 
changes over time. Therefore, the Department proposes to use a 
compensation growth rate based on the change in the ECI total 
compensation index for construction, extraction, farming, fishing, and 
forestry occupations to adjust non-collectively bargained rates (both 
base hourly and fringe benefit rates) published in 2001 or after.\62\
---------------------------------------------------------------------------

    \62\ Because this particular index is unavailable prior to 2001, 
the Department proposes to use the compensation growth rate based on 
the change in the ECI total compensation index for the goods-
producing industries (which includes the construction industry) to 
bring the relatively small percentage of non-collectively bargained 
rates published before 2001 up to their 2000 value. The Department 
would then adjust the rates up to the present value using the ECI 
total compensation index for construction, extraction, farming, 
fishing, and forestry occupations.
---------------------------------------------------------------------------

    In addition, because updating non-collectively bargained rates 
would be resource-intensive, the Department does not anticipate making 
all initial adjustments to such rates that are 3 or more years old 
simultaneously, but rather anticipates that such adjustments would be 
made over a period of time (though as quickly as is reasonably 
possible). Similarly, particularly due to the effort involved, the 
process of adjusting non-collectively bargained rates that are 3 or 
more years old is

[[Page 15718]]

unlikely to begin until approximately 6 months to a year after a final 
rule implementing this proposal becomes effective.
    The Department seeks comments on this proposal, and invites 
comments on alternative data sources to adjust non-collectively 
bargained rates. The Department considered proposing to use the 
Consumer Price Index (CPI) but considers this data source to be a less 
appropriate index to use to update non-collectively bargained rates 
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 nonetheless invites comments on use 
of the CPI to adjust non-collectively bargained rates.
(D) 29 CFR 1.6(f)
    Section 1.6(f) addresses post-award determinations that a wage 
determination has been wrongly omitted from a contract. The 
Department's proposed changes to this subsection are discussed below in 
part III.B.3.xx (``Post-award determinations and operation-of-law''), 
together with proposed changes to Sec. Sec.  5.5 and 5.6.
vii. Section 1.7 Scope of Consideration
    The Department's existing regulations in Sec.  1.7 address two 
related concepts. The first is the level of geographic aggregation of 
wage data that should be the default for making a wage determination. 
The second is how the Department should expand that level of geographic 
aggregation when it does not have sufficient wage survey data to make a 
wage determination at the default level. The Department is considering 
whether to update the language of Sec.  1.7 to more clearly describe 
WHD's process for expanding the geographic scope of survey data, and 
whether to modify the regulations by eliminating the current bar on 
mixing wage data from ``metropolitan'' and ``rural'' counties when the 
geographic scope is expanded.
(A) Background
    With regard to the first concept addressed in Sec.  1.7, the 
default level of geographic aggregation, the DBA specifies that the 
relevant geographic area for determining the prevailing wage is the 
``civil subdivision of the State'' where the contract is performed. 40 
U.S.C. 3142(b). For many decades now, the Secretary has used the county 
as the default civil subdivision for making a wage determination. The 
Department codified this procedure in the 1981-1982 rulemaking in Sec.  
1.7(a), in which it stated that the relevant area for a wage 
determination will ``normally be the county.'' 29 CFR 1.7(a); see 47 FR 
23644, 23647 (May 28, 1982).
    The use of the county as the default ``area'' means that in making 
a wage determination the Administrator first considers the wage survey 
data WHD has received from projects of a ``similar character'' in a 
given county. See 40 U.S.C. 3142(b). If there is sufficient county-
level data for a ``corresponding class[ ]'' of covered workers (e.g., 
laborers, painters, etc.) working on those projects, the Administrator 
then makes a determination of the prevailing wage rate for that class 
of workers. Id; 29 CFR 1.7(a). This has a practical corollary for 
contracting agencies--in order to determine what wages apply to a given 
construction project, the agency needs to identify the county (or 
counties) in which the project will be constructed and obtain the wage 
determination for the correct type of construction for that county (or 
counties) from SAM.gov.
    The second concept currently addressed in Sec.  1.7 is the 
procedure that WHD follows when it does not receive sufficient survey 
wage data at the county level to determine a prevailing wage rate for a 
given classification of workers. This process is described in detail in 
the 2013 Chesapeake Housing ARB decision. 2013 WL 5872049. In short, if 
there is insufficient data to determine a prevailing wage rate for a 
classification of workers in a given county, WHD will determine that 
county's wage-rate for that classification by progressively expanding 
the geographic scope of data (still for the same classification of 
workers) that it uses to make the determination. First, WHD expands to 
include a group of surrounding counties at a ``group'' level. See 29 
CFR 1.7(b) (discussing consideration of wage data in ``surrounding 
counties''); Chesapeake Housing, 2013 WL 5872049, at *2-3. If there is 
still not sufficient data at the group level, WHD considers a larger 
grouping of counties in the State called a ``supergroup,'' and 
thereafter uses data at a statewide level. See 29 CFR 1.7(c); 
Chesapeake Housing, 2013 WL 5872049, at *2-3.\63\ Currently, WHD 
identifies county groupings by using metropolitan statistical areas 
(MSAs) and other related designations from the Office of Management and 
Budget (OMB). See 75 FR 37246 (June 28, 2010).
---------------------------------------------------------------------------

    \63\ As discussed above in part III.B.1.iii.(A), for residential 
and building construction, this expansion of the scope of data 
considered also involves the use of data from Federal and federally 
assisted projects subject to Davis-Bacon labor standards at each 
county-grouping level when data from non-Federal projects is not 
sufficient. Data from Federal and federally assisted projects 
subject to Davis-Bacon labor standards is used in all instances to 
determine prevailing wage rates for heavy and highway construction.
---------------------------------------------------------------------------

    The current regulations do not define the term ``surrounding 
counties'' that delineates the initial county grouping level. However, 
the provision at Sec.  1.7(b) that describes ``surrounding counties'' 
limits the counties that may be used in this grouping by excluding the 
use of any data from a ``metropolitan'' county in any wage 
determination for a ``rural'' county, and vice versa. 29 CFR 1.7(b). To 
be consistent with the existing prohibition at Sec.  1.7(b), WHD's 
current practice is to use the OMB designations (discussed above) to 
identify whether a county is metropolitan or rural.\64\ Under the 
current constraints, such a proxy designation is reasonable, and the 
practice has been approved by the ARB. See Mistick Construction, 2006 
WL 861357, at *7-8. Although the language in Sec.  1.7(b) does not 
apply explicitly to the consideration of data above the surrounding 
county level, see Sec.  1.7(c), the Department's current procedures do 
not mix metropolitan and rural county data at any level in the 
expansion of geographic scope, including even at the statewide level.
---------------------------------------------------------------------------

    \64\ OMB does not specifically identify counties as ``rural'' 
and disclaims that its MSA standards ``produce an urban-rural 
classification.'' 75 FR 37246, 37246 (June 28, 2010). Nonetheless, 
because OMB identifies counties that have metropolitan 
characteristics as part of MSAs, the practice of the WHD 
Administrator has been to designate counties as rural if they are 
not within an OMB-designated MSA and metropolitan if they are within 
an MSA. See Mistick Construction, 2006 WL 861357, at *8.
---------------------------------------------------------------------------

(B) Proposals for Use of ``Metropolitan'' and ``Rural'' Wage Data
    The current language in Sec.  1.7(b) barring the cross-
consideration of metropolitan and rural wage data was added to the 
Department's regulations in the 1981-1982 rulemaking. See 47 FR 23644 
(May 28, 1982). As the Department noted in that rulemaking, the prior 
practice up until that point had been to allow the Department to look 
to metropolitan wage rates for nearby rural areas when there was 
insufficient data from the rural area to determine a prevailing wage 
rate. See id. at 23647. In explaining the change in the longstanding 
policy, the Department noted commenters had stated that ``importing'' 
higher rates from metropolitan areas caused labor disruptions where 
workers were ``unwilling to return to their usual pay scales after the 
project was completed.'' Id. The Department stated that a more

[[Page 15719]]

appropriate alternative would be to use data from rural counties in 
other parts of the State. See id. To effectuate this, it imposed the 
bar on cross-consideration of rural and metropolitan county data in 
Sec.  1.7(b).
    The Department has received feedback that that this blanket 
decision did not adequately consider the heterogeneity of commuting 
patterns and local labor markets between and among counties that may be 
designated overall as ``rural'' or ``metropolitan.'' As noted in the 
2011 GAO report, the DBA program has been criticized for using 
``arbitrary geographic divisions,'' given that the relevant regional 
labor markets, which are reflective of area wage rates, ``frequently 
cross county and state lines.'' 2011 GAO Report at 24.\65\ OMB itself 
notes that ``[c]ounties included in Metropolitan and Micropolitan 
Statistical Areas and many other counties may contain both urban and 
rural territory and population.'' 75 FR 37246, 37246 (June 28, 2010).
---------------------------------------------------------------------------

    \65\ See note 8, supra.
---------------------------------------------------------------------------

    The Department understands the point articulated in the GAO report 
that actual local labor markets are not constrained by or defined by 
county lines--even those lines between counties identified (by OMB or 
otherwise) as ``metropolitan'' or ``rural.'' This is particularly the 
case for the construction industry, in which workers tend to commute 
longer distances than other professionals--resulting in geographically 
larger labor markets. See, e.g., Keren Sun et al., Hierarchy Divisions 
of the Ability to Endure Commute Costs: An Analysis based on a Set of 
Data about Construction Workers, J. of Econ. & Dev. Stud., Dec. 2020, 
at 1, 6.\66\ Even within the construction industry, workers in certain 
trades have greater or lesser tolerance for longer commutes. Keren Sun, 
Analysis of the Factors Affecting the Commute Distance/Time of 
Construction Workers, Int'l J. of Arts & Humanities, June 2020, at 34-
35.\67\
---------------------------------------------------------------------------

    \66\ http://jedsnet.com/journals/jeds/Vol_8_No_4_December_2020/1.pdf.
    \67\ http://ijah.cgrd.org/images/Vol6No1/3.pdf.
---------------------------------------------------------------------------

    By excluding a metropolitan county's wage rates from consideration 
in a determination for a bordering rural county, the current language 
in Sec.  1.7(b) ignores the potential for projects in both counties to 
compete for the same supply of construction workers and be in the same 
local construction labor market. In many cases, the workers working on 
the metropolitan county projects may themselves live across the county 
lines in the neighboring rural county and commute to the urban 
projects. In such cases, under the current bar, the Department may not 
be able to use the wage rates of the same workers to determine the 
prevailing wage rate for projects in the county in which they live. 
Instead, WHD would import wage rates from other ``rural''-designated 
counties, potentially somewhere far across the State. Such a practice 
can result in Davis-Bacon wage rates that are lower than the wage rates 
that actually prevail in a bi-county labor market and that are based on 
wage data from distant locales rather than from neighboring counties.
    For these reasons, the Department believes that limitations based 
on binary rural and metropolitan designations at the county level can 
result in geographic groupings that at times do not fully account for 
the realities of relevant construction labor markets. To address this 
concern, the Department has considered the possibility of using smaller 
basic units than the county as the initial area for a wage 
determination--and expanding to labor market areas that do not directly 
track county lines. The Department, however, has concluded that 
continuing the longstanding practice of using counties as the civil 
subdivision basis unit is more administratively feasible.\68\ As a 
result, the Department is now considering the option of eliminating the 
metropolitan-rural bar in Sec.  1.7(b) and relying instead on other 
approaches to determine how to appropriately expand geographic 
aggregation when necessary.
---------------------------------------------------------------------------

    \68\ The Department also considered this option in the 1981-1982 
rulemaking, but similarly concluded that the proposal to use the 
county as the basic unit of a wage determination was the ``most 
administratively feasible.'' See 47 FR 23644, 23647 (May 28, 1982).
---------------------------------------------------------------------------

    In addition to allowing WHD to account for actual construction 
labor market patterns, this proposal could have other benefits. It 
could allow WHD to publish more rates at the group level rather than 
having to rely on data from larger geographic areas, because it could 
increase the number of counties that may be available to supply data at 
the group level. The proposal could also allow WHD to publish more 
rates overall by authorizing the use of both metropolitan and rural 
county data together when it must rely on statewide data. Combining 
rural and urban data at the State level would be a final option for 
geographic expansion when otherwise the data could be insufficient to 
identify any prevailing wage at all.\69\ The Department believes that 
the purposes of the Act are better served by using such combined 
statewide data to determine the prevailing wage, when the alternative 
could be to fail to publish a wage rate at all.
---------------------------------------------------------------------------

    \69\ The Department is also considering the option of more 
explicitly tailoring the ban on mixing metropolitan and rural data 
so that it applies only at the ``surrounding counties'' level, but 
not at the statewide level or an intermediate level.
---------------------------------------------------------------------------

    The proposal to eliminate the strict rural-metropolitan bar would 
result in a program that would be more consistent with the Department's 
original practice between 1935 and the 1981-1982 rulemaking. Reverting 
to this prior status quo would be appropriate in light of the text and 
legislative history of the DBA. Congressional hearings shortly after 
the passage of the initial 1931 Act suggest that Congress understood 
the DBA as allowing the Secretary to refer to metropolitan rates where 
rural rates were not available--including by looking to the nearest 
city when there was insufficient construction in a village or ``little 
town'' to determine a prevailing wage. See 75 Cong. Rec. 12,366, 12,377 
(1932) (remarks of Rep. Connery). Likewise, the Department's original 
1935 regulations directed the Department to ``the nearest large city'' 
when there had been no similar construction in the locality in recent 
years. See Labor Department Regulation No. 503 section 7(2) (1935).
    In light of the above, the Department solicits comments on its 
proposal to allow the Administrator the discretion to determine 
reasonable county groupings, at any level, without the requirement to 
make a distinction between counties WHD designates as rural or 
metropolitan.
(C) Proposals for Amending the County Grouping Methodology
    In addition to considering whether to eliminate the metropolitan-
rural proviso language in Sec.  1.7(b), the Department is also 
considering other potential changes to the methods for describing the 
county groupings procedure.
(1) Defining ``Surrounding Counties''
    One potential change is to more precisely define ``surrounding 
counties,'' as used in Sec.  1.7(b). Because the term is not currently 
defined, this has from time to time led to confusion among stakeholders 
regarding whether a county can be considered ``surrounding'' if it does 
not share a border with the county for which more data is needed. As 
noted above, WHD's current method of creating ``surrounding county'' 
groupings is to use OMB-designed MSAs to create pre-determined county 
groupings. This method does not require that all counties in the 
grouping share a border with (in other words, be a direct neighbor to) 
the county in need. Rather,

[[Page 15720]]

at the ``surrounding county'' grouping, WHD will include counties in a 
group as long as they are all a part of the same contiguous area of 
either metropolitan or rural counties--even though each county included 
may not be directly adjacent to every other county in the group.\70\
---------------------------------------------------------------------------

    \70\ In addition, in certain limited circumstances, WHD has 
allowed the aggregation of counties at the ``surrounding counties'' 
level that are not part of a contiguous grouping of all-metropolitan 
or all-rural counties. This has been considered appropriate where, 
for example, two rural counties border an MSA on different sides and 
do not themselves share a border with each other or with any other 
rural counties. Under WHD's current practice, those two rural 
counties could be considered to be a county group at the 
``surrounding counties'' level even though they neither share a 
border nor are part of a contiguous group of counties.
---------------------------------------------------------------------------

    For example, in the Chesapeake Housing case, one ``surrounding 
county'' group that WHD had compiled included the independent city of 
Portsmouth, combined with Virginia Beach, Norfolk, and Suffolk 
counties. 2013 WL 5872049, at *1, n.1. That was appropriate because 
those jurisdictions all were part of the same contiguous OMB-designated 
metropolitan area, and each county thus shared a border with at least 
one other county in the group--even if they did not all share a border 
with every other county in the group. See id. at *5-6. Thus, by using 
the group, WHD combined data from Virginia Beach and Suffolk counties 
at the ``surrounding counties'' level, even though those two counties 
do not themselves touch each other.
    This grouping strategy--of relying on OMB MSA designations--has 
been found to be consistent both with the term ``surrounding counties'' 
as well as with the metropolitan-rural limitation proviso in Sec.  
1.7(b). See Mistick, 2006 WL 861357, at *7-8. An OMB-designated 
metropolitan statistical area is, at least by OMB's definition, made up 
entirely of ``metropolitan'' counties and thus WHD can group these 
counties together without violating the proviso. See id.; Manual of 
Operations at 39. Thus, the Department has used these OMB designations 
to put together pre-determined groups that can be used as the same 
first-level county grouping for any county within the grouping. While 
relying on OMB designations is not the only way that the Department 
could currently group counties together and comply with the proviso, 
the Department recognizes that, if it eliminates the metropolitan-rural 
proviso at Sec.  1.7(b), it could be helpful to include in its place 
some further language to explain or delimit the meaning of 
``surrounding counties'' in another way that would be both 
administrable and faithful to the purpose of the Davis-Bacon and 
Related Acts.
    The first option would be to eliminate the metropolitan-rural 
proviso but not replace it with a further definition or limitation for 
``surrounding counties.'' The Department has included this proposal in 
the proposed regulatory text of this NPRM. The term ``surrounding 
counties'' is not so ambiguous and devoid of meaning that it requires 
further definition. Even without some additional specific limitation, 
the Department believes the term could reasonably be read to require 
that such a grouping be of a contiguous grouping of counties as the 
Department currently requires in its use of OMB MSAs (as described 
above), with limited exceptions. Thus, while the elimination of the 
proviso would allow a nearby rural county to be included in a 
``surrounding county'' grouping with metropolitan counties that it 
borders, it would not allow WHD to append a faraway rural county to a 
``surrounding county'' group made up entirely of metropolitan counties 
with which the rural county shares no border at all. Conversely, the 
term does not allow the Department to consider a faraway metropolitan 
county to be part of the ``surrounding counties'' of a grouping of 
rural counties with which the metropolitan county shares no border at 
all. Although containing such an inherent definitional limit, this 
first option would allow the Department the discretion to develop new 
methodologies of grouping counties at the ``surrounding county'' level 
and apply them as along as it does so in a manner that is not arbitrary 
or capricious.\71\
---------------------------------------------------------------------------

    \71\ For example, the Department could rely on county groupings 
in use by State governments for little Davis-Bacon laws or similar 
purposes, as long as they are contiguous county groupings that 
reasonably can be characterized as ``surrounding counties.''
---------------------------------------------------------------------------

    The second option the Department is considering is to limit 
surrounding counties to solely those counties that share a border with 
the county for which additional wage data is sought. Such a limitation 
would create a relatively narrow grouping at the initial county 
grouping stage--narrower than the current practice of using OMB MSAs. 
As discussed above, construction workers tend to commute longer than 
other professionals. This potential one-county-over grouping limitation 
would ensure that, in the vast majority of cases, the ``surrounding 
county'' grouping would not expand outward beyond the home counties or 
commuting range of the construction workers who would work on projects 
in the county at issue. The narrowness of such a limitation would also 
be a drawback, as it could lead to fewer wage rates being set at the 
``surrounding counties'' group level. Another drawback is that such a 
limitation would not allow for the use of pre-determined county 
groupings that would be the same for a number of counties--because each 
county may have a different set of counties with which it alone shares 
a border. This could result in a significant burden on WHD in 
developing far more county-grouping rates than it currently does, and 
could result in less uniformity in required prevailing wage rates among 
nearby counties.
    A third option would be to include language that would define the 
``surrounding counties'' grouping as a grouping of counties that are 
all a part of the same ``contiguous local construction labor market'' 
or some comparable definition. In practice, this methodology could 
result in similar (but not identical) groupings as the current 
methodology, as the Department could decide to use OMB designations to 
assist in determining what counties are part of the contiguous local 
labor market. Without the strict metropolitan-rural proviso, however, 
this option would allow the Department to use additional evidence on a 
case-by-case basis to determine whether the OMB designations--which do 
not track construction markets specifically--are too narrow for a given 
construction market. Under this option, the Department could consider 
other measures of construction labor market integration, including 
whether construction workers in general (or workers in specific 
construction trades) typically commute between or work in two bordering 
counties or in a cluster of counties.
    This third option also would bring with it some potential benefits 
and drawbacks. On the one hand, the ability to identify local 
construction labor markets would allow the Department to make pre-
determined county groupings much like it does now. This would reduce 
somewhat the burden of the second option--of calculating a different 
county grouping for each individual county to account for the counties 
that border specifically that county. It would also explicitly 
articulate the limitation that the Department believes is inherent in 
the term ``surrounding counties''--that the grouping must be limited to 
a ``contiguous'' group of counties, with limited exceptions. On the 
other hand, the case-by-case determination of a local ``construction'' 
labor market (that might

[[Page 15721]]

be different from an OMB MSA) could also be burdensome on WHD. The 
definition, however, could allow such a case-by-case determination but 
not require it. Accordingly, if such case-by-case determinations become 
too burdensome, WHD could revert to the adoption of designations from 
OMB or some other externally-defined metric.
    Finally, the Department recognizes that even if it retains the 
metropolitan-rural proviso, doing so does not bind WHD to the current 
practice of using OMB-designated county groupings and other procedures. 
Under the language of the current regulation, the Department retains 
the authority to make its own determinations regarding whether a county 
is ``metropolitan'' or ``rural.'' See 29 CFR 1.7(b). The Department 
also retains certain flexibility for determining how to group counties 
at each level and is not limited to using the OMB designations. As 
noted above, the Department also believes that the plain text of Sec.  
1.7(b) does not necessarily limit it from combining metropolitan and 
rural data beyond the ``surrounding counties'' group level.
(2) Other Proposed Changes to Sec.  1.7
    The Department is also considering other proposed changes to Sec.  
1.7. These include nonsubstantive changes to the wording of the 
paragraphs that clarify that the threshold for expansion in each one is 
insufficient ``current wage data.'' The existing regulation now defines 
``current wage data'' in Sec.  1.7(a) as ``data on wages paid on 
current projects or, where necessary, projects under construction no 
more than one year prior to the beginning of the survey or the request 
for a wage determination, as appropriate.'' The Department seeks 
comment on whether this definition should be kept in its current format 
or amended to narrow or expand its scope.
    The Department is also considering whether to amend Sec.  1.7(c) to 
better describe the process for expanding from the ``surrounding 
county'' level to consider data from an intermediary level (such as the 
current ``supergroup'' level) before relying on statewide data. For 
example, as the Department has included in the current proposed 
regulatory text, the Department could describe this second level of 
county groupings as a consideration of ``comparable counties or groups 
of counties in the State.'' As with the third option discussed above 
for defining ``surrounding counties,'' this ``comparable counties'' 
language in Sec.  1.7(c) would allow the Department to continue to use 
the procedure described in Chesapeake Housing of combining various MSAs 
or various non-contiguous groups of rural counties to create 
``supergroups.'' It would also allow a more nuanced analysis of 
comparable labor markets using construction market data specifically.
    As the foregoing discussion reflects, there is no perfect solution 
for identifying county groupings in Sec.  1.7. Each possibility 
described above has potential benefits and drawbacks. In addition, the 
Department notes that the significance of this section in the wage 
determination process is also related to the level of participation by 
interested parties in WHD's voluntary wage survey. If more interested 
parties participate in the wage survey, then there will be fewer 
counties without sufficient wage data for which the Sec.  1.7 expansion 
process becomes relevant. Absent sufficient survey information, 
however, WHD will need to continue to include a larger geographic scope 
to ensure that it effectuates the purposes of the DBA and Related 
Acts--to issue wage determinations to establish minimum wages on 
federally funded or assisted construction projects. The Department thus 
seeks comment on all aspects of amending the county grouping 
methodology of Sec.  1.7--including administrative feasibility and the 
distinction between rural and metropolitan counties--to ensure that it 
has considered the relevant possibilities for amending or retaining the 
various elements of this methodology.
viii. Section 1.8 Reconsideration by the Administrator
    The Department proposes revisions to Sec. Sec.  1.8 and 5.13 to 
explicitly provide procedures for reconsideration by the Administrator 
of decisions, rulings, or interpretations made by an authorized 
representative of the Administrator. Parts 1 and 5 both define the term 
``Administrator'' to mean the WHD Administrator or an authorized 
representative of the Administrator. See 29 CFR 1.2(c), 5.2(b). 
Accordingly, when parties seek rulings, interpretations, or decisions 
from the Administrator regarding the Davis-Bacon labor standards, it is 
often the practice of the Department to have such decisions made in the 
first instance by an authorized representative. After an authorized 
representative issues a decision, the party may request reconsideration 
by the Administrator. The decision typically provides a time frame in 
which to request reconsideration by the Administrator, often 30 days. 
To provide greater clarity and uniformity, the Department proposes to 
codify this practice and to clarify how and when reconsideration may be 
sought.
    First, the Department proposes to amend Sec.  1.8, which concerns 
reconsideration by the Administrator of wage determinations and 
decisions regarding the application of wage determinations under part 
1, to provide that if a decision for which reconsideration is sought 
was made by an authorized representative of the Administrator, the 
interested party seeking reconsideration may request further 
reconsideration by the Administrator of the Wage and Hour Division. The 
Department proposes that such requests must be submitted within 30 days 
from the date the decision is issued, and that this time period may be 
extended for good cause at the Administrator's discretion upon a 
request by the interested party. Second, the Department proposes to 
amend Sec.  5.13, which concerns rulings and interpretations under 
parts 1, 3, and 5, to similarly provide for the Administrator's 
reconsideration of rulings and interpretations issued by an authorized 
representative. The Department proposes to apply the same procedures 
for such reconsideration requests as apply to reconsideration requests 
under Sec.  1.8. The Department also proposes to divide Sec. Sec.  1.8 
and 5.13 into paragraphs for clarity and readability, and to add email 
addresses for parties to submit requests for reconsideration or for 
rulings or interpretations, respectively.
ix. Section 1.10 Severability
    The Department proposes to add a new Sec.  1.10, titled 
``Severability.'' The proposed severability provision explains that 
each provision is capable of operating independently from one another, 
and that if any provision of part 1 is held to be invalid or 
unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, the Department 
intends that the remaining provisions remain in effect.
x. References to Website for Accessing Wage Determinations
    The Department proposes to revise Sec. Sec.  1.2, 1.5, and 1.6 to 
reflect, in more general terms, that wage determinations are maintained 
online without a reference to a specific website.
    The current regulations reference Wage Determinations OnLine 
(WDOL), previously available at https://www.wdol.gov, which was 
established following the enactment of the E-Government Act of 2002, 
Public Law 107-347, 116 Stat. 2899 (2002). WDOL.gov served as the 
source for Federal contracting agencies to use when obtaining wage 
determinations.

[[Page 15722]]

See 70 FR 50887 (Aug. 26, 2005). WDOL.gov was decommissioned on June 
14, 2019, and the System for Award Management (SAM.gov) became the 
authoritative and single location for obtaining DBA general wage 
determinations.\72\ The transition of wage determinations onto SAM.gov 
was part of the Integrated Award Environment, a government-wide 
initiative administered by GSA to manage and integrate multiple online 
systems used for awarding and administering Federal financial 
assistance and contracts.\73\
---------------------------------------------------------------------------

    \72\ WDOL.gov Decommissioning Approved by IAE Governance: System 
Set to Transition to beta.SAM.gov on June 14, 2019, GSA Interact 
(May 21, 2019), https://interact.gsa.gov/blog/wdolgov-decommissioning-approved-iae-governance-system-set-transition-betasamgov-june-14-2019.
    \73\ About This Site, System for Award Management, https://sam.gov/content/about/this-site (last visited Nov. 19, 2021).
---------------------------------------------------------------------------

    Currently, wage determinations can be found at https://sam.gov/content/wage-determinations. In order to avoid outdated website domain 
references in the regulations should the domain name change in the 
future, the Department proposes to use the more general term 
``Department of Labor-approved website,'' which would refer to any 
official government website the Department approves for posting wage 
determinations.
xi. Appendices A and B to Part 1
    The Department proposes to remove Appendices A and B from 29 CFR 
part 1 and make conforming technical edits to sections that reference 
those provisions. Appendix A lists the Davis-Bacon Act and the Related 
Acts, in other words, the statutes related to the Davis-Bacon Act that 
require the payment of wages at rates predetermined by the Secretary of 
Labor pursuant to the Davis-Bacon Act, and Appendix B lists regional 
offices of the Wage and Hour Division. The Department proposes to 
rescind these appendices as they are no longer current, and updated 
information contained in both appendices can be found on WHD's website 
at https://www.dol.gov/agencies/whd/. Specifically, a listing of 
statutes requiring the payment of wages at rates predetermined by the 
Secretary of Labor under the Davis-Bacon Act is currently at https://www.dol.gov/agencies/whd/government-contracts, and a listing of WHD 
regional offices is currently found at https://www.dol.gov/agencies/whd/contact/local-offices.
xii. Frequently Conformed Rates
    The Department also proposes to revise Sec. Sec.  1.3 and 5.5 to 
provide that, where WHD has received insufficient data through its wage 
survey process to publish a prevailing wage for a classification for 
which conformance requests are regularly submitted, WHD nonetheless may 
list the classification and wage and fringe benefit rates for the 
classification on the wage determination, provided that the three basic 
criteria for conformance of a classification and wage and fringe 
benefit rate have been satisfied: (1) The work performed by the 
classification is not performed by a classification in the wage 
determination; (2) the classification is used in the area by the 
construction industry; and (3) the wage rate for the classification 
bears a reasonable relationship to the wage rates contained in the wage 
determination. The Department specifically proposes that the wage and 
fringe benefit rates for these classifications be determined in 
accordance with the ``reasonable relationship'' criterion that is 
currently used in conforming missing classifications pursuant to 
current 29 CFR 5.5(a)(1)(ii)(A). The Department welcomes comments 
regarding all aspects of this proposal, which is described more fully 
below.
    WHD determines DBA prevailing wage rates based on wage survey data 
that responding contractors and other interested parties voluntarily 
provide. See 29 CFR 1.1 through 1.7. WHD sometimes receives robust 
participation in its wage surveys, thereby enabling it to publish wage 
determinations that list prevailing wage rates for numerous 
construction classifications. However, stakeholder participation can be 
more limited, particularly in surveys for residential construction or 
in rural areas, and WHD therefore does not always receive sufficient 
wage data to publish prevailing wage rates for various classifications 
generally necessary for various types of construction.
    Whenever a wage determination lacks a classification of work that 
is necessary for performance of DBRA-covered construction, the missing 
classification and an appropriate wage rate must be added to the wage 
determination on a contract-specific basis through the conformance 
process. Conformance is the expedited process by which a classification 
and wage and fringe benefit rate are added to an existing wage 
determination applicable to a specific DBRA-covered contract. See 29 
CFR 5.5(a)(1)(ii)(A). When, for example, a wage determination lists 
only certain skilled classifications such as carpenter, plumber, and 
electrician (because they are the skilled classifications for which WHD 
received sufficient wage data through its survey process), the 
conformance process is used to provide contractors with minimum wage 
rates for other necessary classifications (such as, in this example, 
painters and bricklayers).
    ``By design, the Davis-Bacon conformance process is an expedited 
proceeding created to `fill in the gaps' '' in an existing wage 
determination, with the ``narrow goal'' of establishing an appropriate 
wage rate for a classification needed for performance of the contract. 
Am. Bldg. Automation, Inc., ARB No. 00-067, 2001 WL 328123, at *3 (Mar. 
30, 2001). As a general matter, WHD is given ``broad discretion'' in 
setting a conformed wage rate, and the Administrator's decisions ``will 
be reversed only if inconsistent with the regulations, or if they are 
unreasonable in some sense[.]'' Millwright Loc. 1755, ARB No. 98-015, 
2000 WL 670307, at *6 (May 11, 2000) (internal quotations and citations 
omitted). See, e.g., Constr. Terrebonne Par. Juvenile Justice Complex, 
ARB No. 17-0056, 2020 WL 5902440, at *2-4 (Sept. 4, 2020) (reaffirming 
the Administrator's ``broad discretion'' in determining appropriate 
conformed wage rates); Courtland Constr. Corp., ARB No. 17-074, 2019 WL 
5089598, at *2 (Sept. 30, 2019) (same).
    The regulations require the following criteria be met for a 
proposed classification and wage rate to be conformed to a wage 
determination: (1) The work to be performed by the requested 
classification is not performed by a classification in the wage 
determination; (2) the classification is used in the area by the 
construction industry; and (3) the proposed wage rate, including any 
bona fide fringe benefits, bears a reasonable relationship to the wage 
rates in the wage determination. See 29 CFR 5.5(a)(1)(ii)(A).
    Pursuant to the first conformance criterion, WHD may approve a 
conformance request only where the work of the proposed classification 
is not performed by any classification on the wage determination. WHD 
need not ``determine that a classification in the wage determination 
actually is the prevailing classification for the tasks in question, 
only that there is evidence to establish that the classification 
actually performs the disputed tasks in the locality.'' Am. Bldg. 
Automation, 2001 WL 328123, at *4. Even if workers perform only a 
subset of the duties of a classification, they are still performing 
work that is covered by the classification, and conformance of a new 
classification thus would be inappropriate. See, e.g., Fry Bros. Corp., 
WAB No. 76-06, 1977 WL 24823, at *6

[[Page 15723]]

(June 14, 1977). In instances where the first and second conformance 
criteria are satisfied and it has been determined that the requested 
classification should be added to the contract wage determination, WHD 
will address whether the third criterion has also been satisfied, i.e., 
whether ``[t]he proposed wage rate, including any bona fide fringe 
benefits, bears a reasonable relationship to the wage rates'' in the 
wage determination.
    WHD typically receives thousands of conformance requests each year 
(sometimes over 10,000 in a given year). In some instances, including 
instances where contractors are unaware that their work falls within 
the scope of work performed by an established classification on the 
wage determination, WHD receives conformance requests where conformance 
plainly is not appropriate because the wage determination already 
contains a classification that performs the work of the proposed 
classification. In other instances, however, conformance is necessary 
because the applicable wage determination does not contain all of the 
classifications that are necessary to complete the project. The 
considerable need for conformances due to the absence of necessary 
classifications on wage determinations reduces certainty for 
prospective contractors in the bidding process, who may be unsure of 
what wage rate must be paid to laborers and mechanics performing work 
on the project, and taxes WHD's resources. If such uncertainty causes 
contractors to underbid on construction projects and subsequently to 
pay subminimum wages to workers, missing classifications on wage 
determinations can result in the underpayment of wages to workers.
    To address this issue, the Department proposes revising 29 CFR 1.3 
and 5.5(a)(1) to expressly authorize WHD to list classifications and 
corresponding wage and fringe benefit rates on wage determinations even 
when WHD has received insufficient data through its wage survey 
process. Under this proposal, for key classifications or other 
classifications for which conformance requests are regularly 
submitted,\74\ the Administrator would be authorized to list the 
classification on the wage determination along with wage and fringe 
benefit rates that bear a ``reasonable relationship'' to the prevailing 
wage and fringe benefit rates contained in the wage determination, 
using essentially the same criteria under which such classifications 
and rates are currently conformed by WHD pursuant to current Sec.  
5.5(a)(1)(ii)(A)(3). In other words, for a classification for which 
conformance requests are regularly submitted, and for which WHD 
received insufficient data through its wage survey process, WHD would 
be expressly authorized to essentially ``pre-approve'' certain 
conformed classifications and wage rates, thereby providing contracting 
agencies, contractors and workers with advance notice of the minimum 
wage and fringe benefits required to be paid for work within those 
classifications. WHD would list such classifications and wage and 
fringe benefit rates on wage determinations where: (1) The work 
performed by the classification is not performed by a classification in 
the wage determination for which a prevailing wage rate has been 
determined; (2) the classification is used in the area by the 
construction industry; and (3) the wage rate for the classification 
bears a reasonable relationship to the prevailing wage rates contained 
in the wage determination. The Administrator would establish wage rates 
for such classifications in accordance with proposed Sec.  
5.5(a)(1)(iii)(A)(3). Contractors would be required to pay workers 
performing work within such classifications at no less than the rates 
listed on the wage determination. Such classifications and rates on a 
wage determination would be designated with a distinct term, 
abbreviation, or description to denote that they essentially reflect 
pre-approved conformed rates rather than prevailing wage and fringe 
benefit rates that have been determined through the Davis-Bacon wage 
survey process.
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    \74\ As explained in WHD's Prevailing Wage Resource Book, WHD 
has identified several ``key classifications'' normally necessary 
for one of the four types of construction (building, highway, heavy, 
and residential) for which WHD publishes general wage 
determinations. Davis-Bacon Surveys at 6. The Prevailing Wage 
Resource Book contains a table that lists the key classifications 
for each type of construction. The table, which may be updated 
periodically as warranted, currently identifies the key 
classifications for building construction as heat and frost 
insulators, bricklayers, boilermakers, carpenters, cement masons, 
electricians, iron workers, laborers (common), painters, 
pipefitters, plumbers, power equipment operators (operating 
engineers), roofers, sheet metal workers, tile setters, and truck 
drivers; the key classifications for residential construction as 
bricklayers, carpenters, cement masons, electricians, iron workers, 
laborers (common), painters, plumbers, power equipment operators 
(operating engineers), roofers, sheet metal workers, and truck 
drivers; and the key classifications for heavy and highway 
construction as carpenters, cement masons, electricians, iron 
workers, laborers (common), painters, power equipment operators 
(operating engineers), and truck drivers. Id.
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    These rates would apply to the applicable classification without 
the need to submit a conformance request in accordance with current 
Sec.  5.5(a)(1)(ii)(A)-(C). However, if a contracting agency, 
contractor, union, or other interested party has questions or concerns 
about how particular work should be classified--and, specifically, 
whether the work at issue is performed by a particular classification 
included on a wage determination (including classifications listed 
pursuant to this proposal) as a matter of local area practice or 
otherwise, the contracting agency should submit a conformance request 
in accordance with Sec.  5.5(a)(1) or seek guidance from WHD under 29 
CFR 5.13. Moreover, under this proposal, contracting agencies would 
still be required to submit conformance requests for any needed 
classifications not listed on the wage determination, which would be 
approved, modified or disapproved as warranted after award of the 
contract, as required by the regulatory provisions applicable to 
conformance requests.
2. 29 CFR Part 3
    ``Anti-kickback'' and payroll submission regulations under section 
2 of the Act of June 13, 1934, as amended, 40 U.S.C. 3145, popularly 
known as the Copeland Act, are set forth in 29 CFR part 3. This part 
details the obligations of contractors and subcontractors relative to 
the weekly submission of statements regarding the wages paid on work 
covered by the Davis-Bacon labor standards; sets forth the 
circumstances and procedures governing the making of payroll deductions 
from the wages of those employed on such work; and delineates the 
methods of payment permissible on such work.
i. Corresponding Edits to Part 3
    The Department proposes multiple revisions to various sections in 
part 3 to update the language and ensure that terms are used in a 
manner consistent with the terminology used in 29 CFR parts 1 and 5, to 
update websites and contact information, and to make other similar, 
non-substantive changes. The Department also proposes conforming edits 
to part 3 to reflect proposed changes to part 5, such as revising Sec.  
3.2 to clarify existing definitions or to add new defined terms also 
found in parts 1 and 5. The Department welcomes comment on whether it 
should further consolidate and/or harmonize the definitions in 
Sec. Sec.  1.2, 3.2, and 5.2 in a final rule, such as by placing all 
definitions in a single regulatory section applicable to all three 
parts.
    The Department further proposes to change certain requirements 
associated with the submission of certified payrolls. To the extent 
that such

[[Page 15724]]

changes are substantive, the reasons for these proposed changes are 
provided in the discussions of proposed Sec. Sec.  5.2 and 5.5. The 
Department also proposes to remove Sec.  3.5(e) regarding deductions 
for the purchase of United States Defense Stamps and Bonds, as the 
Defense Stamps and Bonds are no longer available for purchase. 
Similarly, the Department proposes to simplify the language regarding 
deductions for charitable donations at Sec.  3.5(g) by eliminating 
references to specific charitable organizations and instead permitting 
voluntary deductions to charitable organizations as defined by 26 
U.S.C. 501(c)(3).
    Finally, the Department proposes to add language to Sec.  3.11 
explaining that the requirements set forth in part 3 are considered to 
be effective as a matter of law, whether or not these requirements are 
physically incorporated into a covered contract, and cross-referencing 
the proposed new language discussing incorporation by operation of law 
at Sec.  5.5(e), discussed further below.
3. 29 CFR Part 5
i. Section 5.1 Purpose and Scope
    The Department proposes minor technical revisions to Sec.  5.1 to 
update statutory references, and further proposes to revise Sec.  5.1 
by deleting the listing of laws requiring Davis-Bacon labor standards 
provisions, given that any such list inevitably becomes out-of-date due 
to statutory revisions and the enactment of new Related Acts. In lieu 
of this listing in the regulation, the Department proposes to add new 
sub-paragraph (a)(1) to reference the WHD website (https://www.dol.gov/agencies/whd/government-contracts) on which a listing of laws requiring 
Davis-Bacon labor standards provisions is currently found and regularly 
updated.
ii. Section 5.2 Definitions
(A) Agency, Agency Head, Contracting Officer, Secretary, and Davis-
Bacon Labor Standards
    The Department proposes to revise the definitions of ``agency 
head'' and ``contracting officer'' and to add a definition of 
``agency'' to reflect more clearly that State and local agencies enter 
into contracts for projects that are subject to the Davis-Bacon labor 
standards and that they allocate Federal assistance they have received 
under a Davis-Bacon Related Act to sub-recipients. These proposed 
definitional changes also are intended to reflect that, for some 
funding programs, the responsible Federal agency has delegated 
administrative and enforcement authority to states or local agencies. 
When the current regulations refer to the obligations or authority of 
agencies, agency heads, and contracting officers, they are referring to 
Federal agencies and Federal contracting officers. However, as noted 
above, State or local agencies and their agency heads and contracting 
officers exercise similar authority in the administration and 
enforcement of Davis-Bacon labor standards. Because the existing 
definitions define ``agency head'' and ``contracting officer'' as 
particular ``Federal'' officials or persons authorized to act on their 
behalf, which does not clearly reflect the role of State and local 
agencies in effectuating Davis-Bacon requirements, including by 
entering into contracts for projects subject to the Davis-Bacon labor 
standards and inserting the Davis-Bacon contract clauses in such 
contracts, the Department proposes to revise these definitions to 
reflect the role of State and local agencies. The proposed revisions 
also enable the regulations to specify the obligations and authority 
held by both State or local and Federal agencies, as opposed to 
obligations that are specific to one or the other.
    The Department also proposes to define the term ``Federal agency'' 
as a sub-definition of ``agency'' to distinguish those situations where 
the regulations refer specifically to an obligation or authority that 
is limited solely to a Federal agency that enters into contracts for 
projects subject to the Davis-Bacon labor standards or allocates 
Federal assistance under a Davis-Bacon Related Act.
    The Department also proposes to add the District of Columbia to the 
definition of ``Federal agency.'' The DBA states in part that it 
applies to every contract in excess of $2,000, to which the Federal 
Government ``or the District of Columbia'' is a party. See 40 U.S.C. 
3142(a). As described above, Reorganization Plan No. 14 of 1950 
authorizes the Department to prescribe regulations to ensure that the 
Act is implemented in a consistent manner by all agencies subject to 
the Act. See 5 U.S.C. app 1. Accordingly, the proposed change to the 
definition of ``Federal agency'' in Sec.  5.2 clarifies that the 
District of Columbia is subject to the DBA and the regulations 
implemented by the Department pursuant to Reorganization Plan No. 14 of 
1950.\75\ The proposed change is also consistent with the definition of 
``Federal agency'' in part 3 of this title, which specifically includes 
the District of Columbia. See 29 CFR 3.2(g). The proposed change simply 
reflects the DBA's applicability to the District of Columbia and is not 
intended to reflect a broader or more general characterization of the 
District as a Federal Government entity.
---------------------------------------------------------------------------

    \75\ The 1973 Home Rule Act, Public Law 93-198, transferred from 
the President to the District of Columbia the authority to organize 
and reorganize specific governmental functions of the District of 
Columbia, but does not contain any language removing the District of 
Columbia from the Department's authority to prescribe DBA 
regulations pursuant to Reorganization Plan No. 14 of 1950.
---------------------------------------------------------------------------

    The Department also proposes a change to the definition of 
``Secretary'' to delete a reference to the Under Secretary for 
Employment Standards; as noted above, the Employment Standards 
Administration was eliminated in a reorganization in 2009 and its 
authorities and responsibilities were devolved into its constituent 
components, including WHD.
    Lastly, the Department proposes a minor technical edit to the 
definition of ``Davis-Bacon labor standards'' to reflect proposed 
changes to Sec.  5.1, discussed above.
(B) Building or Work
(1) Energy Infrastructure and Related Activities
    The Department proposes to modernize the definition of the terms 
``building or work'' by including solar panels, wind turbines, 
broadband installation, and installation of electric car chargers to 
the non-exclusive list of construction activities encompassed by the 
definition. These proposed changes to the definition are intended to 
reflect the significance of energy infrastructure and related projects 
to modern-day construction activities subject to the Davis-Bacon and 
Related Acts, as well as to illustrate the types of energy-
infrastructure and related activities that are encompassed by the 
definition of ``building or work.''
(2) Coverage of a Portion of a Building or Work
    The Department proposes to add language to the definitions of 
``building or work'' and ``public building or public work'' to clarify 
that these definitions can be met even when the construction activity 
involves only a portion of an overall building, structure, or 
improvement. The definition of ``building or work'' already states that 
the terms ``building'' and ``work'' ``generally include construction 
activity as distinguished from manufacturing, furnishing of materials, 
or servicing and maintenance work,'' and includes ``without limitation, 
buildings, structures, and improvements of all types.'' 29 CFR 5.2(i). 
In addition, the

[[Page 15725]]

regulation already provides several examples of construction activity 
included within the term ``building or work'' that do not constitute an 
entire building, structure, or improvement, such as ``dredging, 
shoring, . . . scaffolding, drilling, blasting, excavating, clearing, 
and landscaping.'' Id. Moreover, the current regulations define the 
term ``construction, prosecution, completion, or repair'' to mean ``all 
types of work done on a particular building or work at the site thereof 
. . . including, without limitation . . . [a]ltering, remodeling, 
installation . . . ; [p]ainting and decorating.'' Id. Sec.  5.2(j).
    However, to further make plain that ``building or work'' includes 
not only construction activity involving an entire building, structure, 
or improvement, but also construction activity involving a portion of a 
building, structure, or improvement, or the installation of equipment 
or components into a building, structure, or improvement, the 
Department proposes to add a sentence to this definition stating that 
``[t]he term building or work also includes a portion of a building or 
work, or the installation (where appropriate) of equipment or 
components into a building or work.'' The Department also proposes to 
include additional language in the definition of ``public building or 
public work'' to clarify that a ``public building'' or ``public work'' 
includes the construction, prosecution, completion, or repair of a 
portion of a building or work that is carried on directly by authority 
of or with funds of a Federal agency to serve the interest of the 
general public, even where construction of the entire building or work 
does not fit within this definition.
    These proposed revisions are consistent with the Davis-Bacon Act. 
The concepts of alteration or repair presuppose that only a portion of 
a building, structure, or improvement will be affected. By specifically 
including the alteration or repair of public buildings or works within 
its scope of coverage, the Davis-Bacon Act itself necessitates that 
construction activity involving merely a portion of a building or work 
may be subject to coverage.
    These proposed revisions are also consistent with the Department's 
longstanding policy that a ``public building'' or ``public work'' 
includes construction activity involving a portion of a building or 
work, or the installation of equipment or components into a building or 
work when the other requirements for Davis-Bacon coverage are 
satisfied. See, e.g., AAM 52 (July 9, 1963) (holding that the upgrade 
of communications systems at a military base, including the 
installation of improved cabling, constituted the construction, 
alteration or repair of a public work); Letter from Sylvester L. Green, 
Director, Division of Contract Standards Operations, to Robert Olsen, 
Bureau of Reclamation (Mar. 18, 1985) (finding that the removal and 
replacement of stator cores in a hydroelectric generator was covered 
under the Davis-Bacon Act as the alteration or repair of a public 
work); Letter from Samuel D. Walker, Acting Administrator, to Edward 
Murphy (Aug. 29, 1990) (stating that ``[t]he Department has ruled on 
numerous occasions that repair or alteration of boilers, generators, 
furnaces, etc. constitutes repair or alteration of a `public work' ''); 
Letter from Nancy Leppink, Deputy Administrator, to Armin J. Moeller 
(Dec. 12, 2012) (finding that the installation of equipment such as 
generators or turbines into a hydroelectric plant is considered to be 
the improvement or alteration of a public work).
    Similarly, the proposed revisions are consistent with the 
Department's longstanding position that a ``public building'' or 
``public work'' may include structures, buildings, or improvements that 
will not be owned by the Federal government when construction is 
completed, so long as the construction is carried on directly by 
authority of or with funds of a Federal agency to serve the interest of 
the general public. Accordingly, the Department has long held that the 
Davis-Bacon labor standards provisions may apply to construction 
undertaken when the government is merely going to have the use of the 
building or work, such as in lease-construction contracts, depending 
upon the facts and circumstances surrounding the contract. See 
Reconsideration of Applicability of the Davis-Bacon Act to the Veteran 
Admin.'s Lease of Med. Facilities, 18 Op. O.L.C. 109, 119 n.10 (May 23, 
1994) (``1994 OLC Memorandum'') (``[T]he determination whether a lease-
construction contract calls for construction of a public building or 
public work likely will depend on the details of the particular 
arrangement.''); FOH 15b07. In AAM 176 (June 22, 1994), WHD provided 
guidance to the contracting community regarding the DBA's application 
to lease-construction contracts, and specifically advised that the 
following non-exclusive list of factors from the 1994 OLC Memorandum 
should be considered in determining the scope of DBA coverage: (1) The 
length of the lease; (2) the extent of Government involvement in the 
construction project (such as whether the building is being built to 
Government requirements and whether the Government has the right to 
inspect the progress of the work); (3) the extent to which the 
construction will be used for private rather than public purposes; (4) 
the extent to which the costs of construction will be fully paid for by 
the lease payments; and (5) whether the contract is written as a lease 
solely to evade the requirements of the DBA.
    In sum, as noted above, a building or work includes construction 
activity involving only a portion of a building, structure, or 
improvement. As also noted above, a public building or public work is 
not limited to buildings or works that will be owned by the Federal 
Government, but may include buildings or works that serve the general 
public interest, including spaces to be leased or used by the Federal 
Government. Accordingly, it necessarily follows that a contract for the 
construction of a portion of a building, structure, or improvement may 
be a covered contract for construction of a ``public building'' or 
``public work'' where the other requirements for coverage are met, even 
if the Federal Government is not going to own, lease, use, or otherwise 
be involved with the construction of the remaining portions of the 
building or work. For example, as WHD has repeatedly asserted in 
connection with one contracting agency's lease-construction contracts, 
where the Federal government enters into a lease for a portion of an 
otherwise private building--and, as a condition of the lease, requires 
and pays for specific tenant improvements requiring alterations and 
repairs to that portion to prepare the space for government occupancy 
in accordance with government specifications--Davis-Bacon labor 
standards may apply to the tenant improvements or other specific 
construction activity called for by such a contract. In such 
circumstances, the factors discussed in AAM 176 would still need to be 
considered to determine if coverage is appropriate, but the factors 
would be applied specifically with reference to the leased portion of 
the building and the construction required by the lease.
    Finally, these proposed revisions would further the remedial 
purpose of the Davis-Bacon Act by ensuring that the Act's protections 
apply to contracts for construction activity for which the government 
is responsible. Walsh v. Schlecht, 429 U.S. 401, 411 (1977) 
(reiterating that the DBA ``was not enacted to benefit contractors, but 
rather to protect their employees from substandard earnings by fixing a 
floor under wages on Government projects'')

[[Page 15726]]

(citation and internal quotation marks omitted); 1994 OLC Memorandum, 
18 Op. O.L.C. at 121 (``[W]here the government is financially 
responsible for construction costs, the purposes of the Davis-Bacon Act 
may be implicated.''). If the Davis-Bacon Act were only applied in 
situations where the Federal government is involved in the construction 
of the entire (or even the majority of the) building or work, coverage 
of contracts would be dependent on the size of the building or work, 
even if two otherwise equivalent contracts involved the same square 
footage and the government was paying for the same amount of 
construction. Such an application of coverage would undermine the 
statute's remedial purpose by permitting publicly funded construction 
contracts for millions of dollars of construction activity to evade 
coverage merely based on the size of the overall structure or building.
    Accordingly, and as noted above, the Department proposes revisions 
to the definitions of ``building or work'' and ``public building or 
public work'' that serve to clarify rather than change existing 
coverage requirements. However, the Department understands that in the 
absence of such clarity under the existing regulations, contracting 
agencies have differed in their implementation of Davis-Bacon labor 
standards where construction activity involves only a portion of a 
building, structure, or improvement, particularly in the context of 
lease-construction contracts. Thus, as a practical matter, the proposed 
revisions will result in broader application of Davis-Bacon labor 
standards. The Department therefore invites comment on the benefits and 
costs of these proposed revisions to private business owners, workers, 
and the Federal government, particularly in the context of leasing.
(C) Construction, Prosecution, Completion, or Repair
    The Department also proposes to add a new sub-definition to the 
term ``construction, prosecution, completion, or repair'' in Sec.  5.2, 
to better clarify when demolition and similar activities are covered by 
the Davis-Bacon labor standards.
    In general, the Davis-Bacon labor standards apply to contracts 
``for construction, alteration or repair . . . of public buildings and 
public works[.]'' 40 U.S.C. 3142(a). Early in the DBA's history, the 
Attorney General examined whether demolition fit within these terms, 
and concluded that ``[t]he statute is restricted by its terms to 
`construction, alteration, and/or repair,' '' and that this language 
``does not include the demolition of existing structures'' alone. 38 
Op. Atty. Gen. 229 (1935). The Attorney General ``reserve[d] . . . the 
question . . . of [the coverage of] a razing or clearing operation 
provided for in a building contract, to be performed by the contractor 
as an incident of the building project.'' Id. Consistent with the 
Attorney General's opinion, the Department has long maintained that 
standalone demolition work is generally not covered by the Davis-Bacon 
labor standards. See AAM 190 (Aug. 29, 1998); WHD Opinion Letter SCA-78 
(Nov. 27, 1991); WHD Opinion Letter DBRA-40 (Jan. 24, 1986); WHD 
Opinion Letter DBRA-48 (Apr. 13, 1973); AAM 54 (July 29, 1963); FOH 
15d03(a).
    However, the Department has understood the Davis-Bacon labor 
standards to cover demolition and removal under certain circumstances. 
First, demolition and removal activities are covered by Davis-Bacon 
labor standards when such activities themselves constitute 
construction, alteration, or repair of a public building or work. Thus, 
for example, the Department has explained that removal of asbestos or 
paint from a facility that will not be demolished--even if subsequent 
reinsulating or repainting is not considered--is covered by Davis-Bacon 
because the asbestos or paint removal is an ``alteration'' of the 
facility. See AAM 153 (Aug. 6, 1990). Likewise, the Department has 
explained that Davis-Bacon can apply to certain hazardous waste removal 
contracts, because ``substantial excavation of contaminated soils 
followed by restoration of the environment'' is ``construction work'' 
under the DBA and because the term ``landscaping'' as used in the DBA 
regulations includes ``elaborate landscaping activities such as 
substantial earth moving and the rearrangement or reclamation of the 
terrain that, standing alone, are properly characterized as the 
construction, restoration, or repair of the a public work.'' AAM 155 
(Mar. 25, 1991); see also AAM 190 (noting that ``hazardous waste 
removal contracts that involve substantial earth moving to remove 
contaminated soil and recontour the surface'' can be considered DBA-
covered construction activities)
    Second, the Department has consistently maintained that if future 
construction that will be subject to the Davis-Bacon labor standards is 
contemplated on a demolition site--either because the demolition is 
part of a contract for such construction or because such construction 
is contemplated as part of a future contract, then the demolition of 
the previously-existing structure is considered part of the 
construction of the subsequent building or work and therefore within 
the scope of the Davis-Bacon labor standards. See AAM 190. This 
position is also articulated in the Department's SCA regulations at 29 
CFR 4.116(b). Likewise, the Department has explained that certain 
activities under hazardous waste removal and remediation contracts, 
including ``the dismantling or demolition of buildings, ground 
improvements and other real property structures and . . . the removal 
of such structures or portions of them'' are covered by Davis-Bacon 
labor standards ``if this work will result in the construction, 
alteration, or repair of a public building or public work at that 
location.'' AAM 187 (Nov. 18, 1996), attachment: Superfund Guidance, 
Davis Bacon Act/Service Contract Act and Related Bonding, Jan. 1992) 
(emphasis in original).
    While the Department has addressed these distinctions to a degree 
in the SCA regulations and in subregulatory guidance, the Department 
believes that clear standards for the coverage of demolition and 
removal and related activities in the DBA regulations will assist 
agencies, contractors, workers, and other stakeholders in identifying 
whether contracts for demolition are within the scope of the DBA. This, 
in turn, would ensure that the correct contract provisions and wage 
determinations are incorporated into the contract, thereby providing 
contractors with the correct wage determinations prior to bidding and 
requiring the payment of Davis-Bacon prevailing wages where 
appropriate.\76\ Accordingly, the Department proposes to add a new 
paragraph (2)(v) to the definition of ``construction, prosecution, 
completion, or repair'' to assist agencies, contractors, workers, and 
other stakeholders in identifying when demolition and related 
activities fall within the scope of the DBA.
---------------------------------------------------------------------------

    \76\ The Department notes that under Federal contracts and 
subcontracts, demolition contracts that do not fall within the DBA's 
scope are instead service contracts covered by the SCA, and the 
Department uses DBA prevailing wage rates as a basis for the SCA 
wage determination. See AAM 190. However, federally-funded 
demolition work carried out by State or local governments that does 
not meet the criteria for coverage under a Davis-Bacon Related Act 
would generally not be subject to Federal prevailing wage 
protections.
---------------------------------------------------------------------------

    Specifically, the Department proposes to clarify that demolition 
work is covered under any of three circumstances: (1) Where the 
demolition and/or removal activities themselves constitute 
construction, alteration, and/or repair of an existing public building 
or work; (2) where subsequent

[[Page 15727]]

construction covered in whole or in part by the Davis-Bacon labor 
standards is planned or contemplated at the site of the demolition or 
removal, either as part of the same contract or as part of a future 
contract; or (3) where otherwise required by statute.\77\
---------------------------------------------------------------------------

    \77\ This third option accounts for Related Acts whose broader 
language may permit greater coverage of demolition work.
---------------------------------------------------------------------------

    While determining whether demolition is performed in contemplation 
of a future construction project is a fact-specific question, the 
Department also proposes a non-exclusive list of factors that can 
inform this determination. Although the inclusion of demolition 
activities in the scope of a contract for the subsequent construction 
of a public building or work is sufficient to warrant Davis-Bacon 
coverage, such a condition is not a necessary one. Other factors that 
may be relevant include the existence of engineering or architectural 
plans or surveys; the allocation of, or an application for, Federal 
funds; contract negotiations or bid solicitations; the stated intent of 
the relevant government officials; the disposition of the site after 
demolition (e.g., whether it is to be sealed and abandoned or left in a 
State that is prepared for future construction); and other factors. 
Based on these guidelines, Davis-Bacon coverage may apply, for example, 
to the removal and disposal of contaminated soil in preparation for 
construction of a building, or the demolition of a parking lot to 
prepare the site for a future public park. In contrast, Davis-Bacon 
likely would not apply to the demolition of an abandoned, dilapidated, 
or condemned building to eliminate it as a public hazard, reduce 
likelihood of squatters or trespassers, or to make the land more 
desirable for sale to private parties for purely private construction.
(D) Contract, Contractor, Prime Contractor, and Subcontractor
    The Department proposes non-substantive revisions to the definition 
of ``contract'' and also proposes new definitions in Sec.  5.2 for the 
terms ``contractor,'' ``subcontractor'' and ``prime contractor.'' These 
definitions apply to 29 CFR part 5, including the DBRA contract clauses 
in Sec.  5.5(a) and (b) of this part.
    Neither the DBA nor CWHSSA defines the terms ``contract,'' 
``contractor,'' ``prime contractor,'' or ``subcontractor.'' The 
language of the Davis-Bacon and Related Acts, however, makes it clear 
that Congress intended the prevailing wage and overtime requirements to 
apply broadly to both prime contracts executed directly with Federal 
agencies as well as any subcontracts through which the prime 
contractors carry out the work on the prime contract. See 40 U.S.C. 
3142(c); 40 U.S.C. 3702(b), (d). Thus, the Department's existing 
regulations define the term ``contract'' as including ``any prime 
contract . . . and any subcontract of any tier thereunder.'' 29 CFR 
5.2(h). As indicated by the reference in the existing regulations to 
the laws listed in Sec.  5.1, the term also may include the contracts 
between Federal, State or local government entities administering 
Federal assistance and the direct recipients or beneficiaries of that 
assistance, where such assistance is covered by one of the Related 
Acts--as well as the construction contracts and subcontracts of any 
tier financed by or facilitated by such a contract for assistance.
    In other Federal contractor labor standards regulations, the 
Department has sometimes included more detailed definitions of a 
``contract.'' In the regulations implementing Executive Order 13658 
(Establishing a Minimum Wage for Contractors), for example, the 
Department defined contract as ``an agreement between two or more 
parties creating obligations that are enforceable or otherwise 
recognizable at law'' and listed many types of specific instruments 
that fall within that definition. 29 CFR 10.2. The Department's SCA 
regulations, while containing a definition of ``contract'' that is 
similar to the current Davis-Bacon regulatory definition at 29 CFR 
5.2(h), separately specify that ``the nomenclature, type, or particular 
form of contract used . . . is not determinative of coverage'' at 29 
CFR 4.111(a).
    The term ``contract'' in the Davis-Bacon and Related Acts has been 
interpreted in a similarly broad manner. See, e.g., Bldg. & Const. 
Trades Dep't, AFL-CIO v. Turnage, 705 F. Supp. 5, 6 (D.D.C. 1988) 
(``The Court finds that it is reasonable to conclude, as the WAB has 
done, that the nature of the contract is not controlling so long as 
construction work is part of it.''). Similarly, in its 1994 memorandum, 
the OLC cited the basic common-law understanding of the term to explain 
that, for the purposes of the DBA, ``[t]here can be no question that a 
lease is a contract, obliging each party to take certain actions.'' 
1994 OLC Memorandum, 18 Op. O.L.C. at 113 n.3 (citing Arthur Linton 
Corbin, Corbin on Contracts sections 1.2-1.3 (rev. ed., Joseph M. 
Perillo, ed., 1993)). The Davis-Bacon and Related Acts thus have been 
routinely applied to various types of agreements that meet the common-
law definition of a ``contract''--such as, for example, leases, utility 
privatization agreements, individual job orders or task letters issued 
under basic ordering agreements, and loans or agreements in which the 
only consideration from the agency is a loan guarantee--as long as the 
other elements of DBRA coverage are satisfied.
    However, the Department considers that it may not be necessary to 
include in the regulatory text itself a similarly detailed recitation 
of types of agreements that may be considered to be contracts, because 
such a list necessarily follows from the use of the term ``contract'' 
in the statute and the Department is not aware of any argument to the 
contrary. The Department thus seeks comment on whether a more detailed 
definition of the term ``contract'' is warranted, including whether 
aspects of the definition at 29 CFR 10.2 or the SCA regulations should 
or should not be included in the regulatory definition of contract at 
Sec.  5.2.
    The Department also seeks comment on whether it is necessary to 
explicitly promulgate in the definition of ``contract'' in Sec.  5.2, 
or elsewhere in the regulations, an explanation regarding contracts 
that may be found to be void. The Department intends the use of the 
term in the regulations to apply also to any agreement in which the 
parties intended for a contract to be formed, even if (as a matter of 
the common law) the contract may later be considered to be void ab 
initio or otherwise fail to satisfy the elements of the traditional 
definition of a contract. Such usage follows from the statutory 
requirement that the relevant labor standards clauses must be included 
not just in ``contracts'' but also in the advertised specifications 
that may (or may not) become a covered contract. See 40 U.S.C. 3142(a).
    In addition to the term ``contract,'' the existing DBRA regulations 
use the terms ``contractor,'' ``subcontractor,'' and ``prime 
contractor,'' but do not currently define the latter three terms. The 
Department proposes to include a definition of the term ``contractor'' 
to clarify that, where used in the regulations, it applies to both 
prime contractors and subcontractors. In addition, the definition would 
clarify that sureties may also--under appropriate circumstances--be 
considered ``contractors'' under the regulations. This is consistent 
with the Department's longstanding interpretation. See Liberty Mutual 
Ins., ARB No. 00-018, 2003 WL 21499861 at *6 (June 30, 2003) (finding 
that the term ``contractor'' included sureties

[[Page 15728]]

completing a contract pursuant to a performance bond). As the ARB 
explained in the Liberty Mutual case, the term ``contractor'' in the 
DBA should be interpreted broadly in light of Congress's ``overarching 
. . . concern'' in the 1935 amendments to the Act that the new 
withholding authority included in those amendments would ensure workers 
received the pay they were due. Id. (citing S. Rep. No. 1155, at 3 
(1935)). As discussed below, the proposed definition of contractor also 
reflects the long-held interpretation that bona fide ``material 
suppliers'' are generally not considered to be contractors under the 
DBRA, subject to certain exceptions.
    The Department also proposes a nonsubstantive change to move, with 
minor nonsubstantive edits, two sentences from the existing definition 
of ``contract'' to the new definition of ``contractor.'' These 
sentences clarify that State and local governments are not regarded as 
contractors or subcontractors under the Related Acts in situations 
where construction is performed by their own employees, but that under 
statutes that require payment of Davis-Bacon prevailing wages to all 
laborers and mechanics employed in the assisted project or in the 
project's development, State and local recipients of Federal aid must 
pay these employees according to Davis-Bacon labor standards. In 
addition, the Department proposes to supplement that language to 
explain (as the Department has similarly clarified in the SCA 
regulations) that the U.S. Government, its agencies, and 
instrumentalities are also not contractors or subcontractors for the 
purposes of the Davis-Bacon and Related Acts. Cf. 29 CFR 4.1a(f).
    The Department proposes to add a definition for the term ``prime 
contractor'' as it is used in part 5 of the regulations. Consistent 
with the ARB's decision in Liberty Mutual, discussed above, the 
Department proposes a broad definition of prime contractor that 
prioritizes the appropriate allocation of responsibility for contract 
compliance and enhances the effectiveness of the withholding remedy. 
The proposed definition clarifies that the label an entity gives itself 
is not controlling, and an entity is considered to be a ``prime 
contractor'' based on its contractual relationship with the Government, 
its control over the entity holding the prime contract, or the duties 
it has been delegated.
    The definition begins by identifying as a prime contractor any 
person or entity that enters into a covered contract with an agency. 
This includes, under appropriate circumstances, entities that may not 
be understood in lay terms to be ``construction contractors.'' For 
example, where a non-profit organization, owner/developer, borrower or 
recipient, project manager, or single-purpose entity contracts with a 
State or local government agency for covered financing or assistance 
with the construction of housing--and the other required elements of 
the relevant statute are satisfied--that owner/developer or recipient 
entity is considered to be the ``prime contractor'' under the 
regulations. This is so even if the entity does not consider itself to 
be a ``construction contractor'' and itself does not employ laborers 
and mechanics and instead subcontracts with a general contractor to 
complete the construction. See, e.g., Phoenix Dev. Co., WAB No. 90-09, 
1991 WL 494725, at *1 (Mar. 29, 1991) (``It is well settled that prime 
contractors (`owners-developers' under the HUD contract at hand) are 
responsible for the Davis-Bacon compliance of their subcontractors.''); 
Werzalit of Am., Inc., WAB No. 85-19, 1986 WL 193106, at *3 (Apr. 7, 
1986) (rejecting petitioner's argument that it was a loan ``recipient'' 
standing in the shoes of a State or local government and not a prime 
``contractor'').
    The proposed definition also includes as a ``prime contractor'' the 
controlling shareholder or member of any entity holding a prime 
contract, the joint venturers or partners in any joint venture or 
partnership holding a prime contract, any contractor (e.g., a general 
contractor) that has been delegated all or substantially all of the 
responsibilities for overseeing and/or performing the construction 
anticipated by the prime contract, and any other person or entity that 
has been delegated all or substantially all of the responsibility for 
overseeing Davis-Bacon labor standards compliance on a prime contract. 
Under this definition, more than one entity on a contract--for example, 
both the owner/developer and the general contractor--may be considered 
to be ``prime contractors'' on the same contract. Accordingly, the 
proposal also explains that any two of these nominally different legal 
entities are considered to be the ``same prime contractor'' for the 
purposes of cross-withholding.
    Although the Department has not previously included a definition of 
prime contractor in the implementing regulations, the proposed 
definition is consistent with the Department's prior enforcement of the 
DBRA. In appropriate circumstances, for example, the Department has 
considered a general contractor to be a ``prime contractor'' that is 
therefore responsible for the violations of its subcontractors under 
the regulations--even where that general contractor does not directly 
hold the contract with the Government (or is not the direct recipient 
of Federal assistance), but instead has been hired by the private 
developer that holds the overall construction contract. See Palisades 
Urb. Renewal Enters. LLP., OALJ No. 2006-DBA-00001 (Aug. 3, 2007), at 
16, aff'd, ARB No. 07-124, (July 30, 2009); Milnor Constr. Corp., WAB 
No. 91-21, 1991 WL 494763, at *1, 3 (Sept. 12, 1991); cf. Vulcan Arbor 
Hill Corp. v. Reich, 81 F.3d 1110, 1116 (D.C. Cir. 1996) (referencing 
agreement by developer that ``its prime'' contractor would comply with 
Davis-Bacon standards). Likewise, where a joint venture holds the 
contract with the government, the Department has characterized the 
actions of the parties to that joint venture as the actions of ``prime 
contractors.'' See Big Six, Inc., WAB No. 75-03, 1975 WL 22569, at *2 
(July 21, 1975).
    The proposed definition of prime contractor is also similar to, 
although somewhat narrower than, the broad definition of the term 
``contractor'' in the FAR part 9 regulations that govern suspension and 
debarment across a broad swath of Federal procurement contracts. In 
that context, where the Federal Government seeks to protect its 
interest in effectively and efficiently completing procurement 
contracts, the FAR Council has adopted an expansive definition of 
contractor that includes affiliates or principals that functionally 
control the prime contract with the government. See 48 CFR 9.403. Under 
that definition, ``Contractor'' means any individual or entity that 
``[d]irectly or indirectly (e.g., through an affiliate)'' is awarded a 
Government contract or ``[c]onducts business . . . with the Government 
as an agent or representative of another contractor.'' Id.\78\ The 
Department has a similar interest here in protecting against the use of 
the corporate form to avoid

[[Page 15729]]

responsibility for the Davis-Bacon labor standards.
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    \78\ The definition section in 48 CFR 9.403 specifies that it 
applies only ``as used in this subpart''--referring to subpart 9.4 
of the FAR. It thus applies only to the general suspension and 
debarment provisions of the FAR and thus does not apply to the 
regulations within the FAR that implement the Davis-Bacon labor 
standards, which are located in FAR part 22 and the contract clauses 
FAR part 52. The DBRA-specific provisions of the FAR are based on 
the Department's regulations in parts 1, 3, and 5 of subtitle 29 of 
the CFR, which are the subject of this NPRM. Thus, the Department 
expects that, after this rule is final, the FAR Council will 
consider how to amend FAR part 22 and the FAR contract clauses to 
appropriately incorporate the new and amended definitions that are 
adopted in the Department's final rule. The Department does not 
anticipate that this rulemaking would affect FAR subpart 9.4.
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    The Department seeks comment on the proposed definition of ``prime 
contractor,'' in particular as it affects the withholding contract 
clauses at Sec.  5.5(a)(2) and (b)(3), the prime contractor 
responsibility provisions at Sec.  5.5(a)(6) and (b)(4), and the 
proposed provisions in Sec.  5.9 regarding the authority and 
responsibility of contracting agencies for satisfying requests for 
cross-withholding.
    Finally, the Department proposes a new definition of the term 
``subcontractor.'' The proposed definition would affirmatively state 
that a ``subcontractor'' is ``any contractor that agrees to perform or 
be responsible for the performance of any part of a contract that is 
subject wholly or in part to the labor standards provisions of any of 
the laws referenced in Sec.  5.1.'' Like the current definition of 
``contract,'' the proposed definition of ``subcontractor'' also 
reflects that the Act covers subcontracts of any tier--and thus the 
proposed definition of ``subcontractor'' would state that the term 
includes subcontractors of any tier. See 40 U.S.C. 3412; Castro v. Fid. 
& Deposit Co. of Md., 39 F. Supp. 3d 1, 6-7 (D.D.C. 2014). The proposed 
definition for ``subcontractor'' necessarily excludes material 
suppliers (except for narrow exceptions), because such material 
suppliers are excluded from the definition of ``contractor,'' as 
proposed, and that definition applies to both prime contractors and 
subcontractors. Finally, the proposed definition of ``subcontractor'' 
also clarifies that the term does not include laborers or mechanics for 
whom a prevailing wage must be paid. As discussed below, and as 
Congress expressly indicated, the requirement to pay a prevailing wage 
to ordinary laborers and mechanics cannot be evaded by characterizing 
such workers as ``owner operators'' or ``subcontractors.'' See 40 
U.S.C. 3142(c)(1) (requiring payment of prevailing wage ``regardless of 
any contractual relationship which may be alleged to exist between the 
contractor or subcontractor and the laborers and mechanics'').
(E) Apprentice and Helper
    The Department proposes to amend the current regulatory definition 
in Sec.  5.2(n) of ``apprentice, trainee, and helper'' to remove 
references to trainees. A trainee is currently defined as a person 
registered and receiving on-the-job training in a construction 
occupation under a program approved and certified in advance by ETA as 
meeting its standards for on-the-job training programs, but ETA no 
longer reviews or approves on-the-job training programs so this 
definition is unnecessary. See section III.B.3.iii.(C) (``29 CFR 
5.5(a)(4) Apprentices.''). The Department also proposes to modify the 
definition of ``apprentice and helper'' to reflect the current name of 
the office designated by the Secretary of Labor, within the Department, 
to register apprenticeship programs.
(F) Laborer or Mechanic
    The Department proposes to amend the regulatory definition of 
``laborer or mechanic'' to remove the reference to trainees and to 
replace the term ``foremen'' with the gender-neutral term ``working 
supervisors.'' \79\ The Department does not propose any additional 
substantive changes to this definition.
---------------------------------------------------------------------------

    \79\ The proposal addressing trainees is discussed in greater 
detail below in section III.B.3.iii.(C) (``29 CFR 5.5(a)(4) 
Apprentices.'').
---------------------------------------------------------------------------

    However, because the Department frequently receives questions 
pertaining to the application of the definition of ``laborer or 
mechanic''--and thus the application the Davis-Bacon labor standards--
to members of survey crews, the Department provides the following 
information to clarify when survey crew members are laborers or 
mechanics under the existing definition of that term.
    The Department has historically recognized that members of survey 
crews who perform primarily physical and/or manual work on a DBA or 
Related Acts covered project on the site of the work immediately prior 
to or during construction in direct support of construction crews may 
be laborers or mechanics subject to the Davis-Bacon labor 
standards.\80\ Whether or not a specific survey crew member is covered 
by these standards is a question or fact, which takes into account the 
actual duties performed and whether these duties are ``manual or 
physical in nature'' including the ``use of tools or . . . work of a 
trade.'' When considering whether a survey crew member performs 
primarily physical and/or manual duties, it is appropriate to consider 
the relative importance of the worker's different duties, including 
(but not solely) the time spent performing these duties. Thus, survey 
crew members who spend most of their time on a covered project taking 
or assisting in taking measurements would likely be deemed laborers or 
mechanics (provided that they do not meet the tests for exemption as 
professional, executive, or administrative employees under part 541). 
If their work meets other required criteria (i.e., it is performed on 
the site of the work, where required, and immediately prior to or 
during construction in direct support of construction crews), it would 
be covered by the Davis-Bacon labor standards.
---------------------------------------------------------------------------

    \80\ See, e.g., AAM 212 (Mar. 22, 2013). While AAM 212 was 
rescinded to allow the Department to seek a broader appreciation of 
the coverage issue it addressed and due to its incomplete 
implementation, see AAM 235 (Dec. 14, 2020), its rescission did not 
change the applicable standard, which is the definition of ``laborer 
or mechanic'' as currently set forth in 29 CFR 5.2(m).
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    The Department seeks comment on issues relevant to the application 
of the current definition to survey crew members, especially the range 
of duties performed by, and training required of, survey crew members 
who perform work on construction projects and whether the range of 
duties or required training varies for different roles within a survey 
crew based on the licensure status of the crew members, or for 
different types of construction projects.
(G) Site of the Work and Related Provisions
    The Department proposes the following revisions related to the 
DBRA's ``site of the work'' requirement: (1) Revising the definition of 
``site of the work'' to further encompass certain construction of 
significant portions of a building or work at secondary worksites, (2) 
clarifying the application of the ``site of the work'' principle to 
flaggers, (3) revising the regulations to better delineate and clarify 
the ``material supplier'' exemption, and (4) revising the regulations 
to set clear standards for DBA coverage of truck drivers.
(1) Current Statutory and Regulatory Provisions Related to Site of the 
Work
a. Site of the Work
    The DBA and Related Acts generally apply to ``mechanics and 
laborers employed directly on the site of the work'' by 
``contractor[s]'' and ``subcontractor[s]'' on contracts for 
``construction, alteration, or repair, including painting and 
decorating, of [covered] public buildings and public works.'' 40 U.S.C. 
3142(a), (c)(1). The Department's current regulations define ``site of 
the work'' as including ``the physical place or places where the 
building or work called for in the contract will remain'' and ``any 
other site where a significant portion of the building or work is 
constructed, provided that such site is established specifically for 
the performance of the contract or project.'' 29 CFR 5.2(l)(1). They 
further provide that in general, ``job headquarters, tool yards, batch 
plants, borrow pits, etc.'' are part of the

[[Page 15730]]

``site of the work'' if they are ``dedicated exclusively, or nearly so, 
to performance of the covered contract or project'' and also are 
``adjacent or virtually adjacent to the site of the work'' itself. 29 
CFR 5.2(l)(2).
    The ``site of the work'' requirement does not apply to Related Acts 
that extend Davis-Bacon coverage to all laborers and mechanics employed 
in the ``development'' of a project; such statutes include the United 
States Housing Act of 1937; the Housing Act of 1949; and the Native 
American Housing Assistance and Self-Determination Act of 1996. See 
Sec.  5.2(j)(1); 42 U.S.C. 1437j(a); 25 U.S.C. 4114(b)(1), 
4225(b)(1)(B); 42 U.S.C. 12836(a). As the Department has previously 
noted, ``the language and/or clear legislative history'' of these 
statutes ``reflected clear congressional intent that a different 
coverage standard be applied.'' 65 FR 80267 at 80275; see, e.g., L.T.G. 
Constr. Co., WAB Case No. 93-15, 1994 WL 764105, at *4 (Dec. 30, 1994) 
(noting that ``the Housing Act [of 1937] contains no `site of work' 
limitation similar to that found in the Davis-Bacon Act'').
b. Off-Site Transportation
    The ``site of the work'' requirement is also referenced in the 
current regulation's definition of ``construction, prosecution, 
completion, or repair,'' which provides that ``the transportation of 
materials or supplies to or from the site of the work'' is not covered 
by the DBRA, except for such transportation under the statutes to which 
the ``site of the work'' requirement does not apply. 29 CFR 5.2(j)(2). 
However, transportation to or from the site of the work is covered by 
the DBRA where a covered laborer or mechanic (1) transports materials 
between an ``adjacent or virtually adjacent'' dedicated support site 
that is part of the site of the work pursuant to 29 CFR 5.2(l)(2), or 
(2) transports portions of the building or work between a site where a 
significant portion of the building or work is constructed and that is 
established specifically for contract or job performance, which is part 
of the site of the work pursuant to 29 CFR 5.2(l)(1), and the physical 
place or places where the building or work will remain.\81\
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    \81\ For more detail on this topic, see the section titled 
``Coverage of Construction Work at Secondary Construction Sites.''
---------------------------------------------------------------------------

c. Material Supplier Exception
    While not explicitly set out in the statute, the DBA has long been 
understood to exclude from coverage employees of bona fide ``material 
suppliers'' or ``materialmen'' whose sole responsibility is to provide 
materials (such as sand, gravel, and ready-mixed concrete) to a project 
if they also supply those materials to the general public, and the 
plant manufacturing the materials is not established specifically for a 
particular contract or located at the site of the work. See AAM 45 
(Nov. 9, 1962) (enclosing WHD Opinion Letter DB-30 (Oct. 15, 1962)); 
AAM 36 (Mar. 16, 1952) (enclosing WHD Opinion Letter DB-22 (Mar. 12, 
1962)); H.B. Zachry Co. v. United States, 344 F.2d 352, 359 (Ct. Cl. 
1965); FOH 15e16. This principle has generally been understood to 
derive from the limitation of the DBA's statutory coverage to 
``contractor[s]'' and ``subcontractor[s].'' See AAM 36, WHD Opinion 
Letter DB-22, at 2 (discussing ``the application of the term 
subcontractor, as distinguished from materialman or submaterialman''); 
cf. MacEvoy v. United States, 322 U.S. 102 (1944) (distinguishing a 
``subcontractor'' from ``ordinary laborers and materialmen'' under the 
Miller Act); FOH 15e16 (``[B]ona fide material suppliers are not 
considered contractors under DBRA.''). As the Department has explained, 
this exception applies to employees of companies ``whose only 
contractual obligations for on-site work are to deliver materials and/
or pick up materials.'' PWRB, DBA/DBRA Compliance Principles at 7 
(emphasis added).
    Like the ``site of the work'' restriction, the material supplier 
exception does not apply to work under statutes that extend Davis-Bacon 
coverage to all laborers and mechanics employed in the ``development'' 
of a project, regardless of whether they are employed by 
``contractors'' or ``subcontractors.'' See existing regulation 29 CFR 
5.2(j)(1) (defining ``construction, prosecution, completion, or 
repair'' as including ``[a]ll types of work done on a particular 
building or work at the site thereof . . . by laborers and mechanics 
employed by a construction contractor or construction subcontractor 
(or, under the United States Housing Act of 1937; the Housing Act of 
1949; and the Native American Housing Assistance and Self-Determination 
Act of 1996, all work done in the construction or development of the 
project)''); existing regulation 29 CFR 5.2(i) (``The manufacture or 
furnishing of materials, articles, supplies or equipment . . . is not a 
building or work within the meaning of the regulations in this part 
unless conducted in connection with and at the site of such a building 
or work as is described in the foregoing sentence, or under the United 
States Housing Act of 1937 and the Housing Act of 1949 in the 
construction or development of the project.'').
d. Relevant Regulatory History and Case Law
    The regulatory provisions discussed above were shaped by three 
appellate court decisions between 1992 and 2000. The language in Sec.  
5.2(l) that deems dedicated sites such as batch plants and borrow pits 
part of the site of the work only if they are ``adjacent or virtually 
adjacent'' to the construction site was adopted in 2000 in response to 
Ball, Ball & Brosamer, Inc. v. Reich, 24 F. 3d 1447 (D.C. Cir. 1994) 
and L.P. Cavett Company v. U.S. Dep't of Labor, 101 F.3d 1111 (6th Cir. 
1996), which concluded that batch plants located only a few miles from 
the construction site (2 miles in Ball, 3 miles in L.P. Cavett) were 
not part of the ``site of the work.'' See 65 FR 80268 (``2000 final 
rule'').\82\ The ``adjacent or virtually adjacent'' requirement in the 
current regulatory text is one that the courts in Ball and L.P. Cavett 
suggested would be permissible. Similarly, the provision in Sec.  
5.2(j)(2) that excludes, with narrow exceptions, ``the transportation 
of materials or supplies to or from the site of the work'' from 
coverage stems from a 1992 interim final rule, see 57 FR 19204 (May 4, 
1992) (``1992 IFR''), that implemented Building & Construction Trades 
Dep't, AFL-CIO v. U.S. Dep't of Labor Wage Appeals Bd. (Midway), in 
which the D.C. Circuit held that drivers of a prime contractor's 
subsidiary who picked up supplies and transported them to the job site 
were not covered by the DBA because ``the Act applies only to employees 
working directly on the physical site of the public building or public 
work under construction.'' 932 F.2d 985, 990 (D.C. Cir. 1991).\83\
---------------------------------------------------------------------------

    \82\ Prior to 2000, the Department had interpreted ``site of the 
work'' more broadly to include, in addition to the site where the 
work or building would remain, ``adjacent or nearby property used by 
the contractor or subcontractor in such construction which can 
reasonably be said to be included in the `site.' '' 29 CFR 5.2(l) 
(1990); see 65 FR 80268, 80269 (Dec. 20, 2000); AAM 86 (Feb. 11, 
1970).
    \83\ Prior to 1992, the Department had interpreted the DBA as 
covering the transportation of materials and supplies to or from the 
site of the work by workers employed by a contractor or 
subcontractor. See 29 CFR 5.2(j) (1990).
---------------------------------------------------------------------------

(2) Proposed Regulatory Revisions
    The Department proposes the following regulatory changes related to 
the ``site of the work'' requirement: (1) Revising the definition of 
``site of the work'' to further encompass certain construction of 
significant portions of a

[[Page 15731]]

building or work at secondary worksites, (2) clarifying the application 
of the ``site of the work'' principle to flaggers, (3) revising the 
regulations to better delineate and clarify the ``material supplier'' 
exemption, and (4) revising the regulations to set clear standards for 
DBA coverage of truck drivers. Each proposal is explained in turn.
a. Coverage of Construction Work at Secondary Construction Sites
    In the 2000 final rule, the Department amended the definition of 
``site of the work'' to include a site away from the location where the 
building or work will remain, where the site is established 
specifically for the performance of the contract or project and a 
``significant portion'' of a building or work is constructed at the 
site. 29 CFR 5.2(l)(1). The Department explained that this change was 
intended to respond to technological developments that had enabled 
companies in some cases to construct entire portions of public 
buildings or works off-site, leaving only assembly or placement of the 
building or work remaining. See 65 FR 80273 (describing ``the 
innovative construction techniques developed and currently in use, 
which allow significant portions of public buildings and public works 
to be constructed at locations other than the final resting place of 
the building or work''). The Department cited examples, including a dam 
project where ``two massive floating structures, each about the length 
of a football field'' were constructed upriver and then floated 
downriver and submerged, the construction and assembly of military 
housing units in Portland for final placement in Alaska, and the 
construction of modular units to be assembled into a mobile service 
tower for Titan missiles. See id. (citing ATCO Construction, Inc., WAB 
No. 86-1 (Aug. 22, 1986), and Titan IV Mobile Serv. Tower, WAB No. 89-
14 (May 10, 1991)).
    The Department stressed that this new provision would apply only at 
a location where ``such a large amount of construction is taking place 
that it is fair and reasonable to view such location as a site where 
the public building or work is being constructed,'' and reaffirmed its 
longstanding position that ``[o]rdinary commercial fabrication plants, 
such as plants that manufacture prefabricated housing components,'' are 
not part of the site of the work. 65 FR at 80274; see, e.g., AAM 86 
(Feb. 11, 1970) at 1-2 (explaining that the site of the work does not 
include a contractor's permanent ``fabrication plant[s] . . . whose 
locations and continuance are governed by his general business 
operations . . . even though mechanics and laborers working at such an 
establishment may . . . make doors, windows, frames, or forms''). It 
accordingly described this expansion of coverage as a narrow one. See 
65 FR at 80276 (``[T]he Department believes that the instances where 
substantial amounts of construction are performed at one location and 
then transported to another location for final installation are 
rare.''). Consistent with this amendment, the Department also revised 
Sec.  5.2(j) to cover transportation of portion(s) of the building or 
work between such a site and the location where the building or work 
would remain.
    Since 2000, technological developments have continued to facilitate 
off-site construction that replaces on-site construction to an even 
greater degree, and the Department expects such trends to continue in 
the future. For example, one recent industry analysis notes that both 
design firms and contractors ``are forecasting expanded use of both 
[prefabrication and modular construction] over the coming years as the 
benefits are more widely measured, owners become increasingly 
comfortable with the process and the outcomes, and the industry 
develops more resources to support innovative applications.'' Dodge 
Data and Analytics, Prefabrication and Modular Construction 2020 
(2020), at 4.\84\ In the specific context of Federal government 
contracting, a GSA document cites several benefits to ``pre-
engineered'' or ``modular'' construction, including decreased 
construction time, cost savings, and fewer environmental and safety 
hazards. GSA, Schedule 56--Building and Building Materials, Industrial 
Service and Supplies, Pre-Engineered/Prefabricated Buildings Customer 
Ordering Guide (GSA Schedule 56), at 5-7.\85\
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    \84\ http://modular.org/documents/public/PrefabModularSmartMarketReport2020.pdf.
    \85\ https://www.gsa.gov/cdnstatic/SCHEDULE_56_-_ORDERING_GUIDE.pdf.
---------------------------------------------------------------------------

    In the 2000 final rule, the Department explained that ``[i]t [was] 
the Department's intention in [that] rulemaking to require in the 
future that workers who construct significant portions of a Federal or 
federally assisted project at a location other than where the project 
will finally remain, will receive prevailing wages as Congress intended 
when it enacted the Davis-Bacon and related Acts.'' 65 FR at 80274. 
However, by limiting such coverage to facilities that are established 
specifically for the performance of a particular contract or project, 
the current regulation falls short of its stated goal. The Department 
stated at the time that this limit was necessary to exclude 
``[o]rdinary commercial fabrication plants, such as plants that 
manufacture prefabricated housing components.'' 65 FR at 80274. 
However, such an exclusion can be more effectively accomplished with 
language that expands on the term ``significant portion.''
    The Department accordingly proposes to revise Davis-Bacon coverage 
of off-site construction of ``significant portions'' of a building or 
work so that such coverage is not limited to facilities established 
specifically for the performance of a contract or project. Rather, the 
Department proposes to amend the definition of ``site of the work'' to 
include off-site construction where the ``significant portions'' are 
constructed for specific use in a designated building or work, rather 
than simply reflecting products that the contractor or subcontractor 
makes available to the general public. The Department also proposes to 
explain the term ``significant portions'' to ensure that this expansion 
does not result in the coverage of activities that have long been 
understood to be outside the DBA's scope.
    Specifically, the Department proposes to explain that ``significant 
portion'' means that entire portions or modules of the building or 
work, as opposed to smaller prefabricated components, are delivered to 
the place where the building or work will remain, with minimal 
construction work remaining other than the installation and/or assembly 
of the portions or modules. As the Midway court observed, the 1932 
House debate on the DBA demonstrates that its drafters understood that 
off-site prefabrication sites would generally not beconsidered part of 
the site of the work. See Midway, 932 F.2d at 991 n.12. As in 2000, the 
Department does not propose to alter this well-established principle. 
Such prefabrication, however, is distinguishable from modern methods of 
``pre-engineering'' or ``modular'' construction, in which significant 
portions of a building or work are constructed and then simply 
assembled onsite ``similar to a child's building block kit.'' GSA 
Schedule 56 at 5.\86\ Under the latter circumstances, as the Department 
noted in 2000, ``such a large amount of construction is taking place 
[at an offsite location] that it is fair and reasonable to view such 
location as a site where the public building or work is being 
constructed.'' 65 FR at 80274; see also id. at 80272 (stating that 
``the Department views such [secondary construction] locations as the 
actual

[[Page 15732]]

physical site of the public building or work being constructed''). In 
other words, when ``significant portions'' of a building or work that 
historically would have been built where the building or work will 
ultimately remain are instead constructed elsewhere, the exclusion from 
the DBA of laborers and mechanics engaged in such construction is 
inconsistent with the DBA.
---------------------------------------------------------------------------

    \86\ See note 85, supra.
---------------------------------------------------------------------------

    In light of the contractor/material supplier distinction discussed 
above, the Department also proposes to add, as an additional 
requirement for coverage of offsite construction, that the portions or 
modules are constructed for specific use in a designated building or 
work, rather than simply reflecting products that the contractor or 
subcontractor makes available to the general public. When significant 
portions or modules are constructed specifically for a particular 
building or work and not as part of the contractor's regular 
manufacturing operations, the company is not a material supplier but a 
contractor or subcontractor. See United Constr. Co., Inc., WAB No. 82-
10, 1983 WL 144675, at *3 (Jan. 14, 1983) (examining, as part of an 
inquiry into whether support activities are on the ``site of the 
work,'' ``whether the activities are sufficiently independent of the 
primary project to determine that the function of the support 
activities may be viewed as similar to that of materialman'').
    For clarity, the Department also proposes to amend Sec.  5.2 to use 
the term ``secondary construction sites'' to describe such locations, 
and to use the term ``primary construction sites'' to describe the 
place where the building or work will remain. The Department 
additionally proposes to use the term ``nearby dedicated support site'' 
to describe locations such as batch plants that are part of the site of 
the work because they are dedicated exclusively, or nearly so, to the 
project, and are adjacent or nearly adjacent to a primary or secondary 
construction site.
    The Department specifically seeks public comment on (1) examples of 
the types of off-site construction techniques described above, and the 
extent to which they are used in government and government-funded 
contracting, and (2) whether the proposed limits, including the 
clarification of ``significant portion,'' are appropriate.
b. Clarification of Application of ``Site of the Work'' Principle to 
Flaggers
    The Department also proposes to clarify that workers engaged in 
traffic control and related activities adjacent or nearly adjacent to 
the primary construction site are working on the site of the work. 
Often, particularly for heavy and highway projects, it is necessary to 
direct pedestrian or vehicular traffic around or away from the primary 
construction site. Certain workers of contractors or subcontractors, 
typically called ``flaggers'' or ``traffic directors,'' may therefore 
engage in activities such as setting up barriers and traffic cones, 
using a flag and/or stop sign to control and direct traffic, and 
related activities such as helping heavy equipment move in and out of 
construction zones. Although some flaggers work within the confines of 
the primary construction site, others work outside of that area and do 
not enter the construction zone itself.
    The Department has previously explained that flaggers are laborers 
or mechanics within the meaning of the DBA. See AAM 141 (Aug. 16, 
1985); FOH 15e10(a); Superior Paving & Materials, Inc., ARB No. 99-065 
(June 12, 2002). The Department now proposes to clarify, in the 
definition of ``nearby dedicated support sites,'' that such workers, 
even if they are not working precisely on the site where the building 
or work would remain, are working on the site of the work if they work 
at a location adjacent or virtually adjacent to the primary 
construction site, such as a few blocks away or a short distance down a 
highway. Although the Department believes that any adjacent or 
virtually adjacent locations at which such work is performed are 
included within the current regulatory ``site of the work'' definition, 
given that questions have arisen regarding this coverage issue, the 
Department proposes to make this principle explicit.
    As the Department has previously noted, such work by flaggers and 
traffic operators is integrally related to other construction work at 
the worksite and construction at the site would not be possible 
otherwise. See AAM 141; FOH 15e10(a). Additionally, as noted above and 
as the ARB has previously explained, the principle of adjacency or 
virtual adjacency in this context is consistent with the statutory 
``site of the work'' limitation as interpreted by courts. See Bechtel 
Constructors Corp., ARB No. 97-149, 1998 WL 168939, at *5 (March 25, 
1998) (explaining that ``it is not uncommon or atypical for 
construction work related to a project to be performed outside the 
boundaries defined by the structure that remains upon completion of the 
work,'' such as where a crane in an urban environment is positioned 
adjacent to the future building site). This proposed change would 
therefore be consistent with the DBA and would eliminate any ambiguity 
regarding these workers' coverage.
c. Clarification of ``Material Supplier'' Distinction
    Next, the Department proposes to clarify the distinction between 
subcontractors and ``material suppliers'' and to make explicit that 
employees of material suppliers are not covered by the DBA and most of 
the Related Acts. Although, as explained above, this distinction has 
existed since the DBA's inception, the precise line between ``material 
supplier'' and ``subcontractor'' is not always clear, and is sometimes 
the subject of litigation.
    The Department proposes to clarify the scope of the material 
supplier exception consistent with case law and WHD guidance. First, 
the Department proposes to add a new definition of ``material 
supplier'' to Sec.  5.2, and to define the term as an employer meeting 
three criteria: First, the employer's only obligations for work on the 
contract or project are the delivery of materials, articles, supplies, 
or equipment, which may include pickup in addition to, but not 
exclusive of, delivery; \87\ second, the employer also supplies 
materials to the general public; and third, the employer's facility 
manufacturing the materials, articles, supplies, or equipment, is 
neither established specifically for the contract or project nor 
located at the site of the work. See H.B. Zachry, 344 F.2d at 359; AAM 
5 (Dec. 26, 1957); AAM 31 (Dec. 11, 1961); AAM 36 (Mar. 16, 1962); AAM 
45 (Nov. 9, 1962); AAM 53 (July 22, 1963). The subsection further 
clarifies that if an employer, in addition to being engaged in material 
supply and pickup, also engages in other construction, prosecution, 
completion, or repair work at the site of the work, it is not a 
material supplier but a subcontractor. See PWRB, DBA/DBRA Compliance 
Principles, at 7-8 (``[I]f a material supplier, manufacturer, or 
carrier undertakes to perform a part of a construction contract as a 
subcontractor, its laborers and mechanics employed at the site of the 
work would be subject to Davis-Bacon labor standards in the same manner 
as those employed by any other

[[Page 15733]]

contractor or subcontractor.''); FOH 15e16(c) (same).
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    \87\ The Department notes that under this definition, an 
employer that contracts only for pickup of materials from the site 
of the work is not a material supplier but a subcontractor. This is 
consistent with the plain meaning of the term ``material supplier'' 
and with the Department's case law. See Kiewit-Shea, Case No. 84-
DBA-34, 1985 WL 167240 (OALJ Sept. 6, 1985), at *2 (concluding that 
companies whose contractual duties ``called for hauling away 
material and not for its supply'' were subcontractors, not material 
suppliers''), aff'd, Maryland Equipment, Inc., WAB No. 85-24, 1986 
WL 193110 (June 13, 1986).
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    While the Davis-Bacon regulations have not previously included 
definitions of ``contractor'' or ``subcontractor,'' this proposed rule, 
as discussed above, would add such definitions into Sec.  5.2. The 
Department therefore proposes to incorporate the material supplier 
exception into the proposed new definition of ``contractor,'' which is 
incorporated into the proposed definition of ``subcontractor.'' 
Specifically, the Department proposes to exclude material suppliers 
from the regulatory definition of ``contractor,'' with the exception of 
entities performing work under Related Acts that apply the Davis-Bacon 
labor standards to all laborers and mechanics employed in a project's 
development, given that, as explained, the application of such statutes 
is not limited to ``contractors'' or ``subcontractors.''
d. Coverage of Time for Truck Drivers
    Finally, the Department proposes to revise the regulations to 
clarify coverage of truck drivers under the DBA. Since Midway, various 
questions have arisen regarding the application of the DBA and the 
Related Acts to truck drivers. While the Department's regulations 
address this issue to a certain extent, the Department has expanded on 
these issues in regulatory preambles and subregulatory guidance, which 
differ depending on whether truck drivers are employed by material 
suppliers or by contractors or subcontractors.
    As noted above, the DBA does not apply to workers employed by bona 
fide material suppliers. However, under current WHD policy, if a 
material supplier, in addition to providing supplies, also performs 
onsite construction, alteration, or repair work as a subcontractor--
such as a precast concrete item supplier that also repairs and cleans 
such items at the worksite or an equipment rental dealer that also 
repairs its leased equipment onsite--then its workers are covered for 
any on-site time for such construction work that is ``more than . . . 
incidental.'' FOH 15e16(c); PWRB, DBA/DBRA Compliance Principles at 7-
8. For enforcement purposes, if a material supplier's worker spends 
more than 20 percent of the workweek performing such construction work 
on-site, all of the employee's on-site time during that workweek is 
covered.
    For truck drivers employed by contractors or subcontractors, the 
Department has explained that such drivers' time is covered under 
certain circumstances. See FOH 15e22. First, ``truck drivers who haul 
materials or supplies from one location on the site of the work to 
another location on the site of the work'' are covered. 65 FR at 80275. 
Such ``on-site hauling'' is unaffected by Midway, which concerned the 
coverage of off-site hauling. Based on the same principle, any other 
construction work that drivers perform on the site of the work that is 
not related to off-site hauling is also covered. See FOH 15e22(a)(1) 
(stating that drivers are covered ``for time spent working on the site 
of the work''). Second, ``truck drivers who haul materials or supplies 
from a dedicated facility that is adjacent or virtually adjacent to the 
site of the work'' are covered for all of their time spent in those 
activities. 65 FR at 80275-76; 29 CFR 5.2(j)(1)(iv)(A); FOH 
15e22(a)(3). Such drivers are hauling materials or supplies between two 
locations on the site of the work, and given the requirement of 
adjacency or virtual adjacency, any intervening off-site time is likely 
extremely minimal. Third, drivers are covered for time spent 
transporting portion(s) of the building or work between a secondary 
site, established specifically for contract or project performance and 
where a ``significant portion'' of the work is constructed, and the 
site where the building or work will remain. See 29 CFR 
5.2(j)(1)(iv)(B); 65 FR at 80276; FOH 15e22(a)(4). As the Department 
has explained, ``under these circumstances[,] the site of the work is 
literally moving between the two work sites,'' 65 FR 57269, 57273, and 
as such, ``workers who are engaged in transporting a significant 
portion of the building or work between covered sites . . . are 
`employed directly upon the site of the work[.]' '' 65 FR at 80276. 
Fourth, drivers are covered for any time spent on the site of the work 
that is related to hauling materials to or from the site, such as 
loading or unloading materials, provided that such time is more than de 
minimis--a standard that, as currently applied, excludes drivers ``who 
come onto the site of the work for only a few minutes at a time merely 
to drop off construction materials.'' 65 FR at 80276; FOH 15e22(a)(2); 
PWRB, DBA/DBRA Compliance Principles, at 6-7.
    Feedback from stakeholders, including contractors and contracting 
agencies, indicates that there is significant uncertainty regarding 
this topic. Such uncertainty includes the distinction between drivers 
for material supply companies versus drivers for construction 
contractors or subcontractors; what constitutes de minimis; whether the 
de minimis determination is made on a per trip, per day, or per week 
basis; and whether the 20 percent threshold for construction work 
performed onsite by material supply drivers is also applicable to 
delivery time spent on site by drivers employed by a contractor or 
subcontractor. This lack of clarity has also led to divergent 
interpretations by Department ALJs. Compare Rogers Group, ALJ No. 2012-
DBA-00005 (OALJ May 28, 2013) (concluding that a subcontractor was not 
required to pay its drivers prevailing wages for sometimes-substantial 
amounts of on-site time (as much as 7 hours 30 minutes in a day) making 
deliveries of gravel, sand, and asphalt from offsite) with E.T. Simonds 
Constr. Co., ALJ No. 2021-DBA-00001 (OALJ May 25, 2021), appeal 
pending, ARB No. 21-054 (concluding that drivers employed by a 
subcontractor who hauled materials from the site of the work and spent 
at least 15 minutes per hour--25 percent of the workday--on site were 
covered for their onsite time).
    Taking the above into account, the Department proposes to revise 
the regulations to clarify coverage of truck drivers in the following 
manner:
    First, as noted above, the Department has proposed to clarify that 
employees of ``material suppliers'' are not covered by the DBRA, except 
for those Related Acts to which the material supplier exception does 
not apply. The proposed definition of a ``material supplier'' is 
limited to companies whose only contractual responsibilities are 
material supply and thus excludes companies that also perform any on-
site construction, alteration, or repair. The Department believes that 
this proposed clarification will make the distinction between 
contractors/subcontractors and material suppliers clear. It also 
obviates the need for the 20 percent threshold for coverage of 
construction work performed onsite by material supply drivers discussed 
above, because, by definition, any drivers whose responsibilities 
include performing onsite construction work in addition to material 
supply are employed by subcontractors, not material suppliers. Thus, 
under this proposed rule, any time that drivers spend performing such 
construction work on the site of the work would be covered regardless 
of amount, as is the case for other laborers and mechanics.
    Second, the Department proposes to amend its regulations concerning 
the coverage of transportation by truck drivers who are included within 
the DBA's scope generally (i.e., truck drivers employed by contractors 
and subcontractors, as well as any truck drivers employed in project

[[Page 15734]]

construction or development under certain Related Acts). Specifically, 
the Department proposes to amend the definition of ``construction, 
prosecution, completion, or repair'' in Sec.  5.2 to include 
``transportation'' under five specific circumstances, which the 
Department proposes to define, collectively, as ``covered 
transportation'': (1) Transportation that takes place entirely within a 
location meeting the definition of site of the work (for example, 
hauling materials from one side of a construction site to the other 
side of the same site); (2) transportation of portion(s) of the 
building or work between a ``secondary construction site'' and a 
``primary construction site''; (3) transportation between a ``nearby 
dedicated support site'' and either a primary or secondary construction 
site; (4) a driver or driver's assistant's ``onsite activities 
essential or incidental to offsite transportation,'' discussed further 
below, where the driver or driver's assistant's time spent on the site 
of the work is not so insubstantial or insignificant that it cannot as 
a practical administrative matter be precisely recorded; and (5) any 
transportation and related activities, whether on or off the site of 
the work, by laborers and mechanics under a statute that extends Davis-
Bacon coverage to all laborers and mechanics employed in the 
construction or development of a project.
    Items (1), (2), (3), and (5) set forth principles reflected in the 
current regulations, but in a clearer and more transparent fashion. 
Item (4) seeks to resolve the ambiguities discussed above regarding the 
coverage of on-site time by delivery drivers. Specifically, the 
Department proposes to explain that truck drivers and their assistants 
are covered for their time engaged in ``onsite activities essential or 
incidental to offsite transportation,'' defined as activities by a 
truck driver or truck driver's assistant on the site of the work that 
are essential or incidental to the transportation of materials or 
supplies to or from the site of the work, such as unloading, loading, 
and waiting time, where the driver or assistant's time is not ``so 
insubstantial or insignificant that it cannot as a practical 
administrative matter be precisely recorded.''
    This proposed language is identical to the standard the Department 
uses to describe the de minimis principle under the Fair Labor 
Standards Act. See 29 CFR 785.47. Importantly, while the amount of time 
is relevant to this principle, the key inquiry is not merely whether 
the amount of time is small, but rather whether it is administratively 
feasible to track it, as the FLSA de minimis rule ``applies only where 
there are uncertain and indefinite periods of time involved of a few 
seconds or minutes duration, and where the failure to count such time 
is due to considerations justified by industrial realities.'' Id. 
(emphasis added). Moreover, ``an employer may not arbitrarily fail to 
count as hours worked any part, however small, of the employee's fixed 
or regular working time or practically ascertainable period of time he 
is regularly required to spend on duties assigned to him.'' Id. Thus, 
under the proposed language, where a driver's duties include dropping 
off and/or picking up materials on the site of the work, the driver 
must be compensated under the DBRA for any ``practically 
ascertainable'' time spent on the site of the work. The Department 
anticipates that in the vast majority of cases, it will be feasible to 
record the amount of time a truck driver or driver's assistant spends 
on the site of the work, and, therefore, that the Davis-Bacon labor 
standards will apply to any such time under the proposed rule. However, 
under the narrow circumstances where it is infeasible or impractical to 
measure a driver's very small amount of time spent on the site of the 
work, such time need not be compensated under this proposed rule.
    This proposal is also consistent with the statutory ``site of the 
work'' restriction as interpreted in Midway. As the Department has 
previously explained, given the small amount of time the Midway drivers 
spent on-site, no party in the case had argued whether such on-site 
time alone could be subject to coverage. See 65 FR at 80275-76. Given 
that the court did not consider this issue, the Department does not 
understand Midway as precluding coverage of any time that drivers spend 
on the site of the work, ``no matter how brief.'' 65 FR at 80275-76. 
However, as with the FLSA, the Department proposes to exclude such time 
from DBRA coverage under the rare circumstances where it is very small 
in duration and industrial realities make it impossible or impractical 
to measure such time.
e. Non-Substantive Changes for Conformance and Clarity
    In addition to the above changes, the Department proposes a number 
of revisions to the regulatory definitions related to the ``site of the 
work'' and ``material supplier'' principle to conform to the above 
substantive revisions and for general clarity. The Department proposes 
to delete, from the definition of ``building or work,'' the language 
explaining that in general, ``[t]he manufacture or furnishing of 
materials, articles, supplies or equipment . . . is not a building or 
work.'' Instead, the Department proposes to clarify in the definition 
of the term ``construction (or prosecution, completion, or repair)'' 
that ``construction, prosecution, completion, or repair'' only includes 
``manufacturing or furnishing of materials, articles, supplies or 
equipment'' under certain limited circumstances. Additionally, the 
Department proposes to remove the citation to Midway from the 
definition of the term ``construction (or prosecution, completion, or 
repair)''; although, as discussed above, some of the regulatory changes 
the Department has made reflect the holdings in the three appellate 
cases noted above, the Department does not believe it is necessary to 
cite the case in the regulation.
    The Department also proposes defining the term ``development 
statute'' to mean a statute that requires payment of prevailing wages 
under the Davis-Bacon labor standards to all laborers and mechanics 
employed in the development of a project. As noted above, some statutes 
extend Davis-Bacon coverage to all laborers and mechanics employed in 
the ``development'' of a project, regardless of whether they are 
working on the site of the work or employed by ``contractors'' or 
``subcontractors.'' The current regulations reference three specific 
statutes--the United States Housing Act of 1937; the Housing Act of 
1949; and the Native American Housing Assistance and Self-Determination 
Act of 1996--that fit this description, but do not consistently 
reference all three. Use of the defined term ``development statute'' 
would improve regulatory clarity and ensure that the regulations to not 
become obsolete if existing statutes meeting this description are 
revised or if new statutes meeting this description are added. The 
Department proposes to make conforming changes in Sec.  5.5 to 
incorporate this new term.
    Finally, the Department proposes several linguistic changes to 
defined terms in Sec.  5.2 to improve clarity and readability.
(H) Paragraph Designations
    The Department is also proposing to amend Sec.  5.2 to remove 
paragraph designations of defined terms and instead to list defined 
terms in alphabetical order. The Department proposes to make conforming 
edits throughout parts 1, 3, and 5 in any

[[Page 15735]]

provisions that currently reference lettered paragraphs of Sec.  5.2.
iii. Section 5.5 Contract Provisions and Related Matters
    The Department proposes to remove the table at the end of Sec.  5.5 
related to the display of OMB control numbers. This table aids in 
fulfilling the requirements of the Paperwork Reduction Act; however, 
the Department maintains an inventory of OMB control numbers on https://www.reginfo.gov under ``Information Collection Review.'' This website 
is updated regularly and interested persons are encouraged to consult 
this website for the most up-to-date information.
(A) 29 CFR 5.5(a)(1)
    The Department proposes to add language to Sec.  5.5(a)(1) to state 
that the conformance process may not be used to split or subdivide 
classifications listed in the wage determination, and that conformance 
is appropriate only where the work which a laborer or mechanic performs 
under the contract is not within the scope of any classification listed 
on the wage determination, regardless of job title. This language 
reflects the principle that conformance is not appropriate when the 
work of the proposed classification is already performed by a 
classification on the wage determination. See 29 CFR 
5.5(a)(1)(ii)(A)(1). Even if workers perform only some of the duties of 
a classification, they are still performing work that is covered by the 
classification, and conformance of a new classification thus would be 
inappropriate. See, e.g., Fry Bros. Corp., 1977 WL 24823, at *6 
(contractor could not divide carpentry work between carpenters and 
carpenter tenders in order to pay a lower wage rate for a portion of 
the work; under the DBA it is not permissible to divide the work of a 
classification into several parts according to the contractor's 
assessment of each worker's skill and to pay for such division of the 
work at less than the specified rate for the classification). The 
proposed regulatory language is also in line with the principle that 
WHD must base its conformance decisions on the work to be performed by 
the proposed classification, not on the contractor's own classification 
or perception of the workers' skill. See 29 CFR 5.5(a)(1)(i) (``Such 
laborers and mechanics shall be paid the appropriate wage rate and 
fringe benefits . . . for the classification of work actually 
performed, without regard to skill . . . .''); see also, e.g., Tele-
Sentry Sec., Inc., WAB No. 87-43, 1987 WL 247062, at *7 (Sept. 11, 
1987) (workers who performed duties falling within the electrician 
classification must be paid the electrician rate regardless of the 
employer's classification of workers as laborers). The Department 
welcomes any comments on this proposal.
    The Department also proposes to make non-substantive revisions to 
current Sec.  5.5(a)(1)(ii)(B) and (C) to more clearly describe the 
conformance request process, including by providing that contracting 
officers should submit the required conformance request information to 
WHD via email using a specified WHD email address.
    The Department has also proposed changes relating to the 
publication of rates for frequently conformed classifications. The 
Department's proposed changes to this subsection are discussed above in 
part III.B.1.xii (``Frequently conformed rates''), together with 
proposed changes to Sec.  1.3.
    The Department also proposes to add language to the contract 
clauses at Sec.  5.5(a)(1)(vi), (a)(6), and (b)(4) requiring the 
payment of interest on any underpayment of wages or monetary relief 
required by the contract. This language is consistent with and would be 
subject to the proposed discussion of interest in 29 CFR 5.10 
(Restitution, criminal action), which requires that calculations of 
interest be carried out at the rate specified by the Internal Revenue 
Code for underpayment of taxes and compounded daily.
(B) 29 CFR 5.5(a)(3)
    The Department proposes a number of revisions to Sec.  5.5(a)(3) to 
better effectuate compliance and enforcement by clarifying and 
supplementing existing recordkeeping requirements. Similar changes 
proposed in Sec.  5.5(c) are discussed here.
    As an initial matter, all references to employment (e.g., employee, 
employed, employing, etc.) in Sec.  5.5(a)(3) and (c), as well as in 
Sec.  5.6 and various other sections, have been revised to refer 
instead to ``workers'' or ``laborers and mechanics.'' These changes are 
discussed in greater detail below in section xxii, ``Employment 
Relationship Not Required.''
(1) 29 CFR 5.5(a)(3)(i)
    The Department proposes to amend Sec.  5.5(a)(3)(i) to clarify its 
longstanding interpretation and enforcement of this recordkeeping 
regulation to require contractors to maintain and preserve basic 
records and information, as well as certified payrolls. The required 
basic records include but are not limited to regular payroll (sometimes 
referred to as ``in-house'' payroll) and additional records relating to 
fringe benefits and apprenticeship and training. The term regular 
payroll refers to any written or electronic records that the contractor 
uses to document workers' days and hours worked, rate and method of 
payment, compensation, contact information, and other similar 
information, which provide the basis for the contractor's subsequent 
submission of certified payroll.
    The Department also proposes to amend Sec.  5.5(a)(3)(i) to clarify 
that regular payrolls and other basic records required by this section 
must be preserved for a period of at least 3 years after all the work 
on the prime contract is completed. In other words, even if a project 
takes more than 3 years to complete, contractors and subcontractors 
must keep payroll and basic records for at least 3 years after all the 
work on the prime contract has been completed. This revision expressly 
states the Department's longstanding interpretation and practice 
concerning the period of time that contractors and subcontractors must 
keep payroll and basic records required by Sec.  5.5(a)(3).
    The Department also proposes a new requirement that records 
required by Sec.  5.5(a)(3) and (c) must include last known worker 
telephone numbers and email addresses. Updating the Davis-Bacon 
regulations to require this additional worker contact information would 
reflect more modern and efficient methods of communication between 
workers and contractors, subcontractors, contracting agencies, and the 
Department's authorized representatives.
    Another proposed revision in this section, as well as in Sec.  
5.5(c), clarifies the Department's longstanding interpretation of these 
regulatory provisions that contractors and subcontractors must maintain 
records of each worker's correct classification or classifications of 
work actually performed and the hours worked in each classification. 
See, e.g., Pythagoras Gen. Contracting Corp., ARB Nos. 08-107, 09-007, 
2011 WL 1247207, at *7 (Mar. 1, 2011) (``If workers perform labor in 
more than one job classification, they are entitled to compensation at 
the appropriate wage rate for each classification according to the time 
spent in that classification, which time the employer's payroll records 
must accurately reflect.''), aff'd sub nom. Pythagoras Gen. Contracting 
Corp. v. U.S. Dep't of Lab., 926 F. Supp. 2d 490 (S.D.N.Y. 2013). 
Current regulations permit contractors and subcontractors to pay 
``[l]aborers or mechanics performing work in more than one 
classification . . . at the rate specified for each classification for 
the

[[Page 15736]]

time actually worked therein,'' but only if ``the employer's payroll 
records accurately set forth the time spent in each classification in 
which work is performed.'' 29 CFR 5.5(a)(1)(i). The proposed revisions 
similarly recognize that laborers or mechanics may perform work in more 
than one classification and more expressly provide that, in such cases, 
it is the obligation of contractors and subcontractors to accurately 
record information required by this section for each separate 
classification of work performed.
    By revising the language in Sec.  5.5(a)(3)(i) and (c) to require 
records of the ``correct classification(s) of work actually 
performed,'' the Department intends to clarify its longstanding 
interpretation that contractors and subcontractors must keep records of 
(and include on certified payrolls) hours worked segregated by each 
separate classification of work performed. It would continue to be the 
case that if a contractor or subcontractor fails to maintain such 
records of actual daily and weekly hours worked and correct 
classifications, then it must pay workers the rates of the 
classification of work performed with the highest prevailing wage and 
fringe benefits due.
    It is implicit--and expressly stated in various parts of current 
Sec.  5.5--that records that contractors and subcontractors are 
required to maintain must be accurate and complete. See also 40 U.S.C. 
3145(b). The Department proposes to put contractors and subcontractors 
on further notice of their statutory, regulatory, and contractual 
obligations to keep accurate, correct, and complete records by adding 
the term ``actually'' in Sec.  5.5(a)(3)(i) and (c) to modify ``hours 
worked'' and ``work performed.'' The current regulations require 
maintenance of records containing ``correct classifications'' and 
``actual wages paid,'' and this proposed revision is not intended to 
make any substantive change to the longstanding requirement that 
contractors and subcontractors keep accurate, correct, and complete 
records of all the information required in these sections.
(2) 29 CFR 5.5(a)(3)(ii)-(iii)
    The Department proposes to revise the language in Sec.  
5.5(a)(3)(ii) and (iii) to expressly apply to all entities that might 
be responsible for maintaining the payrolls and basic records a 
contractor is required to submit weekly when a Federal agency is not a 
party to the contract. Currently, the specified records must be 
submitted to the ``applicant, sponsor, or owner'' if a Federal agency 
is not a party to the contract. The proposed revision would add the 
language ``or other entity, as the case may be, that maintains such 
records'' to clarify that this requirement applies regardless of the 
role or title of the recipient of Federal assistance (through grants, 
loans, loan guarantees or insurance, or otherwise) under any of the 
statutes referenced by Sec.  5.1.
    The Department proposes to revise Sec.  5.5(a)(3)(ii) by replacing 
the phrase ``or audit of compliance with prevailing wage requirements'' 
with ``or other compliance action.'' This revision clarifies that 
compliance actions may be accomplished by various means, not solely by 
an investigation or audit of compliance. A similar change is proposed 
in Sec.  5.6. Compliance actions include, without limitation, full 
investigations, limited investigations, office audits, self-audits, and 
conciliations. This proposed revision expressly sets forth the 
Department's longstanding practice and interpretation of this current 
regulatory language to encompass all types of Davis-Bacon compliance 
actions currently used by the Department, as well as any additional 
types that the Department may use in the future. This revision does not 
impose any new or additional requirements upon Federal agencies, 
applicants, sponsors, owners, or other entities, or on the Department, 
contractors, or subcontractors.
    The Department also proposes to add language to Sec.  
5.5(a)(3)(ii)(A) to codify the Department's longstanding policy that 
contracting agencies and prime contractors can permit or require 
contractors to submit their certified payrolls through an electronic 
system, provided that the electronic submission system requires a 
legally valid electronic signature, as discussed below, and the 
contracting agency or prime contractor permits other methods of payroll 
submission in situations where the contractor is unable or limited in 
its ability to use or access the electronic system. See generally PWRB, 
DBA/DBRA Compliance Principles, at 26. The Department encourages all 
contracting agencies to permit submission of certified payrolls 
electronically, so long as all of the required information and 
certification requirements are met. Nevertheless, contracting agencies 
determine which, if any, electronic submissions systems they will use, 
as certified payrolls are submitted directly to the contracting 
agencies. Electronic submission systems can reduce the recordkeeping 
burden and costs of record maintenance, and many such systems include 
compliance monitoring tools that may streamline the review of such 
payrolls.\88\
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    \88\ The Department does not endorse or approve the use of any 
electronic submission system or monitoring tool(s). Although 
electronic monitoring tools can be a useful aid to compliance, 
successful submission of certified payrolls to an electronic 
submission system with such tools does not guarantee that a 
contractor is in compliance, particularly since not all violations 
can be detected through electronic monitoring tools. Contractors 
that use electronic submission systems remain responsible for 
ensuring compliance with Davis-Bacon labor standards provisions.
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    However, under the proposal, agencies that require the use of an 
electronic submission system would be required to allow contractors to 
submit certified payrolls by alternative methods when contractors are 
not able to use the agency's electronic submission system due to 
limitations on the contractor's ability to access the system. For 
example, if a contractor does not have internet access or is unable to 
access the electronic submission system due to a disability, the 
contracting agency would be required to allow such a contractor to 
submit certified payrolls in a manner that accommodates these 
circumstances.
    The Department also proposes a new sub-paragraph, Sec.  
5.5(a)(3)(ii)(D), to reiterate the Department's longstanding policy 
that, to be valid, the contractor's signature on the certified payroll 
must either be an original handwritten signature or a legally valid 
electronic signature. Both of these methods are sufficient for 
compliance with the Copeland Act. See WHD Ruling Letter (Nov. 12, 2004) 
(``Current law establishes that the proper use of electronic signatures 
on certified payrolls . . . satisfies the requirements of the Copeland 
Act and its implementing regulations.'').\89\ Valid electronic 
signatures include any electronic process that indicates acceptance of 
the certified payroll record and includes an electronic method of 
verifying the signer's identity. Valid electronic signatures do not 
include a scan or photocopy of a written signature. The Department 
recognizes that electronic submission of certified payroll expands the 
ability of contractors and contracting agencies to comply with the 
requirements of the Davis-Bacon and Copeland Acts. As a matter of 
longstanding policy, the Department considers an original signature to 
be legally binding evidence of the intention of a person with regard to 
a document, record, or transaction. Modern technologies and evolving 
business practices are rendering the

[[Page 15737]]

distinction between original paper and electronic signatures nearly 
obsolete.
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    \89\ https://www.fhwa.dot.gov/construction/cqit/111204dol.cfm.
---------------------------------------------------------------------------

    The Department proposes to add paragraph (a)(3)(iii) to Sec.  5.5 
to require all contractors, subcontractors, and recipients of Federal 
assistance to maintain and preserve Davis-Bacon contracts, 
subcontracts, and related documents for 3 years after all the work on 
the prime contract is completed. These related documents include, 
without limitation, contractors' and subcontractors' bids and 
proposals, as well as amendments, modifications, and extensions to 
contracts, subcontracts, or agreements.
    WHD routinely requests these contract documents in its DBRA 
investigations. In the Department's experience, contractors and 
subcontractors that comply with the Davis-Bacon labor standards 
requirements usually, as a good business practice, maintain these 
contracts and related documents. It is also the Department's experience 
that Davis-Bacon contractors and subcontractors that do not keep their 
contracts, agreements, and related legally binding documents are more 
likely to disregard their obligations to workers and subcontractors. 
Adding an express regulatory requirement that contractors and 
subcontractors maintain and provide these records to WHD would bolster 
enforcement of the labor standards provisions of the statutes 
referenced by Sec.  5.1. This requirement would not relieve contractors 
or subcontractors from complying with any more stringent record 
retention requirements (e.g., longer record retention periods).
    This proposed revision also could help level the playing field for 
contractors and subcontractors that comply with Davis-Bacon labor 
standards. Like the current recordkeeping requirements, non-compliance 
with this new proposed requirement may result in the suspension of any 
further payment, advance, or guarantee of funds and may also be grounds 
for debarment action pursuant to 29 CFR 5.12.
    The Department proposes to renumber current Sec.  5.5(a)(3)(iii) as 
Sec.  5.5(a)(3)(iv). In addition, the Department proposes to revise 
this re-numbered paragraph to clarify the records contractors and 
subcontractors are required to make available to the Federal agency (or 
applicant, sponsor, owner, or other entity, as the case may be) or the 
Department upon request. Specifically, the proposed revisions to Sec.  
5.5(a)(3)(ii) and (iv), and the proposed new Sec.  5.5(a)(3)(iii), 
expand and clarify the records contractors and subcontractors are 
required to make available for inspection, copying, or transcription by 
authorized representatives specified in this section. The Department 
also proposes adding a requirement that contractors and subcontractors 
must make available any other documents deemed necessary to determine 
compliance with the labor standards provisions of any of the statutes 
referenced by Sec.  5.1.
    Current Sec.  5.5(a)(3)(iii) requires contractors and 
subcontractors to make available the records set forth in Sec.  
5.5(a)(3)(i) (Payrolls and basic records). The proposed revisions to 
re-numbered Sec.  5.5(a)(3)(iv) ensure that contractors and 
subcontractors are aware that they are required to make available not 
only payrolls and basic records, but also the payrolls actually 
submitted to the contracting agency (or applicant, sponsor, owner, or 
other entity, as the case may be) pursuant to Sec.  5.5(a)(3)(ii), 
including the Statement of Compliance, as well as any contracts and 
related documents required by the proposed Sec.  5.5(a)(3)(iii). These 
records help WHD determine whether contractors are in compliance with 
the labor standards provisions of any of the statutes referenced by 
Sec.  5.1, and what the appropriate back wages and other remedies, if 
any, should be. The Department believes that these clarifications will 
remove doubt or uncertainty as to whether contractors are required to 
make such records available to the Federal agency (or applicant, 
sponsor, owner, or other entity, as the case may be) or the Department 
upon request. These revisions make explicit the Department's 
longstanding practice and do not impose any new or additional 
requirements upon a Federal agency (or applicant, sponsor, owner, or 
other entity, as the case may be).
    The new or additional recordkeeping requirements in the proposed 
revisions to Sec.  5.5(a)(3) likely do not impose an undue burden on 
contractors or subcontractors, as they likely already maintain worker 
telephone numbers and email addresses and may already be required by 
contracting agencies to keep contracts and related documents. These 
revisions also enhance the Department's ability to provide education, 
outreach and compliance assistance to contractors and subcontractors 
awarded contracts subject to the Davis-Bacon labor standards 
provisions.
    Finally, the Department in re-numbered Sec.  5.5(a)(3)(iv)(B) 
proposes to add a sanction for contractors and other persons that fail 
to submit the required records in Sec.  5.5(a)(3) or make those records 
available to WHD within the time WHD requests that the records be 
produced. Specifically, the Department proposes that contractors that 
fail to comply with WHD record requests will be precluded from 
introducing as evidence in an administrative proceeding under 29 CFR 
part 6 any of the required records that were not provided or made 
available to WHD. The Department proposes this sanction to enhance 
enforcement of recordkeeping requirements and encourage cooperation 
with its investigations and other compliance actions. The proposal 
provides that WHD will take into consideration a reasonable request 
from the contractor or person for an extension of the time for 
submission of records. WHD will determine the reasonableness of the 
request and may consider, among other things, the location of the 
records and the volume of production.
(C) 29 CFR 5.5(a)(4) Apprentices
    The Department proposes to reorganize Sec.  5.5(a)(4)(i) so that 
each of the four apprentice-related topics it addresses--rate of pay, 
fringe benefits, apprenticeship ratios, and reciprocity--are more 
clearly and distinctly addressed. These proposed revisions are not 
substantive. In addition, the Department proposes to revise the 
subsection of Sec.  5.5(a)(4)(i) regarding reciprocity to better align 
with the purpose of the DBA and the Department's Employment and 
Training Administration (ETA) regulation at 29 CFR 29.13(b)(7) 
regarding the applicable apprenticeship ratios and wage rates when work 
is performed by apprentices in a different State than the State in 
which the apprenticeship program was originally registered.
    Section 5.5(a)(4)(i) provides that apprentices may be paid less 
than the prevailing rate for the work they perform if they are employed 
pursuant to, and individually registered in, a bona fide apprenticeship 
program registered with ETA's Office of Apprenticeship (OA) or with a 
State Apprenticeship Agency (SAA) recognized by the OA. In other words, 
in order to employ apprentices on a Davis-Bacon project at lower rates 
than the prevailing wage rates applicable to journeyworkers, 
contractors must ensure that the apprentices are participants in a 
federally registered apprenticeship program or a State apprenticeship 
program registered by a recognized SAA. Any worker listed on a payroll 
at an apprentice wage rate who is not employed pursuant to and 
individually registered in such a bona fide apprenticeship program must 
be paid the full prevailing wage listed on

[[Page 15738]]

the applicable wage determination for the classification of work 
performed. Additionally, any apprentice performing work on the site of 
the work in excess of the ratio permitted under the registered program 
must be paid not less than the full wage rate listed on the applicable 
wage determination for the classification of work performed.
    In its current form, Sec.  5.5(a)(4)(i) further provides that when 
a contractor performs construction on a project in a locality other 
than the one in which its program is registered, the ratios and wage 
rates (expressed in percentages of the journeyworker's hourly rate) 
specified in the contractor's or subcontractor's registered program 
will be observed. Under this provision, the ratios and wage rates 
specified in a contractor's or subcontractor's registered program are 
``portable,'' such that they apply not only when the contractor 
performs work in the locality in which it was originally registered 
(sometimes referred to as the contractor's ``home State'') but also 
when a contractor performs work on a project located in a different 
State (sometimes referred to as the ``host State''). In contrast, as 
part of a 1979 NPRM, the Department proposed essentially the opposite 
approach, i.e., that apprentice ratios and wage rates would not be 
portable and that, instead, when a contractor performs construction on 
a project in a locality other than the one in which its program is 
registered, ``the ratios and wage rates (expressed in percentages of 
the journeyman's hourly rate) specified in plan(s) registered for that 
locality shall be observed.'' \90\
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    \90\ Proposed Rule, Labor Standards Provisions Applicable to 
Contracts Covering Federally Financed and Assisted Construction, 44 
FR 77080, 77085 (Dec. 28, 1979).
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    In adopting the current approach in a final rule issued in 1981, 
the Department noted that several commenters had objected to the 
proposal to apply the apprentice ratios and wage rates in the location 
where construction is performed, rather than the ratios and wage rates 
applicable in the location in which the program is registered.\91\ The 
Department explained that, in light of these comments, ``[u]pon 
reconsideration, we decided that to impose different plans on 
contractors, many of which work in several locations where there could 
be differing apprenticeship standards, would be adding needless burdens 
to their business activities.'' \92\
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    \91\ Final Rule, Labor Standards Provisions Applicable to 
Contracts Covering Federally Financed and Assisted Construction, 46 
FR 4380, 4383 (Jan. 16, 1981).
    \92\ Id. The 1981 final rule was suspended, but the 
apprenticeship portability provision in Sec.  5.5 was ultimately 
proposed and issued unchanged by a final rule issued in 1982. See 
Final Rule, Labor Standards Provisions Applicable to Contracts 
Covering Federally Financed and Assisted Construction, 47 FR 23658, 
23669 (May 28, 1982).
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    In 2008, ETA amended its apprenticeship regulations in a manner 
that is seemingly in tension with the 1981 final rule's approach to 
Davis-Bacon apprenticeship ``portability.'' Specifically, in December 
2007, ETA issued an NPRM to revise the agency's labor standards for the 
registration of apprenticeship programs regulations.\93\ One of the 
NPRM proposals was to expand the provisions of then-existing 29 CFR 
29.13(b)(8), which at that time provided that in order to be recognized 
by ETA, an SAA must grant reciprocal recognition to apprenticeship 
programs and standards registered in other States--except for 
apprenticeship programs in the building and construction trades.\94\ 
ETA proposed to move the provision to 29 CFR 29.13(b)(7) and to remove 
the exception for the building and construction trades.\95\ In the 
preamble to the final rule issued on October 29, 2008, ETA noted that 
several commenters had expressed concern that it was ``unfair and 
economically disruptive to allow trades from one State to use the pay 
scale from their own State to bid on work in other States, particularly 
for apprentices employed on projects subject to the Davis-Bacon Act.'' 
\96\ The preamble explained that ETA ``agree[d] that the application of 
a home State's wage and hour and apprentice ratios in a host State 
could confer an unfair advantage to an out-of-state contractor bidding 
on a Federal public works project.'' \97\ Further, the preamble noted 
that, for this reason, ETA's negotiations of memoranda of understanding 
with States to arrange for reciprocal approval of apprenticeship 
programs in the building and construction trades have consistently 
required application of the host State's wage and hour and 
apprenticeship ratio requirements. Accordingly, the final rule added a 
sentence to 29 CFR 29.13(b)(7) to clarify that the program sponsor 
seeking reciprocal approval must comply with the host State's wage and 
hour and apprentice ratio standards.\98\
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    \93\ See Apprenticeship Programs, Labor Standards for 
Registration, Amendment of Regulations Notice of Proposed 
Rulemaking, 72 FR 71020 (Dec. 13, 2007).
    \94\ Id. at 71026.
    \95\ Id.
    \96\ Final Rule, Apprenticeship Programs, Labor Standards for 
Registration, Amendment of Regulations, 73 FR 64402, 64419 (Oct. 29, 
2008).
    \97\ Id.
    \98\ Id. at 64420. See 29 CFR 29.13(b)(7).
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    In order to better harmonize the Davis-Bacon regulations and ETA's 
apprenticeship regulations, the Department proposes to revise Sec.  
5.5(a)(4)(i) to reflect that contractors employing apprentices to work 
on a DBRA project in a locality other than the one in which the 
apprenticeship program was originally registered must adhere to the 
apprentice wage rate and ratio standards of the project locality. As 
noted above, the general rule in Sec.  5.5(a)(4)(i) is that contractors 
may pay less than the prevailing wage rate for the work performed by an 
apprentice employed pursuant to and individually registered in a bona 
fide apprenticeship program registered with ETA or an OA-recognized 
SAA. Under ETA's regulation at 29 CFR 29.13(b)(7), if a contractor has 
an apprenticeship program registered for one State but wishes to employ 
apprentices to work on a project in a different State with an SAA, the 
contractor must seek and obtain reciprocal approval from the project 
State SAA and adhere to the wage rate and ratio standards approved by 
the project State SAA. Accordingly, upon receiving reciprocal approval, 
the apprentices in such a scenario would be considered to be employed 
pursuant to and individually registered in the program in the project 
State, and the terms of that reciprocal approval would apply for 
purposes of the DBRA. The Department's proposed revision requiring 
contractors to apply the ratio and wage rate requirements from the 
relevant apprenticeship program for the locality where the laborers and 
mechanics are working therefore better aligns with ETA's regulations on 
recognition of SAAs and is meant to eliminate potential confusion that 
could result for Davis-Bacon contractors subject to both ETA and WHD 
rules regarding apprentices. The proposed revision also better comports 
with the DBA's statutory purpose to eliminate the unfair competitive 
advantage conferred on contractors from outside of a geographic area 
bidding on a Federal construction contract based on lower wage rates 
(and, in the case of apprentices, differing ratios of apprentices paid 
a percentage of the journeyworker rate for the work performed) than 
those that prevail in the location of the project.
    The Department notes that multiple apprenticeship programs may be 
registered in the same State, and that such programs may cover 
different localities of that State and require

[[Page 15739]]

different apprenticeship wage rates and ratios within those separate 
localities. If apprentices registered in a program covering one State 
locality will be doing apprentice work in a different locality of the 
same State, and different apprentice wage and ratio standards apply to 
the two different localities, the proposed rule would require 
compliance with the apprentice wage and ratio standards applicable to 
the locality where the work will be performed. The Department welcomes 
comments as to whether adoption of a consistent rule, applicable 
regardless of whether the project work is performed in the same State 
as the registered apprenticeship program, best aligns with the 
statutory purpose of the DBA and would likely be less confusing to 
apply.
    Lastly, the Department proposes to remove the regulatory provisions 
regarding trainees currently set out in Sec. Sec.  5.2(n)(2) and 
5.5(a)(4)(ii), and to remove the references to trainees and training 
programs throughout parts 1 and 5. Current Sec.  5.5(a)(4)(ii) permits 
``trainees'' to work at less than the predetermined rate for the work 
performed, and Sec.  5.2(n)(2) defines a trainee as a person registered 
and receiving on-the-job training in a construction occupation under a 
program approved and certified in advance by ETA as meeting its 
standards for on-the-job training programs. Sections 5.2(n)(2) and 
5.5(a)(4)(ii) were originally added to the regulations over 50 years 
ago.\99\ However, ETA no longer reviews or approves on-the-job training 
programs and, relatedly, WHD has found that Sec.  5.5(a)(4)(ii) is 
seldom if ever applicable to DBRA contracts. The Department therefore 
proposes to remove the language currently in Sec. Sec.  5.2(n)(2) and 
5.5(a)(4)(ii), and to retitle Sec.  5.5(a)(4) ``Apprentices.'' The 
Department also proposes a minor revision to proposed Sec.  
5.5(a)(4)(ii) to align with the gender-neutral term of 
``journeyworker'' used by ETA in its apprenticeship regulations. The 
Department also proposes to rescind and reserve Sec. Sec.  5.16 and 
5.17, as well as delete references to such trainees and training 
programs in Sec. Sec.  1.7, 5.2, 5.5, 5.6, and 5.15. The Department 
encourages comments on this proposal, including any relevant 
information about the use of training programs in the construction 
industry.
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    \99\ See Final Rule, Labor Standards Applicable to Contracts 
Covering Federally Financed and Assisted Construction, 36 FR 19304 
(Oct. 2, 1971) (defining trainees as individuals working under a 
training program certified by ETA's predecessor agency, the Manpower 
Administration's Bureau of Apprenticeship and Training).
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(D) Flow-Down Requirements in Sec. Sec.  5.5(a)(6) and 5.5(b)(4)
    The Department proposes to add clarifying language to the DBRA- and 
CWHSSA-specific contract clause provisions at Sec.  5.5(a)(6) and 
(b)(4), respectively. Currently, these contract clauses contain 
explicit contractual requirements for prime contractors and upper-tier 
subcontractors to flow-down the required contract clauses into their 
contracts with lower-tier subcontractors. The clauses also explicitly 
state that prime contractors are ``responsible for the compliance by 
any subcontractor or lower tier subcontractor.'' 29 CFR 5.5(a)(6) and 
(b)(4). The Department's proposed rule would affect these contract 
clauses in several ways.
(1) Flow-Down of Wage Determinations
    The Department proposes adding clarifying language to Sec.  
5.5(a)(6) that the flow-down requirement also requires the inclusion in 
such subcontracts of the appropriate wage determination(s).
(2) Application of the Definition of ``Prime Contractor''
    As noted above in the discussion of Sec.  5.2, the Department is 
proposing to codify a definition of ``prime contractor'' in Sec.  5.2 
that would include controlling shareholders or members, joint venturers 
or partners, and general contractors or others to whom all or 
substantially all of the construction or Davis-Bacon labor standards 
compliance duties have been delegated under the prime contract. These 
entities would therefore also be ``responsible'' under Sec.  5.5(a)(6) 
and (b)(4) for the same violations as the legal entity that signed the 
prime contract. The proposed change is intended to ensure that 
contractors do not interpose single-purpose corporate entities as the 
nominal ``prime contractor'' in order to escape liability or 
responsibility for the contractors' Davis-Bacon labor standards 
compliance duties.
(3) Responsibility for the Payment of Unpaid Wages
    The proposal includes new language underscoring that being 
``responsible for . . . compliance'' means the prime contractor has the 
contractual obligation to cover any unpaid wages or other liability for 
contractor or subcontractor violations of the contract clauses. This is 
consistent with the Department's longstanding interpretation of this 
provision. See M.A. Bongiovanni, Inc., WAB No. 91-08, 1991 WL 494751, 
at *1 (Apr. 19, 1991); see also All Phase Elec. Co., WAB No. 85-18, 
1986 WL 193105, at *1-2 (June 18, 1986) (withholding contract payments 
from the prime contractor for subcontractor employees even though the 
labor standards had not been flowed down into the subcontract).\100\ 
Because such liability for prime contractors is contractual, it 
represents strict liability and does not require that the prime 
contractor knew of or should have known of the subcontractors' 
violations. Bongiovanni, 1991 WL 494751, at *1. As the WAB explained in 
Bongiovanni, this rule ``serves two vital functions.'' Id. First, ``it 
requires the general contractor to monitor the performance of the 
subcontractor and thereby effectuates the Congressional intent embodied 
in the Davis-Bacon and Related Acts to an extent unattainable by 
Department of Labor compliance efforts.'' Id. Second, ``it requires the 
general contractor to exercise a high level of care in the initial 
selection of its business associates.'' Id.
---------------------------------------------------------------------------

    \100\ The new language also clarifies that, consistent with the 
proposed language in Sec.  5.10, such responsibility also extends to 
any interest assessed on backwages or other monetary relief.
---------------------------------------------------------------------------

(4) Potential for Debarment for Disregard of Responsibility
    The proposed new language clarifies that underpayments of a 
subcontractor's workers may in certain circumstances subject the prime 
contractor itself to debarment for violating the responsibility 
provision. Under the existing regulations, there is no reference in the 
Sec.  5.5(a)(6) or (b)(4) responsibility clauses to a potential for 
debarment. However, the existing Sec.  5.5(a)(7) does currently explain 
that ``[a] breach of the contract clauses in 29 CFR 5.5''--which thus 
includes the responsibility clause at Sec.  5.5(a)(6)--``may be grounds 
. . . for debarment[.]'' 29 CFR 5.5(a)(7). The proposed new language 
would provide more explicit notice (in Sec.  5.5(a)(6) and (b)(4) 
themselves) of this potential that a prime contractor may be debarred 
where there are violations on the contract (including violations 
perpetrated by a subcontractor) and the prime contractor has failed to 
take responsibility for compliance.
    In providing this additional notice of the potential for debarment, 
the Department does not intend to change the core standard for when a 
prime contractor or upper tier subcontractor may be debarred for the 
violations of a lower tier subcontractor. The potential for debarment 
for a violation of the responsibility requirement, unlike the 
responsibility for back wages, is not currently subject to a strict 
liability

[[Page 15740]]

standard. Rather, in the cases in which prime contractors have been 
debarred for the underpayments of subcontractors' workers, they were 
found to have some level of intent that reflected a disregard of their 
own obligations. See, e.g., H.P. Connor & Co., WAB No. 88-12, 1991 WL 
494691, at *2 (Feb. 26, 1991) (affirming ALJ's recommendation to debar 
prime contractor for ``run[ning] afoul'' of 29 CFR 5.5(a)(6) because of 
its ``knowing or grossly negligent participation in the underpayment'' 
of the workers of its subcontractors).\101\
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    \101\ See also Martell Constr. Co., ALJ No. 86-DBA-32, 1986 WL 
193129, at *9 (DOL OALJ Aug. 7, 1986), aff'd, WAB No. 86-26, 1987 WL 
247045 (July 10, 1987). In Martell, the prime contractor had failed 
to flow down the required contract clauses and investigate or 
question irregular payroll records submitted by subcontractors. The 
ALJ explained that the responsibility clause in Sec.  5.5(a)(6) 
places a burden on the prime contractor ``to act on or investigate 
irregular or suspicious situations as necessary to assure that its 
subcontractors are in compliance with the applicable sections of the 
regulations.'' 1986 WL 193129, at *9.
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(5) The Department Does Not Intend To Change This Standard. 
Responsibility and Liability of Upper-Tier Subcontractors
    The proposed language in Sec.  5.5(a)(6) and (b)(4) would also 
eliminate confusion regarding the responsibility and liability of 
upper-tier subcontractors. The existing language in Sec.  5.5(a)(6) and 
(b)(4) creates express contractual responsibility of upper-tier 
subcontractors to flow down the required contract clauses to bind their 
lower-tier subcontractors. See Sec.  5.5(a)(6) (stating that the prime 
contractor ``or subcontractor'' must insert the required clauses in 
``any subcontracts''); Sec.  5.5(b)(4) (stating that the flow-down 
clause must ``requir[e] the subcontractors to include these clauses in 
any lower tier subcontracts''). The Department has long recognized that 
with this responsibility comes the potential for sanctions against 
upper-tier subcontractors that fail to properly flow down the contract 
clauses. See AAM 69 (DB-51), at 2 (July 29, 1966).\102\
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    \102\ In AAM 69, the Department noted that ``the failure of the 
prime contractor or a subcontractor to incorporate the labor 
standards provisions in its subcontracts may, under certain 
circumstances, be a serious violation of the contract requirements 
which would warrant the imposition of sanctions under either the 
Davis-Bacon Act or our Regulations.''
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    The current contract clauses in Sec.  5.5(a)(6) and (b)(4) do not 
expressly identify further contractual responsibility or liability of 
upper-tier subcontractors for violations that are committed against the 
employees of their lower-tier subcontractors. However, although the 
Department has not had written guidance to this effect, it has in many 
circumstances held upper-tier subcontractors responsible for the 
failure by their own lower-tier subcontractors to pay required 
prevailing wages. See, e.g., Ray Wilson Co., ARB No. 02-086, 2004 WL 
384729, at *6 (Feb. 27, 2004); Norsaire Sys., Inc., WAB No. 94-06, 1995 
WL 90009, at *1 (Feb. 28, 1995)
    In Ray Wilson Co., for example, the ARB upheld the debarment of an 
upper-tier subcontractor because of its lower-tier subcontractor's 
misclassification of workers. As the ARB held, the higher-tier 
subcontractor had an ``obligation[ ] to be aware of DBA requirements 
and to ensure that its lower-tier subcontractor . . . properly complied 
with the wage payment and record keeping requirements on the project.'' 
2004 WL 384729, at *10. The Department sought debarment because the 
upper-tier subcontractor had discussed the misclassification scheme 
with the lower-tier subcontractor and thus ``knowingly countenanced'' 
the violations. Id. at *8.
    The Department proposes in this rulemaking to clarify that upper-
tier subcontractors (in addition to prime contractors) may be 
responsible for the violations committed against the employees of 
lower-tier subcontractors. The proposal would clarify that this 
responsibility would require upper-tier subcontractors to pay back 
wages on behalf of their lower-tier subcontractors and subject upper-
tier subcontractors to debarment in appropriate circumstances (i.e., 
where the lower-tier subcontractor's violation reflects a disregard of 
obligations by the upper-tier subcontractor to workers of their 
subcontractors). The proposal would include, in the Sec.  5.5(a)(6) and 
(b)(4) contract clauses, language adding that ``any subcontractor[ ] 
responsible'' for the violations is also liable for back wages and 
potentially subject to debarment. This language is intended to place 
liability not only on the lower-tier subcontractor that is directly 
employing the worker who does not receive required wages, but also on 
the upper-tier subcontractors that may also have disregarded their 
obligations to be responsible for compliance.
    With this proposal, the Department does not intend to place the 
same strict liability responsibility on all upper-tier subcontractors 
as, discussed above, the existing language already places on prime 
contractors for lower-tier subcontractors' back wages. Rather, the new 
proposed language is intended to clarify that, in appropriate 
circumstances, as in Ray Wilson Co., upper-tier subcontractors may be 
held responsible--both subjecting them to possible debarment and 
requiring them to pay back wages jointly and severally with the prime 
contractor and the lower-tier subcontractor that directly failed to pay 
the prevailing wages.
    A key principle in enacting regulatory requirements is that 
liability should, to the extent possible, be placed on the entity that 
best can control whether or not a violation occurs. See Bongiovanni, 
1991 WL 494751, at *1.\103\ For this reason, the Department proposes 
language assigning liability to upper-tier subcontractors, who have the 
ability to choose the lower-tier subcontractors they hire, notify 
lower-tier subcontractors of the prevailing wage requirements of the 
contract, and take action if they have any reason to believe there may 
be compliance issues. By clarifying that upper-tier subcontractors may 
be liable under appropriate circumstances--but are not strictly liable 
as are prime contractors--the Department believes that it has struck an 
appropriate balance that is consistent with historical interpretation, 
the statutory language of the DBA, and the feasibility and efficiency 
of future enforcement.
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    \103\ Cf. Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 
456 U.S. 556, 572-73 (1982) (``[A] rule that imposes liability on 
the standard-setting organization--which is best situated to prevent 
antitrust violations through the abuse of its reputation--is most 
faithful to the congressional intent that the private right of 
action deter antitrust violations.''). The same principle supports 
the Department's proposed codification of the definition of ``prime 
contractor.'' Where the nominal prime contractor is a single-purpose 
entity with few actual workers, and it contracts with a general 
contractor for all relevant aspects of construction and monitoring 
of subcontractors, the most reasonable enforcement structure would 
place liability on both the nominal prime contractor and the general 
contractor that actually has the staffing, experience, and mandate 
to assure compliance on the job site.
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(E) 29 CFR 5.5(d)--Incorporation by Reference
    Proposed new section 5.5(d) clarifies that, notwithstanding the 
continued requirement that agencies incorporate contract clauses and 
wage determinations ``in full'' into a covered contract, the clauses 
and wage determinations are equally effective if they are incorporated 
by reference. The Department's proposal for this subsection is 
discussed further below in part III.B.3.xx (``Post-award determinations 
and operation-of-law''), together with proposed changes to Sec. Sec.  
1.6(f), 5.5(e), and 5.6.
(F) 29 CFR 5.5(e)--Operation of Law
    In a new section at Sec.  5.5(e), the Department proposes language 
making effective by operation of law a contract

[[Page 15741]]

clause or wage determination that was wrongly omitted from the 
contract. The Department's proposal for this subsection is discussed 
below in part III.B.3.xx (``Post-award determinations and operation-of-
law''), together with proposed changes to Sec. Sec.  1.6(f), 5.5(d), 
and 5.6.
iv. Section 5.6 Enforcement
(A) 29 CFR 5.6(a)(1)
    The Department proposes to revise Sec.  5.6(a)(1) by renumbering 
the existing regulatory text Sec.  5.6(a)(1)(i), and adding an 
additional sub-section, Sec.  5.6(a)(1)(ii), to include a provision 
clarifying that where a contract is awarded without the incorporation 
of the required Davis-Bacon labor standards clauses required by Sec.  
5.5, the Federal agency must incorporate the clauses or require their 
incorporation. The Department's proposal for this subsection is 
discussed further below in part III.B.3.xx (``Post-award determinations 
and operation-of-law''), together with proposed changes to Sec. Sec.  
1.6(f) and 5.5(e).
(B) 29 CFR 5.6(a)(2)
    The Department proposes to amend Sec.  5.6(a)(2) to reflect the 
Department's longstanding practice and interpretation that certified 
payrolls required pursuant to Sec.  5.5(a)(3)(ii) may be requested--and 
Federal agencies must produce such certified payrolls--regardless of 
whether the Department has initiated an investigation or other 
compliance action. The term ``compliance action'' includes, without 
limitation, full investigations, limited investigations, office audits, 
self-audits, and conciliations.\104\ The Department further proposes 
revising this paragraph to clarify that, in those instances in which a 
Federal agency does not itself maintain such certified payrolls, it is 
the responsibility of the Federal agency to ensure that those records 
are provided to the Department upon request, either by obtaining and 
providing the certified payrolls to the Department, or by requiring the 
entity maintaining those certified payrolls to provide the records 
directly to the Department.
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    \104\ See 2020 GAO Report, note 12, supra, at 6 tbl.1, for 
descriptions of WHD Compliance Actions.
---------------------------------------------------------------------------

    The Department also proposes to replace the phrase ``payrolls and 
statements of compliance'' with ``certified payrolls'' to continue to 
more clearly distinguish between certified payrolls and regular payroll 
and other basic records and information that the contractor is also 
required to maintain under Sec.  5.5(a)(3), as discussed above.
    First, the proposed revisions are intended to clarify that an 
investigation or other compliance action is not a prerequisite to the 
Department's ability to obtain from the Federal agency certified 
payrolls submitted pursuant to Sec.  5.5(a)(3)(ii). Second, the 
proposed revisions are intended to remove any doubt or uncertainty that 
the Federal agency has an obligation to produce such certified 
payrolls, even in those circumstances in which it may not be the entity 
actually maintaining the requested certified payrolls. These revisions 
would make explicit the Department's longstanding practice and 
interpretation of this provision.
    These proposed revisions would not place any new or additional 
requirements or recordkeeping burdens on contracting agencies, as they 
are already required to maintain these certified payrolls and provide 
them to the Department upon request.
    These proposed revisions enhance the Department's ability to 
provide compliance assistance to various stakeholders, including 
Federal agencies, contractors, subcontractors, sponsors, applicants, 
owners, or other entities awarded contracts subject to the provisions 
of the DBRA. Specifically, these proposed revisions would facilitate 
the Department's review of certified payrolls on covered contracts 
where the Department has not initiated any specific compliance action. 
Conducting such reviews promotes the proper administration of the DBRA 
because, in the Department's experience, such reviews often enable the 
Department to identify compliance issues and circumstances in which 
additional outreach and education would be beneficial.
(C) 29 CFR 5.6(a)(3)-(5), 5.6(b)
    The Department proposes revisions to Sec.  5.6(a)(3) and (5) and 
(b), similar to the above-mentioned proposed changes to Sec.  
5.6(a)(2), to clarify that an investigation is only one method of 
assuring compliance with the labor standards clauses required by Sec.  
5.5 and the applicable statutes referenced in Sec.  5.1. The Department 
proposes to supplement the term ``investigation,'' where appropriate, 
with the phrase ``or other compliance actions.'' The proposed revisions 
align with all the types of compliance actions currently used by the 
Department, as well as any additional categories that the Department 
may use in the future. These revisions make explicit the Department's 
longstanding practice and interpretation of these provisions and do not 
impose any new or additional requirements upon a Federal agency.
    Proposed revisions to Sec.  5.6(a)(3) clarify the records and 
information that contracting agencies should include in their DBRA 
investigations. These proposed changes conform to proposed changes in 
Sec.  5.5(a)(3).
    The Department also proposes updating current Sec.  5.6(a)(5) to 
reflect its practice of redacting portions of confidential statements 
of workers or other informants that would tend to reveal those 
informants' identities. Finally, the Department proposes renumbering 
current Sec.  5.6(a)(5) as a stand-alone new paragraph Sec.  5.6(c). 
This proposed change is made to emphasize--without making substantive 
changes--that this regulatory provision mandating protection of 
information that identifies or would tend to identity confidential 
sources, or constitute an unwarranted invasion of personal privacy, 
applies to both the Department's and other agencies' confidential 
statements and other related documents.
v. Section 5.10 Restitution, Criminal Action
    To correspond with proposed language in the underlying contract 
clauses, the Department proposes to add references to monetary relief 
and interest to the description of restitution in Sec.  5.10, as well 
as an explanation of the method of computation of interest applicable 
generally to any circumstance in which there has been an underpayment 
of wages under a covered contract.
    The Department has proposed new anti-retaliation contract clauses 
at Sec.  5.5(a)(11) and (b)(5), along with a related section of the 
regulations at Sec.  5.18. Those clauses and section provide for the 
provision of monetary relief that would include, but not be limited to, 
back wages. Reference to this relief in Sec.  5.10 is proposed to 
correspond to those proposed new clauses and section. For further 
discussion of those proposals, see part III.B.3.xix (``Anti-
Retaliation'').
    The reference to interest in Sec.  5.10 is similarly intended to 
correspond to proposed new language requiring the payment of interest 
on any underpayment of wages in the contract clauses at Sec.  
5.5(a)(1)(vi), (a)(2) and (6), and (b)(2) through (4), and on any other 
monetary relief for violations of the proposed anti-retaliation 
clauses. The existing Davis-Bacon regulations and contract clauses do 
not specifically provide for the payment of interest on back wages. The 
ARB and the Department's administrative law judges, however, have held 
that interest calculated to the date of the underpayment or loss is 
generally appropriate where back wages are due

[[Page 15742]]

under other similar remedial employee protection statutes enforced by 
the Department. See, e.g., Lawn Restoration Serv. Corp., No. 2002-SCA-
00006, slip op. at 74 (OALJ Dec. 2, 2003) (awarding prejudgment 
interest under the SCA).\105\ Under the DBRA, as in the INA and SCA and 
other similar statutes, an assessment of interest on back wages and 
other monetary relief will ensure that the workers Congress intended to 
protect from substandard wages will receive the full compensation that 
they were owed under the contract.\106\
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    \105\ See also Greater Mo. Med. Pro-care Providers, Inc., ARB 
No. 12-015, 2014 WL 469269, at *18 (Jan. 29, 2014) (approving of 
pre-judgment and post-judgment interest on back pay award for H-1B 
visa cases under the Immigration and Nationality Act (INA)), aff'd 
sub nom. Greater Mo. Med. Pro-care Providers, Inc. v. Perez, No. 
3:14-CV-05028, 2014 WL 5438293 (W.D. Mo. Oct. 24, 2014), rev`d on 
other grounds, 812 F.3d 1132 (8th Cir. 2015).
    \106\ The Department does not propose any requirement of 
interest on assessments of liquidated damages under the CWHSSA 
clause at Sec.  5.5(b)(2). Under CHWSSA, unlike the FLSA, there is 
no requirement that liquidated damages be provided to affected 
workers. Contracting agencies can provide liquidated damages that 
they recover to employees, but they are also allowed to retain 
liquidated damages to compensate themselves for the costs of 
enforcement or otherwise for their own benefit. See 40 U.S.C. 
3702(b)(2)(B), 3703(b)(2)(A).
---------------------------------------------------------------------------

    The proposed language establishes that interest will be calculated 
from the date of the underpayment or loss, using the interest rate 
applicable to underpayment of taxes under 26 U.S.C. 6621, and will be 
compounded daily. Various OSHA whistleblower regulations use the tax 
underpayment rate and daily compounding because that accounting best 
achieves the make-whole purpose of a back-pay award. See Procedures for 
the Handling of Retaliation Complaints Under Section 806 of the 
Sarbanes-Oxley Act of 2002, as Amended, Final Rule, 80 FR 11865, 11872 
(Mar. 5, 2015).
vi. Section 5.11 Disputes Concerning Payment of Wages
    The Department proposes minor revisions to Sec.  5.11(b)(1) and 
(c)(1), to clarify that where there is a dispute of fact or law 
concerning payment of prevailing wage rates, overtime pay, or proper 
classification, the Administrator may notify the affected contractors 
and subcontractors, if any, of the investigation findings by means 
other than registered or certified mail, so long as those other means 
would normally assure delivery. Examples of such other means include, 
but are not limited to, email to the last known email address, delivery 
to the last known address by commercial courier and express delivery 
services, or by personal service to the last known address. As has been 
recently highlighted during the COVID-19 pandemic, while registered or 
certified mail may generally be a reliable means of delivery, in some 
circumstances other delivery methods may be just as reliable or even 
more successful at assuring delivery. These revisions allow the 
Department to choose methods to ensure that the necessary notifications 
are delivered to the affected contractors and subcontractors.
    In addition, the Department proposes similar changes to allow 
contractors and subcontractors to also provide their response, if any, 
to the Administrator's notification of the investigative findings by 
any means that would normally assure delivery. The Department also 
proposes replacing the term ``letter'' with the term ``notification'' 
in this section, since the notification of investigation findings may 
be delivered by letter or other means, such as email. Similarly, the 
Department proposes to replace the term ``postmarked'' with ``sent'' to 
reflect that other methods of delivery may be confirmed by other means, 
such as by the date stamp on an email or the delivery confirmation 
provided by a commercial delivery service.
    For additional discussion related to Sec.  5.11, see part 
III.B.3.xxi (``Debarment'').
vii. Section 5.12. Debarment Proceedings
    The Department proposes minor revisions to Sec.  5.12(b)(1) and 
(d)(2)(iv)(A), to clarify that the Administrator may notify the 
affected contractors and subcontractors, if any, of the investigation 
findings by means other than registered or certified mail, so long as 
those other means would normally assure delivery. As discussed above in 
reference to identical changes proposed to Sec.  5.11, these proposed 
revisions will allow the Department to choose the most appropriate 
method to confirm that the necessary notifications reach their 
recipients. The Department proposes similar changes to allow the 
affected contractors or subcontractors to use any means that would 
normally assure delivery when making their response, if any, to the 
Administrator's notification.
    The Department also proposes a slight change to Sec.  5.12(b)(2), 
to state that the Administrator's findings will be final if no hearing 
is requested within 30 days of the date of the Administrator's 
notification, as opposed to the current language, which states that the 
Administrator's findings shall be final if no hearing is requested 
within 30 days of receipt of the Administrator's notification. This 
proposed change would align the time period available for requesting a 
hearing in Sec.  5.12(b)(2) with similar requirements in Sec.  5.11 and 
other paragraphs in Sec.  5.12, which state that such requests must be 
made within 30 days of the date of the Administrator's notification.
    For additional discussion related to Sec.  5.12, see part 
III.B.3.xxi (``Debarment'').
viii. Section 5.16 Training Plans Approved or Recognized by the 
Department of Labor Prior to August 20, 1975
    As noted above (see part III.B.3.iii(C) ``29 CFR 5.5(a)(4) 
Apprentices.''), the Department proposes to rescind and reserve Sec.  
5.16. Originally published along with Sec.  5.5(a)(4)(ii) in a 1975 
final rule, Sec.  5.16 is essentially a grandfather clause permitting 
contractors, in connection with certain training programs established 
prior to August 20, 1975, to continue using trainees on Federal and 
federally assisted construction projects without having to seek 
additional approval from the Department pursuant to Sec.  
5.5(a)(4)(ii). See 40 FR 30480. Since Sec.  5.16 appears to be obsolete 
more than four decades after its issuance, the Department proposes to 
rescind and reserve the section. The Department also proposes several 
technical edits to Sec.  5.5(a)(4)(ii) to remove references to Sec.  
5.16.
ix. Section 5.17 Withdrawal of Approval of a Training Program
    As discussed in detail above, the Department proposes to remove 
references to trainees and training programs throughout parts 1 and 5 
(see section iii(C) ``29 CFR 5.5(a)(4) Apprentices.'') as well as 
rescind and reserve Sec.  5.16 (see section viii ``Section 5.16 
Training plans approved or recognized by the Department of Labor prior 
to August 20, 1975.''). Accordingly, the Department also proposes to 
rescind and reserve Sec.  5.17.
x. Section 5.20 Scope and Significance of This Subpart
    The Department proposes two technical corrections to Sec.  5.20. 
First, the Department proposes to correct a typographical error in the 
citation to the Portal-to-Portal Act of 1947 to reflect that the 
relevant section of the Portal-to-Portal Act is codified at 29 U.S.C. 
259, not 29 U.S.C. 359. Second, the last sentence of Sec.  5.20 
currently states, ``Questions on matters not fully covered by this 
subpart may be referred to the Secretary for interpretation as provided 
in Sec.  5.12.'' However, the regulatory provision titled ``Rulings and 
Interpretations,'' which this section is

[[Page 15743]]

meant to reference, is currently located at Sec.  5.13. The Department 
therefore proposes to replace the incorrect reference to Sec.  5.12 
with the correct reference to Sec.  5.13.
xi. Section 5.23 The Statutory Provisions
    The Department proposes to make technical, non-substantive changes 
to Sec.  5.23. The existing text of Sec.  5.23 primarily consists of a 
lengthy quotation of a particular fringe benefit provision of the 1964 
amendments to the DBA. The Department proposes to replace this text 
with a summary of the statutory provision at issue for two reasons. 
First, due to a statutory amendment, the quotation set forth in 
existing Sec.  5.23 no longer accurately reflects the statutory 
language. Specifically, on August 21, 2002, Congress enacted 
legislation which made several non-substantive revisions to the 
relevant 1964 DBA amendment provisions and recodified those provisions 
from 40 U.S.C. 276a(b) to 40 U.S.C. 3141.\107\ The Department proposes 
to update Sec.  5.23 to include a citation to 40 U.S.C. 3141(2). 
Second, the Office of the Federal Register disfavors lengthy block 
quotations of statutory text.\108\ In light of this drafting 
convention, and because the existing quotation in Sec.  5.23 no longer 
accurately reflects the statutory language, the Department is proposing 
to revise Sec.  5.23 so that it paraphrases the statutory language set 
forth at 40 U.S.C. 3141(2).
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    \107\ See Revision of Title 40, U.S.C., ``Public Buildings, 
Property, and Works,'' Public Law 107-217, 3141, 116 Stat. 1062, 
1150 (Aug. 21, 2002).
    \108\ See Office of the Federal Register, Document Drafting 
Handbook Sec.  3.6 (Aug. 2018 ed., rev. Mar. 24, 2021), available at 
https://www.archives.gov/files/Federal-register/write/handbook/ddh.pdf.
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xii. Section 5.25 Rate of Contribution or Cost for Fringe Benefits
    The Department proposes to add new paragraph (c) to existing Sec.  
5.25 to codify the principle of annualization used to calculate the 
amount of Davis-Bacon credit that a contractor may receive for 
contributions to a fringe benefit plan when the contractor's workers 
also work on private projects. While existing guidance generally 
requires the use of annualization to compute the hourly equivalent of 
fringe benefits, annualization is not currently addressed in the 
regulations. The Department's proposal would require annualization of 
fringe benefits unless a contractor is approved for an exception and 
provide guidance on how to properly annualize fringe benefits. The 
proposed revision also creates a new administrative process that 
contractors must follow to obtain approval by the Administrator for an 
exception from the annualization requirement.
    Consistent with the Secretary's authority to set the prevailing 
wage, WHD has long concluded that a contractor generally may not 
calculate Davis-Bacon credit for all its contributions to a fringe 
benefit plan in a given time period based solely upon the workers' 
hours on a Davis-Bacon project when the contractor's workers also work 
on private projects for the contractor in that same time period. See, 
e.g., Miree Constr. Corp. v. Dole, 930 F.2d 1536, 1545-46 (11th Cir. 
1991); see also, e.g., WHD Opinion Letter DBRA-72 (June 5, 1978); WHD 
Opinion Letter DBRA-134 (June 6, 1985); WHD Opinion Letter DBRA-68 (May 
22, 1984); FOH 15f11(b). WHD's guidance explains that contributions 
made to a fringe benefit plan for government work generally may not be 
used to fund the plan for periods of non-government work, and a 
contractor typically must convert its total annual contributions to the 
fringe benefit plan to an hourly cash equivalent by dividing the cost 
of the fringe benefit by the total number of working hours (DBRA and 
non-covered) to determine the amount creditable towards meeting its 
obligation to pay the prevailing wage under the DBRA. See FOH 15f11(b), 
15f12(b).
    This principle, which is referred to as ``annualization,'' thus 
generally compels a contractor performing work on a Davis-Bacon covered 
project to divide its contributions to a fringe benefit plan for a 
worker by that worker's total hours of work on both Davis-Bacon and 
private projects for the employer in that year, rather than attribute 
those contributions solely to the worker's work on Davis-Bacon covered 
projects. Annualization effectively prohibits contractors from using 
fringe benefit plan contributions attributable to work on private jobs 
to meet their prevailing wage obligation for DBRA-covered work. See, 
e.g., Miree Constr., 930 F.2d at 1545 (annualization ensures receipt of 
the prevailing wage by ``prevent[ing] employers from receiving Davis-
Bacon credit for fringe benefits actually paid to employees during non-
Davis-Bacon work''). Annualization is intended to prevent the use of 
DBRA work as the disproportionate or exclusive source of funding for 
benefits that are continuous in nature and that constitute compensation 
for all the worker's work, both Davis-Bacon covered and private. 
Despite the longstanding nature of this policy, however, the concept of 
annualization is not expressly referred to in the Davis-Bacon 
regulations.
    For many years, WHD has required contractors to annualize 
contributions for most types of fringe benefit plans, including health 
insurance plans, apprenticeship training plans, vacation plans, and 
sick leave plans. WHD's rationale for requiring annualization is that 
such contributions finance benefits that: (1) Are continuous in nature, 
and (2) reflect compensation for all of the work performed by a laborer 
or mechanic, including work on both DBA-covered and private projects. 
One notable exception to this general rule compelling the annualization 
of fringe benefit plan contributions, however, is that WHD has not 
required annualization for defined contribution pension plans (DCPPs) 
that provide for immediate participation and essentially immediate 
vesting (e.g., 100 percent vesting after a worker works 500 or fewer 
hours). See WHD Opinion Letter DBRA-134 (June 6, 1985); see also FOH 
15f14(f)(1). The rationale for such exclusion is that DCPPs are not 
continuous in nature, as the benefits are not available until a 
worker's retirement, and that they ensure that the vast majority of 
workers will receive the full amount of contributions made on their 
behalf. However, WHD does not currently have any public guidance 
explaining the extent to which other plans may also share those 
characteristics and warrant an exception from the annualization 
principle.
    To clarify when an exception to the general annualization principle 
may be appropriate, the Department proposes language stating that a 
fringe benefit plan may only qualify for such an exception when three 
criteria are satisfied: (1) The benefit provided is not continuous in 
nature; (2) the benefit does not provide compensation for both public 
and private work; and (3) the plan provides for immediate participation 
and essentially immediate vesting. In accordance with the Department's 
longstanding guidance, a plan will generally be considered to have 
essentially immediate vesting if the benefits vest after a worker works 
500 or fewer hours. These criteria are not necessarily limited to 
DCPPs. However, to ensure that the criteria are applied correctly and 
that workers' Davis-Bacon wages are not disproportionately used to fund 
benefits during periods of private work, such an exception can only 
apply when the plan in question has been submitted to the Department 
for review and approval. Such requests may be submitted by plan 
administrators, contractors, or their representatives. However, to 
avoid any disruption to the provision of worker benefits, the 
Department also proposes that any plan that does not require

[[Page 15744]]

annualization under the Department's existing guidance, such as DCPPs, 
may continue to use such an exception until the plan has either 
requested and received a review of its exception status under this 
process, or until 18 months have passed from the effective date of this 
rule, whichever comes first.
    By requiring annualization, the proposed paragraph (c) furthers the 
above policy goal of protecting workers' fringe benefits from dilution 
by preventing contractors from taking credit for fringe benefits 
attributable to work on non-governmental projects against fringe 
benefits required on DBA-covered work. The proposed exception also 
provides the flexibility for plans that do not dilute workers' fringe 
benefits to avoid the annualization requirement if they meet the 
proposed criteria, which are based on the Department's existing 
guidance with which stakeholders are already familiar. In this way, the 
Department hopes to strike a balance between protecting workers and 
preserving access to the types of plans that have traditionally been 
considered exempt from the annualization requirement.
xiii. Section 5.26 `` * * * Contribution Irrevocably Made * * * to a 
Trustee or to a Third Person''
    The Department proposes several non-substantive technical 
corrections to Sec.  5.26 to improve clarity and readability.
xiv. Section 5.28 Unfunded Plans
    The Department proposes several revisions to this section. First, 
the Department proposes a technical correction to the citation to the 
DBA to reflect the codification of the relevant provision at 40 U.S.C. 
3141(2)(B)(ii), as well as a number of non-substantive revisions.
    Additionally, the Department proposes adding a new paragraph (b)(5) 
to this section, explicitly stating that unfunded benefit plans or 
programs must be approved by the Secretary in order to qualify as bona 
fide fringe benefits, and a new paragraph (c) explaining the process 
contractors and subcontractors must use to request such approval. To 
accommodate these proposed additions, the text currently located in 
paragraph (c) of this section would be moved to new paragraph (d).
    As other regulatory sections make clear, if a contractor provides 
its workers with fringe benefits through an unfunded plan instead of by 
making irrevocable payments to a trustee or other third person, the 
contractor may only take credit for any costs reasonably anticipated in 
providing such fringe benefits if it has submitted a request in writing 
to the Department and the Secretary has determined that the applicable 
standards of the DBA have been met. See 29 CFR 5.5(a)(1)(iv), 5.29(e). 
However, Sec.  5.28 does not mention this approval requirement, even 
though it is the section that most specifically discusses requirements 
for unfunded plans. Incorporating this requirement and a description of 
the approval process into Sec.  5.28 would therefore help improve 
regulatory clarity. Accordingly, the Department proposes to revise 
Sec.  5.28 to clarify that, for payments under an unfunded plan or 
program to be credited as fringe benefits, contractors and 
subcontractors must submit a written request, including sufficient 
documentation, for the Secretary to consider in determining whether the 
plan or program, and the benefits proposed to be provided thereunder, 
are ``bona fide,'' meet the factors set forth in Sec.  5.28(b)(1)-(4), 
and are otherwise consistent with the Act. The Department also proposes 
to add language to explain that such requests must be submitted by mail 
to WHD's Division of Government Contracts Enforcement, via email to 
[email protected] or any successor address, or via any other means 
directed by the Administrator.
    The proposed revised regulation provides that a request for 
approval of an unfunded plan must include sufficient documentation to 
enable the Department to evaluate whether the plan satisfies the 
regulatory criteria. To provide flexibility, the proposed revised 
regulation does not itself specify the documentation that must be 
submitted with the request. However, current paragraph (c) of this 
section, and proposed paragraph (d), explain that the words 
``reasonably anticipated'' contemplate a plan that can ``withstand a 
test'' of ``actuarial soundness.'' While WHD's determination whether or 
not an unfunded plan meets the statutory and regulatory requirements 
will be based on the totality of the circumstances, the type of 
information WHD will require from contractors or subcontractors in 
order to make such a determination will typically include: (1) 
Identification of the benefit(s) to be provided; (2) an explanation of 
the funding/contribution formula; (3) an explanation of the financial 
analysis methodology used to estimate the costs of the plan or program 
benefits and how the contractor has budgeted for those costs; (4) a 
specification of how frequently the contractor either sets aside funds 
in accordance with the cost calculations to meet claims as they arise, 
or otherwise budgets, allocates, or tracks such funds to ensure that 
they will be available to meet claims; (5) an explanation of whether 
employer contribution amounts are different for Davis-Bacon and non-
prevailing wage work; (6) identification of the administrator of the 
plan or program and the source of the funds the administrator uses to 
pay the benefits provided by the plan or program; (7) specification of 
the Employee Retirement Income Security Act of 1974 (ERISA) status of 
the plan or program; and (8) an explanation of how the plan or program 
is communicated to laborers or mechanics.
xv. Section 5.29 Specific Fringe Benefits
    The Department proposes to revise Sec.  5.29 to add a new paragraph 
(g) that addresses how contractors may claim a fringe benefit credit 
for the costs of an apprenticeship program. While Sec.  5.29(a) states 
that fringe benefits may be used for the defrayment of the costs of 
apprenticeship programs, the regulations do not presently address how 
to properly credit such contributions against a contractor's fringe 
benefit obligations. The proposed revision would codify the 
Department's longstanding practice and interpretation. See WHD Opinion 
Letters DBRA-116 (May 17, 1978), DBRA-18 (Sept. 7, 1983), DBRA-16 (July 
28, 1987), DBRA-160 (March 10, 1990); see also FOH 15f17. The proposed 
revision also reflects relevant case law. See Miree Constr. Corp., WAB 
No. 87-13, 1989 WL 407466 (Feb. 17, 1989); Miree Constr. Corp. v. Dole, 
730 F. Supp. 385 (N.D. Ala. 1990); Miree Constr. Corp. v. Dole, 930 
F.2d at 1537.
    Proposed paragraph (g) clarifies when a contractor may take credit 
for contributions made to an apprenticeship program and how to 
calculate the credit a contractor may take against its fringe benefit 
obligation. First, the proposed paragraph states that for a contractor 
or subcontractor to take credit for the costs of an apprenticeship 
program, the program, in addition to meeting all other requirements for 
fringe benefits, must be registered with the Department of Labor's 
Employment and Training Administration, Office of Apprenticeship (OA), 
or with a State Apprenticeship Agency recognized by the OA. 
Additionally, the proposed paragraph explains that contractors may take 
credit for the actual costs of the apprenticeship program, such as 
tuition, books, and materials, but may not take credit for additional 
contributions that are beyond the costs actually incurred for the 
apprenticeship program. It also reiterates the Department's position 
that the contractor may only claim credit

[[Page 15745]]

towards its prevailing wage obligations for the classification of 
laborer or mechanic that is the subject of the apprenticeship program. 
For example, if a contractor has apprentices registered in a bona fide 
apprenticeship program for carpenters, the contractor could claim a 
credit for the costs of the apprenticeship program towards the 
prevailing wages due to the carpenters on a Davis-Bacon project, but 
could not apply that credit towards the prevailing wages due to the 
electricians or laborers on the project. Likewise, the proposed 
paragraph explains that, when applying the annualization principle 
discussed above, the workers whose total working hours are used to 
calculate the hourly contribution amount are limited to those workers 
in the same classification as the apprentice, and that this hourly 
amount may only be applied toward the wage obligations for such 
workers.
    The Department also proposes a minor technical revision to 
subsection (e) to include a citation to Sec.  5.28, which provides 
additional guidance on unfunded plans.
xvi. Section 5.30 Types of Wage Determinations
    The Department proposes several non-substantive revisions to Sec.  
5.30. In particular, the Department proposes to update the 
illustrations in Sec.  5.30(c) to more closely resemble the current 
format of wage determinations issued under the DBA. The current 
illustrations in Sec.  5.30(c) list separate rates for various 
categories of fringe benefits, including ``Health and welfare,'' 
``Pensions,'' ``Vacations,'' ``Apprenticeship program,'' and 
``Others.'' However, current Davis-Bacon wage determinations typically 
contain a single combined fringe benefit rate per classification, 
rather than separately listing rates for different categories of fringe 
benefits. To avoid confusion, the Department proposes to update the 
illustrations to reflect the way in which fringe benefits are typically 
listed on wage determinations. The Department has also proposed several 
non-substantive revisions to Sec.  5.30(a) and (b), including revisions 
pertaining to the updated illustrations in Sec.  5.30(c).
xvii. Section 5.31 Meeting Wage Determination Obligations
    The Department has proposed to update the illustrations in Sec.  
5.30(c) to more closely resemble the current format of wage 
determinations under the DBRA. The Department therefore proposes to 
make technical, non-substantive changes to Sec.  5.31 to reflect the 
updated illustration in Sec.  5.30(c).
xviii. Section 5.33 Administrative Expense of a Contractor or 
Subcontractor
    The Department proposes to add a new Sec.  5.33 to codify existing 
WHD policy under which a contractor or subcontractor may not take 
Davis-Bacon credit for its own administrative expenses incurred in 
connection with the administration of a fringe benefit plan. See WHD 
Opinion Letter DBRA-72 (June 5, 1978); see also FOH 15f18. This is 
consistent with Department case law under the DBA, under which such 
payments are viewed as ``part of [an employer's] general overhead 
expenses of doing business and should not serve to decrease the direct 
benefit going to the employee.'' Collinson Constr. Co., WAB No. 76-09, 
1977 WL 24826, at *2 (Apr. 20, 1977) (also noting that the DBA's 
inclusion of ``costs'' in the provision currently codified at 40 U.S.C. 
3141(2)(B)(ii) refers to ``the costs of benefits under an unfunded 
plan'') (emphasis in original); see also Cody-Zeigler, Inc., ARB Nos. 
01-014, 01-015, 2003 WL 23114278, at *20 (Dec. 19, 2003) (applying 
Collinson and concluding that a contractor improperly claimed its 
administrative costs for ``bank fees, payments to clerical workers for 
preparing paper work and dealing with insurance companies'' as a fringe 
benefit). This is also consistent with the Department's regulations and 
guidance under the SCA. See 29 CFR 4.172; FOH 14j00(a)(1).
    The Department also seeks public comment regarding whether it 
should clarify this principle further with respect to third-party 
administrative costs. Under both the DBA and SCA, fringe benefits 
include items such as health insurance, which necessarily involves both 
the payment of benefits and administration of benefit claims. 40 U.S.C. 
3141(2)(B); 41 U.S.C. 6703(2). Accordingly, reasonable costs incurred 
by a third-party fiduciary in its administration and delivery of fringe 
benefits to employees are creditable under the SCA. See WHD Opinion 
Letter SCA-93 (Jan. 27, 1994) (noting, in a circumstance in which an 
SCA contractor contributed to a pension plan on behalf of its 
employees, that ``the plan itself may recoup [its] administrative 
costs''). For example, a contractor may take credit for the premiums it 
pays to a health insurance carrier, and the insurance carrier may use 
those premium payments both to pay for workers' medical expenses and to 
pay the reasonable costs of tasks related to the administration and 
delivery of benefits, such as evaluating benefit claims, deciding 
whether they should be paid, and approving referrals to specialists. 
See FOH 14j00(a)(2). The Department applies a similar standard under 
the DBA.
    However, whether fees charged by a third party are creditable 
depends on the facts and circumstances. As noted above, a contractor's 
own administrative costs incurred in connection with the provision of 
fringe benefits are not creditable, as they are considered the 
contractor's business expenses. See Collinson, 1977 WL 24826, at *2; 29 
CFR 4.172. As such, WHD has previously advised that if a third party is 
merely performing on the contractor's behalf administrative functions 
associated with providing fringe benefits to employees, rather than 
actually administering claims and paying benefits, the contractor's 
payments to such a third party are not creditable because they 
substitute for the contractor's own administrative costs. Such 
functions include, for example, tracking the amount of the contractor's 
fringe benefit contributions, making sure those contributions cover the 
fringe benefit credit claimed by the contractor, tracking and paying 
invoices from third-party administrators, and sending lists of new 
hires to the plan administrators. Essentially, the principle explained 
in 29 CFR 4.172, FOH 14j00(a)(1), FOH 15f18, and proposed Sec.  5.33 
that a contractor may not take credit for its own administrative 
expenses applies regardless of whether a contractor uses its own 
employees to perform this sort of administrative work or engages 
another company to handle these tasks.
    The Department has received an increasing number of inquiries in 
recent years regarding the extent to which fees charged by third 
parties for performing such administrative tasks are or are not 
creditable. As such, while not proposing specific regulatory text, the 
Department proposes to clarify this matter in a final rule. The 
Department seeks comment on whether it should incorporate the above-
described policies, or other policies regarding third-party entities, 
into its regulations. In addition, the Department seeks comment on 
examples of the administrative duties performed by third parties that 
do not themselves pay benefits or administer benefit claims.
    The Department also seeks comment on the extent to which third-
party entities both (1) perform administrative functions associated 
with providing fringe benefits to employees, such as tracking a 
contractor's fringe benefit contributions, and (2) actually administer 
and deliver benefits, such as evaluating and paying out medical

[[Page 15746]]

claims, and on how the Department should treat payments to any such 
entities. For instance, should the Department consider the cost of the 
administrative functions in (1) non-creditable business expenses, and 
the cost of actual benefits administration and payment in (2) to be 
creditable as fringe benefit contributions? Alternatively, should the 
creditability of payments to such an entity depend on what the third-
party entity's primary function is? Should the answer to these 
questions depend on whether the third-party entity is an employee 
welfare plan within the meaning of ERISA, 29 U.S.C. 1002(1)?
xix. Anti-Retaliation
    The Department proposes to add anti-retaliation provisions to 
enhance enforcement of the DBRA, and their implementing regulations in 
29 CFR parts 1, 3, and 5. The proposed new anti-retaliation provisions 
are intended to discourage contractors, responsible officers, and any 
other persons from engaging in--or causing others to engage in--
unscrupulous business practices that may chill worker participation in 
WHD investigations or other compliance actions and enable prevailing 
wage violations to go undetected. The proposed anti-retaliation 
regulations are also intended to provide make-whole relief for any 
worker who has been discriminated against in any manner for taking, or 
being perceived to have taken, certain actions concerning the labor 
standards provisions of the DBA, CWHSSA and other Related Acts, and the 
regulations in parts 1, 3, and 5.
    In most WHD DBRA investigations or other compliance actions, 
effective enforcement requires worker cooperation. Information from 
workers about their actual hours worked and their pay is often 
essential to uncover violations such as falsification of certified 
payrolls or wage underpayments by contractors or subcontractors who 
fail to keep any pay or time records, or whose records are inaccurate 
or incomplete. Workers are often reluctant to come forward with 
information about potential violations of the laws WHD enforces because 
they fear losing their jobs or suffering other adverse consequences. 
Workers are similarly reluctant to raise these issues with their 
supervisors. Such reluctance to inquire or complain internally may 
result in lost opportunities for early correction of violations by 
contractors.
    The current Davis-Bacon regulations protect the identity of 
confidential worker-informants in large part to prevent retribution by 
contractors for whom they work. See 29 CFR 5.6(a)(5), 6.5. This 
protection helps combat the ``possibility of reprisals'' by 
``vindictive employers'' against workers who speak out about wage and 
hour violations, but does not eliminate it. Cosmic Constr. Co., WAB No. 
79-19, 1980 WL 95656, at *5 (Sept. 2, 1980).
    When contractors retaliate against workers who cooperate or are 
suspected of cooperating with WHD or who make internal complaints, 
neither worker confidentiality nor the Davis-Bacon remedial measures of 
back wages or debarment can make workers whole. The Department's 
proposed anti-retaliation provisions aim to remedy such situations by 
providing make-whole relief to workers who are retaliated against, as 
well as by deterring or correcting interference with Davis-Bacon worker 
protections.
    The Department's authority to promulgate the anti-retaliation 
provisions stems from 40 U.S.C. 3145 and Reorganization Plan No. 14 of 
1950. In transmitting the Reorganization Plan to Congress, President 
Truman noted that ``the principal objective of the plan is more 
effective enforcement of labor standards,'' and that the plan ``will 
provide more uniform and more adequate protection for workers through 
the expenditures made for the enforcement of the existing 
legislation.'' Special Message to the Congress Transmitting 
Reorganization Plan No. 14 of 1950, reprinted in 5 U.S.C. app. 1 (Mar. 
13, 1950) (1950 Special Message to Congress).
    It is well settled that the Department has regulatory authority to 
debar Related Act contractors even though the Related Acts do not 
expressly provide for debarment. See Janik Paving & Constr., Inc. v. 
Brock, 828 F.2d 84, 90, 91 (2d Cir. 1987) (upholding debarment for 
CWHSSA violations even though that statute ``specifically provided 
civil and criminal sanctions for violations of overtime work 
requirements but failed to mention debarment''). In 1951 the Department 
added a new part 5 to the DBRA regulations, including the Related Act 
debarment regulation. See 16 FR 4430. The Department explained it was 
doing so in compliance with the directive of Reorganization Plan No. 14 
of 1950 to ``assure coordination of administration and consistency of 
enforcement of the labor standards provisions'' of the DBRA. Id. Just 
as regulatory debarment is a permissible exercise of the Department's 
``implied powers of administrative enforcement,'' Janik, 828 F.2d at 
91, so too are the proposed anti-retaliation provisions--as well as the 
revised Related Act debarment provisions discussed below in part 
III.B.3.xxi (``Debarment''). The Department believes that it would be 
both efficient and consistent with the remedial purpose of the DBRA to 
investigate and adjudicate complaints of retaliation as part of WHD's 
enforcement of the DBRA. These proposed measures will help achieve more 
effective enforcement of the Davis-Bacon labor standards.
    Currently, debarment is the primary mechanism under the DBRA civil 
enforcement scheme for remedying retribution against workers who assert 
their right to prevailing wages. Debarment is also the main tool for 
addressing less tangible discrimination such as interfering with 
investigations by intimidating or threatening workers. Such 
unscrupulous behavior may be both a ``disregard of obligations'' to 
workers under the DBA and ``aggravated or willful'' violations under 
the current Related Act regulations that warrant debarment. See 40 
U.S.C. 3144(b)(1); 29 CFR 5.12(a)(1), (a)(2), (b)(1).
    Both the ARB and ALJs have debarred contractors in part because of 
their retaliatory conduct or interference with WHD investigations. See, 
e.g., Pythagoras Gen. Contracting Corp., 2011 WL 1247207, at *13 
(affirming debarment of contractor and its principal in a DBRA case in 
part because of the ``attempt [by principal and other officials of the 
contractor] at witness coercion or intimidation'' when they visited 
former employees to talk about their upcoming hearing testimony); R.J. 
Sanders, Inc., WAB No. 90-25, 1991 WL 494734, at *1-2 (Jan. 31, 1991) 
(affirming ALJ's finding that employer's retaliatory firing of an 
employee who reported to a Navy inspector being paid less than the 
prevailing wage was ``persuasive evidence of a willful violation of the 
[DBA]''); Early & Sons, Inc., ALJ No. 85-DBA-140, 1986 WL 193128, at *8 
(OALJ Aug. 5, 1986) (willful and aggravated DBRA violations evidenced 
in part where worker who ``insisted on [receiving the mandated wage] . 
. . was told, in effect, to be quiet or risk losing his job''), rev'd 
on other grounds, WAB No. 86-25, 1987 WL 247044, at *2 (Jan. 29, 1987); 
Enviro & Demo Masters, Inc., ALJ No. 2011-DBA-00002, Decision and 
Order, slip op. at 9-10, 15, 59, 62-64 (OALJ Apr. 23, 2014) (Enviro 
D&O) (debarring subcontractor, its owner, and a supervisor because of 
``aggravated and willful avoidance of paying the required prevailing 
wages'' which included firing an employee who refused to sign a 
declaration repudiating his DBRA rights, and instructing workers to lie 
about their pay and underreport their hours if questioned by 
investigators).

[[Page 15747]]

    There are also criminal sanctions for certain coercive conduct by 
DBRA contractors. The Copeland Anti-Kickback Act makes it a crime to 
induce DBRA-covered construction workers to give up any part of 
compensation due ``by force, intimidation, or threat of procuring 
dismissal from employment, or by any other manner whatsoever.'' 18 
U.S.C. 874; cf. 29 CFR 5.10(b) (discussing criminal referrals for DBRA 
violations). Such prevailing wage kickback schemes are also willful or 
aggravated violations of the civil Copeland Act (a Related Act) that 
warrant debarment. See 40 U.S.C. 3145; see, e.g., Killeen Elec. Co., 
WAB No. 87-49, 1991 WL 494685, at *5 (Mar. 21, 1991).
    Interference with WHD investigations or other compliance actions 
may also warrant criminal prosecution. For example, in addition to 
owing 37 workers $656,646 in back wages in the DBRA civil 
administrative proceeding, see Enviro D&O at 66, both the owner of 
Enviro & Demo Masters and his father, the supervisor, were convicted of 
Federal crimes including witness tampering and conspiracy to commit 
witness tampering. These officials instructed workers at the jobsite to 
hide from and ``lie to investigators about their working hours and 
wages,'' and they fired workers who spoke to investigators or refused 
to sign false documents. Naranjo v. United States, No. 17-CV-9573, 2021 
WL 1063442, at *1-2 (S.D.N.Y. Feb. 26, 2021), report and recommendation 
adopted by 2021 WL 1317232 (S.D.N.Y. Apr. 8, 2021); see also Naranjo, 
Sr. v. United States, No. 16 Civ. 7386, 2019 WL 7568186, at *1 
(S.D.N.Y. Dec. 16, 2019), report and recommendation adopted by 2020 WL 
174072, at *1 (S.D.N.Y. Jan. 13, 2020).
    Though contractors, subcontractors, and their responsible officers 
may be debarred--and even criminally prosecuted--for retaliatory 
conduct, laborers and mechanics who have been discriminated against for 
speaking up, or for having been perceived as speaking up, currently 
have no redress under the Department's regulations implementing the DBA 
or Related Acts to the extent that back wages do not make them whole. 
For example, WHD currently may not order reinstatement of workers fired 
for their cooperation with investigators or as a result of an internal 
complaint to their supervisor. Nor may the Department award back pay 
for the period after a worker is fired. Similarly, WHD cannot require 
contractors to compensate workers for the difference in pay resulting 
from retaliatory demotions or reductions in hours. The addition of 
anti-retaliation provisions is a logical extension of the DBA and 
Related Acts debarment remedial measure. It would supplement debarment 
as an enforcement tool to more effectively prevent retaliation and 
interference or any other such discriminatory behavior. An anti-
retaliation mechanism would also build on existing back-wage remedies 
by extending compensation to a fuller range of harms.
    The Department therefore proposes to add two new regulatory 
provisions concerning anti-retaliation, as well as to update several 
other regulations to reflect the new anti-retaliation provisions.
(A) Proposed New Sec.  5.5(a)(11) and (b)(5)
    The Department proposes to implement anti-retaliation in part by 
adding a new anti-retaliation provision to all contracts subject to the 
DBA or Related Acts. Proposed contract clauses provided for in Sec.  
5.5(a)(11) and (b)(5) state that it is unlawful for any person to 
discharge, demote, intimidate, threaten, restrain, coerce, blacklist, 
harass, or in any other manner discriminate, or to cause any person to 
do the same, against any worker for engaging in a number of protected 
activities. The protected activities include notifying any contractor 
of any conduct which the worker reasonably believes constitutes a 
violation; filing any complaints, initiating or causing to be initiated 
any proceeding, or otherwise asserting any right or protection; 
cooperating in an investigation or other compliance action, or 
testifying in any proceeding; or informing any other person about their 
rights under the DBA, Related Acts, or the regulations in 29 CFR parts 
1, 3, or 5, for proposed Sec.  5.5(a)(11), or the CWHSSA or its 
implementing regulations in 29 CFR part 5, for proposed Sec.  
5.5(b)(5).
    The scope of these anti-retaliation provisions is intended to be 
broad in order to better effectuate the remedial purpose of the DBRA to 
protect workers and ensure that they are not paid substandard wages. 
Workers must feel free to speak openly--with contractors for whom they 
work and contractors' responsible officers and agents, with the 
Department, and with co-workers--about conduct that they reasonably 
believe to be a violation of the prevailing wage requirements or other 
Davis-Bacon labor standards. These proposed anti-retaliation provisions 
recognize that worker cooperation is critical to enforcement of the 
DBRA. They also incentivize compliance and seek to eliminate any 
competitive disadvantage borne by government contractors and 
subcontractors that follow the rules.
    In line with those remedial goals, the Department intends the 
proposed anti-retaliation provisions to protect internal complaints, or 
other assertions of workers' Davis-Bacon or CWHSSA labor standards 
protections set forth in Sec.  5.5(a)(11) and (b)(5), as well as 
interference that may not have an adverse monetary impact on the 
affected workers. Similarly, the Department intends the anti-
retaliation provisions to also apply in situations where there is no 
current work or employment relationship between the parties; for 
example, it would prohibit retaliation by a prospective or former 
employer or contractor (or both). Finally, the Department's proposed 
rule seeks to protect workers who make oral as well as written 
complaints, notifications, or other assertions of their rights 
protected under Sec.  5.5(a)(11) and (b)(5).
(B) Proposed New Sec.  5.18
    The Department proposes remedies to assist in enforcement of the 
DBRA labor standards provisions. Section 5.18 sets forth the proposed 
remedies for violations of the new anti-retaliation provisions. This 
proposed section also includes the process for notifying contractors 
and other persons found to have violated the anti-retaliation 
provisions of the Administrator's investigative findings, as well as 
for Administrator directives to remedy such violations and provide 
make-whole relief.
    Make-whole relief and remedial actions under this provision are 
intended to restore the worker subjected to the violation to the 
position, both economically and in terms of work or employment status 
(e.g., seniority, leave balances, health insurance coverage, 401(k) 
contributions, etc.), that the worker would have occupied had the 
violation never taken place. Available remedies include, but are not 
limited to, any back pay and benefits denied or lost by reason of the 
violation; other actual monetary losses sustained as a direct result of 
the violation; interest on back pay or other monetary relief from the 
date of the loss; and appropriate equitable or other relief such as 
reinstatement or promotion; expungement of warnings, reprimands, or 
derogatory references; the provision of a neutral employment reference; 
and posting of notices that the contractor or subcontractor agrees to 
comply with the DBRA anti-retaliation requirements.
    In addition, proposed Sec.  5.18 specifies that when contractors, 
subcontractors, responsible officers, or other persons dispute findings 
of violations of

[[Page 15748]]

Sec.  5.5(a)(11) or (b)(5), the procedures in 29 CFR 5.11 or 5.12 will 
apply.
    Conforming revisions are being proposed to the withholding 
provisions at Sec. Sec.  5.5(a)(2) and (b)(3) and 5.9 to indicate that 
withholding includes monetary relief for violations of the anti-
retaliation provisions, Sec.  5.5(a)(11) and (b)(5), in addition to 
withholding of back wages for DBRA prevailing wage violations and 
CWHSSA overtime violations.
    Similarly, conforming changes are being proposed to Sec. Sec.  
5.6(a)(4) and 5.10(a). Computations of monetary relief for violations 
of the anti-retaliation provisions have been added to the limited 
investigatory material that may be disclosed without the permission and 
views of the Department under Sec.  5.6(a)(4). In proposed Sec.  
5.10(a), monetary violations of anti-retaliation provisions have been 
added as a type of restitution.
    As explained above, contractors, subcontractors, and their 
responsible officers have long been subject to debarment for their 
retaliatory actions. This rulemaking updates DBRA enforcement 
mechanisms by ensuring that workers may cooperate with WHD or complain 
internally about perceived prevailing wage violations without fear of 
reprisal. This proposed rule is a reasonable extension of the 
Department's broad regulatory authority to enforce and administer the 
DBRA. Further, adding anti-retaliation would amplify existing back wage 
and debarment remedies by making workers whole who suffer the effects 
of retaliatory firings, demotions, and other actions that reduce their 
earnings. This important new tool will help carry out the DBRA's 
remedial purposes by bolstering WHD's enforcement.
xx. Post-Award Determinations and Operation-of-Law
    The Department proposes several revisions throughout parts 1 and 5 
to update and codify the administrative procedure for enforcing Davis-
Bacon labor standards requirements when the contract clauses and/or 
appropriate wage determination(s) have been wrongly omitted from a 
covered contract.
(A) Current Regulations
    The current regulations require the insertion of the relevant 
contract clauses and wage determination(s) in covered contracts. 29 CFR 
5.5. Section 5.5(a) requires that the appropriate contract clauses are 
inserted ``in full'' into any covered contracts, and the contract 
clause language at Sec.  5.5(a)(1) states that the wage 
determination(s) are ``attached'' to the contract.
    The existing regulations at Sec.  1.6(f) provide instruction for 
how the Department and contracting agencies must act when a wage 
determination has been wrongly omitted from a contract. Those 
regulations provide a procedure through which the Administrator makes a 
finding that a wage determination should have been included in the 
contract. After the finding by the Administrator, the contracting 
agency must either terminate and resolicit the contract with the valid 
wage determination, or incorporate the wage determination retroactively 
by supplemental agreement or change order. The same procedure applies 
where the Administrator finds that the wrong wage determination was 
incorporated into the contract. The existing regulations at Sec.  
1.6(f) specify that the contractor must be compensated for any 
increases in wages resulting from any supplemental agreement or change 
order issued in accordance with the procedure.
    Under the current regulations, WHD has faced multiple longstanding 
enforcement challenges. First, the language of Sec.  1.6(f) explicitly 
refers only to omitted wage determinations and does not expressly 
address the situation where a contracting agency has mistakenly omitted 
the contract clauses from the contract. Although WHD has historically 
relied on Sec.  1.6(f) to address this situation, the ambiguity in the 
regulations has caused confusion in communications between WHD and 
contracting agencies and delay in resolving conflicts. See, e.g., WHD 
Opinion Letters DBRA-167 (Aug. 29, 1990); DBRA-131 (Apr. 18, 1985).
    Second, under the existing regulations, affected workers have 
suffered from significant delays while contracting agencies determine 
the appropriate course of action. At a minimum, such delays cause 
problems for workers who must endure long waits to receive their back 
wages. At worst, the delay can result in no back wages recovered at all 
where witnesses are lost or there are no longer any contract payments 
to withhold when a contract is finally modified or terminated. In all 
cases, the identification of the appropriate mechanism for contract 
termination or modification can be difficult and burdensome on Federal 
agencies--in particular during later stages of a contract or after a 
contract has ended.
    The process provided in the current Sec.  1.6(f) is particularly 
problematic where a contracting agency has questions about whether an 
existing contract can be modified without violating another non-DBRA 
statute or regulation. This problem has arisen in particular in the 
context of multiple award schedule (MAS) contracts, blanket purchase 
agreements (BPAs), and other similar schedule contracts negotiated by 
GSA.\109\ Contracting agencies that have issued task orders under GSA 
schedule contracts have been reluctant to modify those task orders to 
include labor standards provisions where the governing Federal schedule 
contract does not contain the provisions. Under those circumstances, 
contracting agencies have argued that such a modification could render 
that task order ``out of scope'' and therefore arguably unlawful.
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    \109\ Sales on the GSA Multiple Award Schedule (MAS), for 
example, have increased dramatically in recent decades--from $4 
billion in 1992 to $36.6 billion in 2020. Gov't Accountability 
Office, High Risk Series: An Update, GAO-05-207 (Jan. 2005), at 25 
(Figure 1) (noting these types of contracting vehicles ``contribute 
to a much more complex environment in which accountability has not 
always been clearly established''), available at https://www.gao.gov/assets/gao-05-207.pdf; Gen. Servs. Admin., GSA FY 2020 
Annual Performance Report, at 11, available at: https://www.gsa.gov/cdnstatic/GSA%20FY%202020%20Annual%20Performance%20Report%20v2.pdf.
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    Although the Department believes it is incorrect that a contract 
modification to incorporate required labor standards clauses or wage 
determinations could render a contract or task order out of scope,\110\ 
concerns about this issue have interfered with the Department's 
enforcement of the labor standards. If a contracting agency believes it 
cannot modify a contract consistent with applicable procurement law, it 
may instead decide to terminate the contract without retroactively 
including the required clauses or wage determinations. In those 
circumstances, the regulations currently provide no clear mechanism 
that would allow the Department or contracting agencies to seek to 
recover the back wages that the workers should have been paid on the 
terminated contract.
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    \110\ This argument tends to conflate the change associated with 
incorporating a missing contract clause or wage determination with 
any unexpected changes by the contracting agency to the actual work 
to be performed under the task order or contract. As a general 
matter, a Competition in Contracting Act (CICA) challenge based 
solely on the incorporation of missing labor standards clauses or 
appropriate wage determinations is without merit. See Booz Allen 
Hamilton Eng'g Servs., LLC, B-411065 (May 1, 2015), available at 
https://www.gao.gov/products/b-411065.
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(B) Proposed Regulatory Revisions
    To address these longstanding enforcement challenges, the 
Department proposes to exercise its authority under Reorganization Plan 
No. 14 of 1950 and

[[Page 15749]]

40 U.S.C. 3145 to adopt several changes to Sec. Sec.  1.6, 5.5, and 
5.6.
(1) Sec.  5.5(e) Proposed Operation-of-Law Language
    The Department proposes to include language in a new paragraph at 
Sec.  5.5(e) to provide that the labor standards contract clauses and 
appropriate wage determinations are effective ``by operation of law'' 
in circumstances where they have been wrongly omitted from a covered 
contract. This proposed language would assure that, in all cases, a 
mechanism exists to enforce Congress's mandate that workers on covered 
contracts receive prevailing wages--notwithstanding any mistake by an 
executive branch official in an initial coverage decision or in an 
accidental omission of the labor standards contract clauses. It would 
also ensure that workers receive the correct prevailing wages if the 
correct wage determination was not attached to the original contract or 
was not incorporated during the exercise of an option. In addition, as 
discussed below, the Department is proposing language in other 
regulatory provisions to reflect this change and to provide safeguards 
for both contractors and contracting agencies.
    Under the proposed language in Sec.  5.5(e), erroneously omitted 
contract clauses and appropriate wage determinations would be effective 
by operation of law and therefore enforceable retroactive to the 
beginning of the contract or construction. The proposed language 
provides that all of the contract clauses set forth in Sec.  5.5--the 
contract clauses at Sec.  5.5(a) and the CWHSSA contract clauses at 
Sec.  5.5(b)--are considered to be a part of every covered contract, 
whether or not they are physically incorporated into the contract. This 
includes the contract clauses requiring the payment of prevailing wages 
and overtime at Sec.  5.5(a)(1) and (b)(1), respectively; the 
withholding clauses at Sec.  5.5(a)(2) and (b)(3); and the labor-
standards disputes clause at Sec.  5.5(a)(9).
    The operation-of-law proposal is intended to complement the 
existing requirements in Sec.  1.6(f) and would not entirely replace 
them. Thus, the contracting agency would still be required to take 
action as appropriate to terminate or modify the contract. Under the 
new proposed procedure, however, the Administrator would not need to 
await a contract modification to assess back wages and seek 
withholding, because the wage requirements and withholding clauses 
would be read into the contract as a matter of law.\111\ The 
application of the clauses and the correct wage determination as a 
matter of law would also provide the Administrator with a tool to 
enforce the labor standards on any contract that a contracting agency 
decides it must terminate instead of modify.
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    \111\ The Department proposes parallel language in 29 CFR 5.9 
(Suspension of funds) to clarify that funds may be withheld under 
the contract clauses and appropriate wage determinations whether 
they have been incorporated into the contract physically, by 
reference, or by operation of law.
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    Under the proposal, when the contract clause or wage determination 
is incorporated into the prime contract by operation of law, prime 
contractors would be responsible for the payment of applicable 
prevailing wages to all workers under the contract--including the 
workers of their subcontractors-- retroactive to the contract award or 
beginning of construction, whichever occurs first. This is consistent 
with the current Davis-Bacon regulations and case law. See 29 CFR 
5.5(a)(6); All Phase Elec. Co., WAB No. 85-18 (June 18, 1986) 
(withholding contract payments from the prime for subcontractor 
employees even though the labor standards had not been flowed down into 
the subcontract). This responsibility, however, would be offset by 
proposed language in Sec.  5.5(e) adding a compensation provision that 
would require that the prime contractor be compensated for any 
increases in wages resulting from a post-award incorporation of a 
contract clause or wage determination by operation of law under Sec.  
5.5(e). This proposed language is modeled after similar language that 
has been included in Sec.  1.6(f) since 1983.\112\
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    \112\ See 46 FR 4306, 4313 (Jan. 16, 1981); 47 FR 23644, 23654 
(May 28, 1982) (implemented by 48 FR 19532 (Apr. 29, 1983)).
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    The Department recognizes that post-award coverage or correction 
determinations can cause difficulty for contracting agencies. 
Contracting agencies avoid such difficulty by proactively incorporating 
the Davis-Bacon labor standards clauses and applicable wage 
determinations into contracts or using the existing process for 
requesting a coverage ruling or interpretation from the Administrator 
prior to contract award. See 29 CFR 5.13.\113\ In addition, the new 
language provides that a contracting agency will continue to be able to 
request that the Administrator grant an exemption from retroactive 
enforcement of wage determinations and contract clauses (or, where 
permissible, an exemption from prospective application) under the same 
conditions currently applicable to post-award determinations. See 29 
CFR 1.6(f); 29 CFR 5.14; City of Ellsworth, ARB No. 14-042, 2016 WL 
4238460, at *6-*8 (June 6, 2016).\114\
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    \113\ A ruling of the Administrator under Sec.  5.13 that Davis-
Bacon labor standards do not apply to the contract is authoritative 
and prevents a different post-award determination unless the 
Administrator determines that the pre-award ruling was based on a 
factual description provided by the contracting agency that was 
incomplete or inaccurate at the time, or that no longer is accurate 
after unanticipated changes were made to the scope of the 
contractor's work.
    \114\ Factors that the Administrator considers in making a 
determination regarding retroactive application are discussed in the 
ARB's ruling in City of Ellsworth, ARB No. 14-042, at *6-*10. Among 
the non-exclusive list of potential factors are ``the reasonableness 
or good faith of the contracting agency's coverage decision'' and 
``the status of the procurement (i.e. to what extent the 
construction work has been completed).'' Id. at *10. In considering 
the status of the procurement, the Administrator will consider the 
status of construction at the time that the coverage or correction 
issue is first raised with the Administrator.
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    The operation-of-law provision in proposed Sec.  5.5(e) is similar 
to the Department's existing regulations enacting Executive Order 
11246--Equal Employment Opportunity. See 41 CFR 60-1.4(e); United 
States v. Miss. Power & Light Co., 638 F.2d 899, 905-06 (5th Cir. 1981) 
(finding 41 CFR 60-1.4(e) to be valid and have force of law). The 
operation-of-law provision at 41 CFR 60-1.4(e), like the proposed 
language in Sec.  5.5(e), operates in addition to and complements the 
other provisions in the Executive Order's regulations that require the 
equal opportunity contract clause to be inserted in full into the 
contract. See 41 CFR 60-1.4(a).
    Unlike 41 CFR 60-1.4(e), the Department's proposed language in the 
new Sec.  5.5(e) would apply the ``operation of law'' provision only to 
prime contracts and not to subcontracts. The reason for this difference 
is that, as noted above, the Davis-Bacon regulations and case law 
provide that the prime contractor is responsible for the payment of 
applicable wages on all subcontracts. If the prime contract contains 
the labor standards as a matter of law, then the prime contractor is 
required to ensure that all employees on the contract--including 
subcontractors' employees--receive all applicable prevailing wages. 
Accordingly, the Department does not believe that extending the 
operation-of-law provision itself to subcontracts is necessary to 
enforce the Congressional mandate that all covered workers under the 
contract are paid the applicable prevailing wages.
    The proposed operation-of-law provision is also similar in many, 
but not all, respects to the judicially-

[[Page 15750]]

developed Christian doctrine, named for the 1963 Court of Claims 
decision, G.L. Christian & Assocs. v. United States, 312 F.2d 418 (Ct. 
Cl.), reh'g denied, 320 F.2d 345 (Ct. Cl. 1963). Under the doctrine, 
courts and administrative tribunals have held that required contractual 
provisions may be effective by operation of law in Federal government 
contracts, even if they were not in fact included in the contract. The 
doctrine applies even when there is no specific ``operation of law'' 
regulation as proposed here.
    The Christian doctrine flows from the basic concept in all contract 
law that ``the parties to a contract . . . are presumed or deemed to 
have contracted with reference to existing principles of law.'' 11 
Williston on Contracts Sec.  30:19 (4th ed. 2021); see Ogden v. 
Saunders, 25 U.S. 213 (1827). Thus, those who contract with the 
government are charged with having ``knowledge of published 
regulations.'' PCA Health Plans of Texas, Inc. v. LaChance, 191 F.3d 
1353, 1356 (Fed. Cir. 1999) (citation omitted).
    Under the Christian doctrine, a court can find a contract clause 
effective by operation of law if that clause ``is required under 
applicable [F]ederal administrative regulations'' and ``it expresses a 
significant or deeply ingrained strand of public procurement policy.'' 
K-Con, Inc. v. Sec'y of Army, 908 F.3d 719, 724 (Fed. Cir. 2018). Where 
these prerequisites are satisfied, it does not matter if the contract 
clause at issue was wrongly omitted from a contract. A court will find 
that a Federal contractor had constructive knowledge of the regulation 
and that the required contract clause applies regardless of whether it 
was included in the contract.
    The recent decision of the Federal Circuit in K-Con is helpful to 
understanding why it is appropriate to provide that the DBA labor 
standards clauses are effective by operation of law. In K-Con, the 
Federal Circuit held that the Christian doctrine applies to the 1935 
Miller Act. 908 F.3d at 724-26. The Miller Act contains mandatory 
coverage provisions that are similar to those in the DBA, though with 
different threshold contract amounts. The Miller Act requires that 
contractors furnish payment and performance bonds before a contract is 
awarded for ``the construction, alteration, or repair of any public 
building or public work.'' 40 U.S.C. 3131(b). The DBA, as amended, 
requires that the prevailing wage stipulations be included in bid 
specifications ``for construction, alteration, or repair, including 
painting and decorating, of public buildings and public works.'' 40 
U.S.C. 3142(a).
    Like the Miller Act, the 90-year old Davis-Bacon Act also expresses 
a significant and deeply ingrained strand of public procurement policy. 
The Miller Act and the Davis-Bacon Act are of similar vintage. The DBA 
was enacted in 1931. The DBA amendments were enacted in 1935, almost 
simultaneously with the Miller Act. Through both statutes, Congress 
aimed to protect participants on government contracts from nonpayment 
by prime contractors and subcontractors. Thus, the same factors that 
the Federal Circuit found sufficient to apply the Christian doctrine to 
the Miller Act also apply to the DBA and suggest that the proposed 
operation-of-law regulation would be appropriate.\115\
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    \115\ The Federal Circuit has also noted that the Christian 
doctrine applies to the SCA, which has a similar purpose as the DBA 
and dates only to 1965. See Call Henry, Inc. v. United States, 855 
F.3d 1348, 1351 & n.1 (Fed. Cir. 2017). Because the Davis-Bacon Act 
and Service Contract Act are similar statutes with the same basic 
purpose, the Department has long noted that court decisions relating 
to one of these acts have a direct bearing on the other. See WHD 
Opinion Letter SCA-3 (Dec. 7, 1973).
---------------------------------------------------------------------------

    The Department's proposal, however, differs from the Christian 
doctrine in two critical respects. First, as noted above, the proposed 
language at Sec.  5.5(e) would be paired with a contractor compensation 
provision similar to the existing provision in Sec.  1.6(f). The 
Christian doctrine does not incorporate such protection for 
contractors, and as a result, can have the effect of shifting cost 
burdens from the government to the contractor. In K-Con, for example, 
the doctrine supported the government's defense against a claim for 
equitable adjustment by the contractor. 908 F.3d at 724-28.
    Second, the Christian doctrine is effectively self-executing and 
renders contract clauses applicable by operation of law solely on the 
basis of the underlying requirement that they be inserted into covered 
contracts. The doctrine contains no specific mechanism through which 
the government can limit its application to avoid any unexpected or 
unjust results--other than simply deciding not to raise it as a defense 
or affirmative argument in litigation. The proposed provision here at 
Sec.  5.5(e), on the other hand, would pair the enactment of the 
operation-of-law language with the traditional authority of the 
Administrator to waive retroactive enforcement or grant a variance, 
tolerance, or exemption from the regulatory requirement under 29 CFR 
1.6(f) and 5.14, which the Department believes will foster a more 
orderly and predictable process and reduce the likelihood of any 
unintended consequences.
    In proposing this new regulatory provision, the Department has 
considered the implications of Universities Research Ass'n, Inc. v. 
Coutu. In that case, the Supreme Court held that there was no implied 
private right of action for workers to sue under the Davis-Bacon Act--
at least when the contract clauses were not included in the contract. 
Coutu, 450 U.S. at 768-69 & nn.17, 19. The Court also stated that the 
workers could not rely on the Christian doctrine to read the missing 
DBA contract clause into the contract. Id. at 784 & n.38. The 
Department has carefully considered the Coutu decision, and for the 
reasons discussed below, has determined that the proposed regulation is 
consistent with Coutu and that the distinctions between the proposed 
regulation and the Christian doctrine address the concerns that 
animated the Coutu Court in that case.
    One of the Court's fundamental concerns in Coutu was that an 
implied private right of action could allow parties to evade the 
Department of Labor's review of whether a contract should be covered by 
the Act. The Court noted that there was at the time ``no administrative 
procedure that expressly provides review of a coverage determination 
after the contract has been let.'' 450 U.S. at 761 n.9.\116\ If an 
implied private right of action existed under those circumstances, 
private parties could effectively avoid raising any questions about 
coverage with the Department or with the contracting agency--and 
instead bring them directly to a Federal court to second-guess the 
administrative determinations. Id. at 783-84.
---------------------------------------------------------------------------

    \116\ Subsection 1.6(f) did not go into effect until April 29, 
1983, nearly 2 years after the Coutu decision. See 48 FR 19532. 
Moreover, although the Department has used Sec.  1.6(f) to address 
post-award coverage determinations, as discussed above, the language 
of that subsection references wage determinations and does not 
explicitly address the omission of required contract clauses. The 
Department now seeks to remedy that ambiguity in Sec.  1.6(f) by 
adding similar language to Sec.  5.6, as discussed below, in 
addition to the proposed operation-of-law language at Sec.  5.5(e).
---------------------------------------------------------------------------

    Another of the Court's concerns was that such an implied private 
right of action would undermine Federal contractors' reliance on the 
wage determinations that the Federal government had (or had not) 
incorporated into bid specifications. The Supreme Court noted that one 
of the purposes of the 1935 amendments to the DBA was to ensure that 
contractors could rely on the predetermination of wage rates that apply 
to each contract. 450 U.S. at 776. If, after a contract had

[[Page 15751]]

already been awarded, a court could find that a higher prevailing wage 
applied to that contract than had been previously determined, the 
contractor could lose money because of its mistaken reliance on the 
prior rates--all of which would undermine Congress's intent. Id. at 
776-77.
    The Department's current proposed procedure would alleviate both of 
these concerns. As described above, the procedure differs from the 
Christian doctrine because--as under the existing regulation at Sec.  
1.6(f)--contractors will be compensated for any increase in costs 
caused by the government's failure to properly incorporate the clauses 
or wage determinations. The proposed procedure therefore will not 
undermine contractors' reliance on an initial determination by the 
contracting agency that the DBRA did not apply or that a wage 
determination with lower rates applied.
    Nor does the proposal risk creating an end-run around the 
administrative procedures set up by contracting agencies and the 
Department pursuant to Reorganization Plan No. 14. Instead, the 
operation-of-law provision would function as part of an administrative 
structure implemented by the Administrator and subject to the 
Administrator's decision to grant a variance, tolerance, or exemption. 
Its enactment should not affect one way or another whether any implied 
private right of action exists under the statute. Executive Order 11246 
provides a helpful comparator. In 1968, the Department promulgated the 
regulation clarifying that the Executive Order's equal opportunity 
contract clause would be effective by ``operation of the Order'' 
regardless of whether it is physically incorporated into the contract. 
41 CFR 60-1.4(e). That regulation was upheld, and the Christian 
doctrine was also found to apply to the required equal opportunity 
contract clause. See Miss. Power & Light, 638 F.2d at 905-06. 
Nonetheless, courts have widely held that E.O. 11246 does not convey an 
implied private right of action. See, e.g., Utley v. Varian Assocs., 
Inc., 811 F.2d 1279, 1288 (9th Cir. 1987).
    The Department has also considered whether the proposal would lead 
to an increase in bid protest litigation or expand the authority of the 
Court of Federal Claims or other contracting appeal tribunals to 
develop their own case law on the application of the DBRA without the 
input of the Department. In exploring this question, the Department 
considered proposing an alternative procedure in which the operation-
of-law rule would only become effective after a determination by the 
Administrator or a contracting agency that a contract was in fact 
covered. The Department, however, does not believe that such an 
approach is necessary because both the GAO and the Federal Circuit 
maintain strict waiver rules that prohibit post-award bid protests 
based on errors or ambiguities in the solicitation. See NCS/EML JV, 
LLC, B-412277, 2016 WL 335854, at *8 n.10 (Comp. Gen. Jan. 14, 2016) 
(citing GAO decisions); Blue & Gold Fleet, L.P. v. United States, 492 
F.3d 1308, 1312-13 (Fed. Cir. 2007).\117\
---------------------------------------------------------------------------

    \117\ In Blue & Gold, the National Park Service failed to 
include the SCA contract clauses in a contract that the Department 
of Labor later concluded was covered by the Act. The Federal Circuit 
denied the bid protest from a the losing bidder because ``a party 
who has the opportunity to object to the terms of a government 
solicitation containing a patent error and fails to do so prior to 
the close of the bidding process waives its ability to raise the 
same objection subsequently in a bid protest action in the Court of 
Federal Claims.'' 492 F.3d at 1313.
---------------------------------------------------------------------------

    The proposal as currently drafted also would not affect the well-
settled case law--developed after the Coutu decision--that only the 
Department of Labor has jurisdiction to resolve disputes arising out of 
the labor standards provisions of the contract. As part of the post-
Coutu 1982 final rule, the Department enacted a provision at 29 CFR 
5.5(a)(9) that requires a disputes clause with that jurisdictional 
limitation to be included in all DBRA-covered contracts. See 47 FR 
23660-61 (final rule addressing comments received on the proposal). The 
labor standards disputes clause creates an exception to the Contract 
Disputes Act of 1974 and effectively bars the Court of Federal Claims 
from deciding substantive matters related to the Davis-Bacon Act and 
Related Acts. See, e.g., Emerald Maint., Inc. v. United States, 925 
F.2d 1425, 1428-29 (Fed. Cir. 1991). Under the Department's current 
operation-of-law proposal, the disputes clause at Sec.  5.5(a)(9) would 
continue to be effective even when it has been omitted from a contract 
because the Department's proposal applies the operation-of-law 
principle to all of the required contract clauses in Sec.  5.5(a)--
including Sec.  5.5(a)(9). As a result, under the proposal, disputes 
regarding DBRA coverage or other related matters would continue to be 
heard only through the Department's administrative process prior to any 
judicial review, and there is no reason to believe that the 
implementation of the operation-of-law provision would lead to a 
parallel body of case law in the Court of Federal Claims.
    Given all of these continued safeguards, the Department believes it 
is not necessary to expressly limit the proposed operation-of-law 
provision to be effective only after an administrative determination. 
However, in addition to input on the proposed regulatory text at Sec.  
5.5(e), the Department also seeks input from commenters regarding the 
alternative proposal to require such a determination. Under that 
alternative, the operation-of-law provision would only become effective 
after a determination by the Administrator or a contracting agency that 
the contract clauses or wage determination was wrongly omitted.
    Regardless of whether the proposed operation-of-law language will 
be subject to a threshold requirement of an administrative 
determination, the provision would operate in tandem with the continued 
requirements that contracting agencies must insert the contract clause 
in full into any new contracts and into existing contracts by 
modification where the clause had been wrongly omitted. The Department 
proposes language to clarify that these parallel provisions are both 
effective, with proposed language in Sec. Sec.  1.6(f), 5.5(a)(1)(i), 
and 5.6(a)(1)(ii) that explains that contracting agencies continue to 
be required to insert the relevant clauses and wage determinations in 
full notwithstanding that the clauses and wage determinations are also 
effective by operation of law. As the clauses and applicable wage 
determination(s) will still be effective as a matter of law even if 
omitted from the contract, it will be advisable for contractors to 
promptly raise any such errors of omission with their contracting 
agencies. A contractor's failure to raise such issues will not relieve 
the contractor from any of their obligations under the Davis-Bacon 
labor standards. See, e.g., Coleman Construction Co., ARB No. 15-002, 
2016 WL 4238468, at *6 & n.40 (June 8, 2016) (holding that ``[t]he law 
is clear that, if a contract subject to Davis-Bacon lacks the wage 
determination, it is the employer's obligation . . . to get it''); 48 
CFR 52.222-52(c).
    Similarly, proposed Sec.  5.5(d) also includes a parallel provision 
that clarifies that the clauses and wage determinations are equally 
effective if they are incorporated by reference, as a contract that 
contains a provision expressly incorporating the clauses and the 
applicable wage determination by reference may be tantamount to 
insertion in full under the FAR. See 48 CFR 52.107, 52.252-2. In 
addition, independent of the FAR, the terms of a document appropriately 
incorporated by reference into a contract effectively bind the parties 
to that contract. See 11 Williston on Contracts section 30:25

[[Page 15752]]

(4th ed.) (``Interpretation of several connected writings'').
    These various proposed parallel regulatory provisions are 
consistent and work together. They require the best practice of 
physical insertion or modification of contract documents (or, where 
warranted, incorporation by reference), so as to provide effective 
notice to all interested parties, such as contract assignees, 
subcontractors, sureties, and employees and their representatives. At 
the same time, they create a safety net to ensure that where any 
mistakes are made in initial determinations, the prevailing wage 
required by statute will still be paid to the laborers and mechanics on 
covered projects.
(2) Sec.  1.6(f) Post-Award Correction of Wage Determinations
    In addition to the operation-of-law language at Sec.  5.5(e), the 
Department proposes to make several changes to the current regulation 
at Sec.  1.6(f) that contains the post-award procedure requiring 
contracting agencies to incorporate an omitted wage determination. 
First, as discussed above in section III.B.1.vi. of this NPRM (Section 
1.6 Use and effectiveness of wage determinations), the Department 
proposes adding titles for each subsection in Sec.  1.6 in order to 
improve readability of the section as a whole. The proposed title for 
Sec.  1.6(f) is ``Post-award determinations and procedures.'' The 
Department also proposes dividing Sec.  1.6(f) into multiple 
subsections to improve the organization and readability of the 
important rules it articulates.
    At the beginning of the section, the Department proposes a new 
Sec.  1.6(f)(1), which explains generally that if a contract subject to 
the labor standards provisions of the Acts referenced by Sec.  5.1 is 
entered into without the correct wage determination(s), the relevant 
agency must incorporate the correct wage determination into the 
contract or require its incorporation. The Department proposes to add 
language to Sec.  1.6(f)(1) expressly providing for an agency to 
incorporate the correct wage determination post-award ``upon its own 
initiative'' as well as upon the request of the Administrator. The 
current version of Sec.  1.6(f) explicitly provides only for a 
determination by the Administrator that a correction must be made. Some 
contracting agencies had interpreted the existing language as 
precluding an action by a contracting agency alone--without action by 
the Administrator--to modify an existing contract to incorporate a 
correct wage determination. The Department now proposes the new 
language to clarify that the contracting agency can take such action 
alone. Where a contracting agency does intend to take such an action, 
proposed language at Sec.  1.6(f)(3)(iii) would require it to notify 
the Administrator of the proposed action.
    In the proposed reorganization of Sec.  1.6(f), the Department 
would locate the discussion of the Administrator's determination that a 
correction is necessary in a new Sec.  1.6(f)(2). The only change to 
the language of that subsection is not substantive. The current text of 
Sec.  1.6(f) refers to the action that the Administrator may take as an 
action to ``issue a wage determination.'' However, in the majority of 
cases, where a wage determination was not included in the contract, the 
proper action by the Administrator will not be to issue a new or 
updated wage determination, as that term is used in Sec.  1.6(c), but 
to identify the appropriate existing wage determination that applies to 
the contract. Thus, to eliminate any confusion, the Department proposes 
to amend the language in this subsection to describe the 
Administrator's action as ``requir[ing] the agency to incorporate'' the 
appropriate wage determination. To the extent that, in an exceptional 
case, the Department would need to ``issue'' a new project wage 
determination to be incorporated into the contract, the proposed new 
language would require the contracting agency to incorporate or require 
the incorporation of that newly issued wage determination.
    The Department also proposes to amend the language in Sec.  1.6(f) 
that describes the potential corrective actions that an agency may 
take. In a nonsubstantive change, the Department proposes to refer to 
the wage determinations that must be newly incorporated as ``correct'' 
wage determinations instead of ``valid'' wage determinations. This is 
because the major problem addressed in Sec.  1.6(f)--in addition to the 
failure to include any wage determination at all--is the use of the 
wrong wage determinations. Even while wrong for one contract, a wage 
determination may be valid if used on a different contract to which it 
properly applies. It is therefore more precise to describe a misused 
wage determination as incorrect rather than invalid. The proposed 
amendment would also add to the reference in the current regulation at 
Sec.  1.6(f) to ``supplemental agreements'' or ``change orders'' as the 
methods for modifying contracts post-award to incorporate valid wage 
determinations. The Department, in a new Sec.  1.6(f)(3), would 
instruct that agencies make such modifications additionally through the 
exercise of ``any other authority that may be needed.'' This language 
parallels the Department's regulation at 29 CFR 4.5 for similar 
circumstances under the SCA.
    The Department also proposes to make several changes to Sec.  
1.6(f) to clarify that the requirements apply equally to projects 
carried out with Federal financial assistance as they do to DBA 
projects. The proposed initial paragraph at Sec.  1.6(f)(1) contains 
new language that states expressly that where an agency is providing 
Federal financial assistance, ``the agency must ensure that the 
recipient or sub-recipient of the Federal assistance similarly 
incorporates the correct wage determination(s) into its contracts.'' 
Similarly, the reference to agencies' responsibilities in proposed new 
Sec.  1.6(f)(3) requires an agency to terminate and resolicit the 
contract or to ``ensure'' the incorporation (in the alternative to 
``incorporating'' the correct wage determination itself)--in 
recognition that this language applies equally to direct procurement 
where the agency is a party to a DBA-covered contract and Related Acts 
where the agency must ensure that the relevant State or local agency 
incorporates the corrected wage determination into the covered 
contract. Finally, the Department also proposes to amend the 
requirement that the incorporation should be ``in accordance with 
applicable procurement law'' to instead reference ``applicable law.'' 
This change is intended to recognize that the requirements in Sec.  1.6 
apply also to projects executed with Federal financial assistance under 
the Related Acts, for which the Federal or State agency's authority may 
not be subject to Federal procurement law. None of these proposed 
changes represent substantive changes, as the Department has 
historically applied Sec.  1.6(f) equally to both DBA and Related Act 
projects. See, e.g., City of Ellsworth, ARB No. 14-042, at *6-8.
    In the new Sec.  1.6(f)(3)(iv), the Department proposes to include 
the requirements from the existing regulations that contractors must be 
compensated for any change and that the incorporation must be 
retroactive to the beginning of the construction. That retroactivity 
requirement, however, is amended to include the qualification that the 
Administrator may direct otherwise. As noted above, the Administrator 
may make determinations of non-retroactivity on a case-by-case basis. 
In addition, consistent with the SCA regulation on post-award 
incorporation of wage determinations at

[[Page 15753]]

29 CFR 4.5(c), the Department proposes including language in a new 
Sec.  1.6(f)(3)(ii) to require that incorporation of the correct wage 
determination be accomplished within 30 days of the Administrator's 
request, unless the agency has obtained an extension.
    The Department also proposes to include new language at Sec.  
1.6(f)(3)(v), applying to Related Acts, instructing that the agency 
must suspend further payments or guarantees if the recipient refuses to 
incorporate the specified wage determination and that the agency must 
promptly refer the dispute to the Administrator for further proceedings 
under Sec.  5.13. This language is a clarification and restatement of 
the existing enforcement regulation at Sec.  5.6(a)(1), which provides 
that no such payment or guarantee shall be made ``unless [the agency] 
ensures that the clauses required by Sec.  5.5 and the appropriate wage 
determination(s) are incorporated into such contracts.''
    In proposed new language at Sec.  1.6(f)(3)(vi), the Department 
includes additional safeguards for the circumstances in which an agency 
does not retroactively incorporate the missing clauses or wage 
determinations and instead seeks to terminate the contract. The 
proposed language provides that before termination, the agency must 
withhold or cross-withhold sufficient funds to remedy any back wage 
liability or otherwise identify and obligate sufficient funds through a 
termination settlement agreement, bond, or other satisfactory 
mechanism. This language is consistent with the existing FAR provision 
at 48 CFR 49.112-2(c) that requires contracting officers to ascertain 
whether there are any outstanding labor violations and withhold 
sufficient funds if possible before forwarding the final payment 
voucher. It is also consistent with the language of the template 
termination settlement agreements at 48 CFR 49.602-1 and 49.603-3 that 
seek to assure that any termination settlement agreement does not 
undermine the government's ability to fully satisfy any outstanding 
contractor liabilities under the DBRA or other labor clauses.
    Finally, the Department includes a proposed provision at Sec.  
1.6(f)(4) that clarifies that the specific requirements of Sec.  1.6(f) 
to physically incorporate the correct wage determination operate in 
addition to the proposed requirement in Sec.  5.5(e) that makes the 
correct wage determination applicable by operation of law. As discussed 
above, such amendment and physical incorporation (including 
incorporation by reference) is necessary in order to provide notice to 
all interested parties, such as contract assignees, subcontractors, 
sureties, and employees and their representatives.
(3) Sec.  5.6(a)(1) Post-Award Incorporation of Contract Clauses
    The Department proposes to revise Sec.  5.6(a)(1) to include 
language expressly providing a procedure for determining that the 
required contract clauses were wrongly omitted from a contract. As 
noted above, the Department has historically sought the retroactive 
incorporation of missing contract clauses by reference to the language 
regarding wage determinations in Sec.  1.6(f). The Department now 
proposes to eliminate any confusion by creating a separate procedure at 
Sec.  5.6(a)(1)(ii) that applies specifically to missing contract 
clauses in a similar manner as Sec.  1.6(f) continues to apply to 
missing or incorrect wage determinations.
    The Department proposes to revise Sec.  5.6(a)(1) by renumbering 
the existing regulatory text Sec.  5.6(a)(1)(i), and adding an 
additional paragraph, (a)(1)(ii), to include the provision clarifying 
that where a contract is awarded without the incorporation of the 
required Davis-Bacon labor standards clauses required by Sec.  5.5, the 
agency must incorporate the clauses--or require their incorporation. 
This includes circumstances where the agency does not award a contract 
directly but instead provides funding assistance for such a contract; 
in such instances, the Federal agency, or other agency where 
appropriate, must ensure that the recipient or sub-recipient of the 
Federal assistance incorporates the required labor standards clauses 
retroactive to the date of contract award, or the start of construction 
if there is no award. The paragraph contains a similar set of 
provisions as Sec.  1.6(f), with its proposed amendments--including 
that the incorporation must be retroactive unless the Administrator 
directs otherwise; that retroactive incorporation is required by the 
request of the Administrator or upon the agency's own initiative; that 
incorporation must take place within 30 days of a request by the 
Administrator, unless an extension is granted; that the agency must 
withhold or otherwise obligate sufficient funds to satisfy back wages 
before any contract termination; and that the contractor should be 
compensated for any increase in costs resulting from any change 
required by the paragraph.
    The Department also proposes to clarify the application of the 
current regulation at Sec.  5.6(a)(1), which states that no payment, 
advance, grant, loan, or guarantee of funds will be approved unless the 
Federal agency ensures that the funding recipient or sub-recipient has 
incorporated the required clauses into any contract receiving the 
funding. Similar to the proposed provision in Sec.  1.6(f)(3)(v), a new 
proposed provision at Sec.  5.6(a)(1)(ii)(C) would explain that such a 
required suspension also applies if the funding recipient refuses to 
retroactively incorporate the required clauses. In such circumstances, 
the issue must be referred promptly to the Administrator for 
resolution.
    Similar to the proposed provision at Sec.  1.6(f)(4), the 
Department also proposes a provision at Sec.  5.6(a)(1)(ii)(E) that 
explains that the physical-incorporation requirements of Sec.  
5.6(a)(1)(ii) would operate in tandem with the proposed language at 
Sec.  5.5(e) making the contract clauses and wage determinations 
effective by operation of law.
    The proposed changes to Sec.  5.6 do not impose any additional 
requirements on Federal agencies, as the existing regulation at Sec.  
5.6 clearly states that the Federal agency is responsible for 
incorporating the required clauses into its own contracts subject to 
the Davis-Bacon labor standards and for ensuring the incorporation of 
the required clauses into contracts subject to the Davis-Bacon labor 
standards entered into by the Federal agency's funding recipients. 
Moreover, as noted above, this additional language is analogous to the 
existing language at 29 CFR 1.6(f) under which the Department 
historically has requested the incorporation of missing contract 
clauses.
    The proposed changes clarify that the requirement to incorporate 
the Davis-Bacon labor standards clauses is an ongoing responsibility 
that does not end upon contract award, and the changes expressly state 
the Department's longstanding practice of requiring the relevant agency 
to retroactively incorporate, or ensure retroactive incorporation of, 
the required clauses in such circumstances. As discussed above, such 
clarification is warranted because agencies occasionally have expressed 
confusion about--and even questioned whether they possess--the 
authority to incorporate, or ensure the incorporation of, the required 
contract clauses after a contract has been awarded or construction has 
started.
    The Department's proposal similarly makes clear that while agencies 
must retroactively incorporate the required clauses upon the request of 
the Administrator, agencies also have the authority to make such 
changes on their own initiative when they discover that an error has 
been made. The proposed changes also eliminate any confusion of the 
recipients of Federal funding as to the extent of the Federal funding 
agency's authority to require such

[[Page 15754]]

retroactive incorporation in federally funded contracts subject to the 
Davis-Bacon labor standards. Finally, the proposed changes do not alter 
the provisions of 29 CFR 1.6(g), including its provisos.
    Retroactive incorporation of the required contract clauses ensures 
that agencies take every available step to ensure that workers on 
covered contracts are paid the prevailing wages that Congress intended. 
The Department welcomes comments on all aspects of this proposal.
xxi. Debarment
    In accordance with the Department's goal of updating and 
modernizing the DBA and Related Act regulations, as well as enhancing 
the implementation of Reorganization Plan No. 14 of 1950, the 
Department proposes a number of revisions to the debarment regulations 
that are intended both to promote consistent enforcement of the Davis-
Bacon labor standards provisions and to clarify the debarment standards 
and procedures for the regulated community, adjudicators, 
investigators, and other stakeholders.
    The regulations implementing the DBA and the Related Acts currently 
reflect different standards for debarment. Since 1935, the DBA has 
mandated 3-year debarment ``of persons . . . found to have disregarded 
their obligations to employees and subcontractors.'' 40 U.S.C. 
3144(b)(1) and (b)(2) (emphasis added); see also 29 CFR 5.12(a)(1) and 
(2) (setting forth the DBA's ``disregard of obligations'' standard). 
Although the Related Acts themselves do not contain debarment 
provisions, since 1951, their implementing regulations have imposed a 
heightened standard for debarment for violations under the Related 
Acts, providing that ``any contractor or subcontractor . . . found . . 
. to be in aggravated or willful violation of the labor standards 
provisions'' of any DBRA will be debarred ``for a period not to exceed 
3 years.'' 29 CFR 5.12(a)(1) (emphasis added). The Department proposes 
to harmonize the DBA and the Related Act debarment-related regulations 
by applying the longstanding DBA debarment standard and related 
provisions to the Related Acts as well. Specifically, in order to 
create a uniform set of substantive and procedural requirements for 
debarment under the DBA and the Related Acts, the Department proposes 
five changes to the Related Act debarment regulations so that they 
mirror the provisions governing DBA debarment.
    First, the Department proposes to adopt the DBA statutory debarment 
standard--disregard of obligations to employees or subcontractors--for 
all debarment cases and to eliminate the Related Acts' regulatory 
``aggravated or willful'' debarment standard. Second, the Department 
proposes to adopt the DBA's mandatory 3-year debarment period for 
Related Act cases and to eliminate the process under the Related Acts 
regulations for early removal from the ineligible list (also known as 
the debarment list \118\). Third, the Department proposes to expressly 
permit debarment of ``responsible officers'' under the Related Acts. 
Fourth, the Department proposes to clarify that under the Related Acts 
as under the DBA, entities in which debarred entities or individuals 
have an ``interest'' may be debarred. Related Acts regulations 
currently require a ``substantial interest.'' Finally, the Department 
proposes to make the scope of debarment under the Related Acts 
consistent with the scope of debarment under the DBA by providing, in 
accordance with the current scope of debarment under the DBA, that 
Related Acts debarred persons and firms may not receive ``any contract 
or subcontract of the United States or the District of Columbia,'' as 
well as ``any contract or subcontract subject to the labor standards 
provisions of the statutes listed in Sec.  5.1.'' See 29 CFR 5.12(a)(1) 
and (2).
---------------------------------------------------------------------------

    \118\ There are several terms referring to the same list (e.g., 
ineligible list, debarment list, debarred bidders list) and the 
terms for this list may continue to change over time.
---------------------------------------------------------------------------

(A) Relevant Legal Authority
    The 1935 amendments to the DBA gave the Secretary authority to 
enforce--not just set--prevailing wages, including through the remedy 
of debarment. See Coutu, 450 U.S. at 758 & n.3, 759, 776; see also S. 
Rep. No. 74-332, pt. 3, at 11, 14-15 (1935). Since then, the DBA has 
required 3-year debarment of persons or firms that have been found to 
``have disregarded their obligations to employees and subcontractors.'' 
40 U.S.C. 3144(b) (formerly 40 U.S.C. 276a-2 and known as section 3(a) 
of the DBA). The DBA also mandates debarment of entities in which 
debarred persons or firms have an ``interest.'' 40 U.S.C. 3144(b)(2).
    Approximately 15 years later, the Truman Administration developed 
and Congress accepted Reorganization Plan No. 14 of 1950, a 
comprehensive plan to improve Davis-Bacon enforcement and 
administration. The Reorganization Plan provided that ``[i]n order to 
assure coordination of administration and consistency of enforcement'' 
of the DBRA by the agencies who are responsible for administering them, 
the Secretary of Labor was empowered to ``prescribe appropriate 
standards, regulations, and procedures, which shall be observed by 
these agencies.'' Reorganization Plan No. 14 of 1950, 5 U.S.C. app. 1. 
In transmitting the Reorganization Plan to Congress, President Truman 
observed that ``the principal objective of the plan is more effective 
enforcement of labor standards'' with ``more uniform and more adequate 
protection for workers through the expenditures made for the 
enforcement of the existing legislation.'' Id. (1950 Special Message to 
Congress).
    Shortly after Reorganization Plan No. 14 of 1950 was adopted, the 
Department promulgated regulations adding ``a new Part 5,'' effective 
July 1, 1951. 16 FR 4430, 4430. These regulations added the 
``aggravated or willful'' debarment standard for the Related Acts. Id. 
at 4431. The preamble to that final rule explained that adding the new 
part 5 was to comply with Reorganization Plan No. 14 of 1950's 
directive to prescribe standards, regulations, and procedures ``to 
assure coordination of administration and consistency of enforcement.'' 
Id. at 4430. Since then, the two debarment standards--disregard of 
obligations in DBA cases and willful or aggravated violations in 
Related Acts cases--have co-existed, but with challenges along the way 
that the Department seeks to resolve through this proposal.
(B) Proposed Regulatory Revisions
(1) Debarment Standard
a. Proposed Change to Debarment Standard
    As noted previously, the DBA generally requires the payment of 
prevailing wages to laborers and mechanics working on contracts with 
the Federal Government or the District of Columbia for the construction 
of public buildings and public works. 40 U.S.C. 3142(a). In addition, 
Congress has included DBA prevailing wage provisions in numerous 
Related Acts under which Federal agencies assist construction projects 
through grants, loans, guarantees, insurance, and other methods. The 
same contract clauses are incorporated into DBA--and Related Act--
covered contracts, and the laws apply the same labor standards 
protections (including the obligation to pay prevailing wages) to 
laborers and mechanics without regard to whether they are performing 
work on a project subject to the DBA or one of the Related Acts. 
Indeed, not only are some projects subject to the requirements of both 
the

[[Page 15755]]

DBA and one of the Related Acts due to the nature and source of Federal 
funding, but also the great majority of DBA-covered projects are also 
subject to CWHSSA, one of the Related Acts.
    Against this backdrop, there is no apparent need for a different 
level of culpability for Related Acts debarment than for DBA debarment. 
The sanction for failing to compensate covered workers in accordance 
with applicable prevailing wage requirements should not turn on the 
source or form of Federal funding. Nor is there any principled reason 
that it should be easier for prime contractors, subcontractors, and 
their responsible officials to avoid debarment in Related Acts cases. 
Accordingly, the Department proposes to revise the governing 
regulations so that conduct that warrants debarment on DBA construction 
projects would also warrant debarment on Related Acts projects. This 
proposal fits within the Department's well-established authority to 
adopt regulations governing debarment of Related Acts contractors. See, 
e.g., Janik Paving & Constr., 828 F.2d at 91; Copper Plumbing & Heating 
Co. v. Campbell, 290 F.2d 368, 372-73 (D.C. Cir. 1961).
    The potential benefits of adopting a single, uniform debarment 
standard outweigh any benefits of retaining the existing dual-standard 
framework. Other than debarment, contractors who violate the DBA and 
Related Acts run the risk only of having to pay back wages, often long 
after violations occurred. Even if these violations are discovered or 
disclosed through an investigation or other compliance action, 
contractors that violate the DBA or Related Acts can benefit from the 
use of workers' wages, an advantage which can allow such contractors to 
underbid more law-abiding contractors. If the violations never come to 
light, such contractors pocket wages that belong to workers. 
Strengthening the remedy of debarment encourages such unprincipled 
contractors to comply with Davis-Bacon prevailing wage requirements by 
expanding the reach of this remedy when they do not. Facchiano Constr. 
Co. v. U.S. Dep't of Labor, 987 F.2d 206, 214 (3d Cir. 1993) (observing 
that debarment ``may in fact `be the only realistic means of deterring 
contractors from engaging in willful [labor] violations based on a cold 
weighing of the costs and benefits of noncompliance' '' (quoting Janik 
Paving & Constr., 828 F.2d at 91)).
    In proposing a unitary debarment standard, the Department intends 
that well-established case law applying the DBA ``disregard of 
obligations'' debarment standard would now also apply to Related Acts 
debarment determinations. Under this standard, as a 2016 ARB decision 
explained, ``DBA violations do not, by themselves, constitute a 
disregard of an employer's obligations,'' and, to support debarment, 
``evidence must establish a level of culpability beyond negligence'' 
and involve some degree of intent. Interstate Rock Prods., Inc., ARB 
No. 15-024, 2016 WL 5868562, at *4 (Sept. 27, 2016) (footnotes 
omitted). For example, the underpayment of prevailing wages, coupled 
with the falsification of certified payrolls, constitute a disregard of 
a contractor's obligations sufficient to establish the requisite level 
of ``intent'' under the DBA debarment provisions. See id. Bad faith and 
gross negligence regarding compliance have also been found to 
constitute a disregard of DBA obligations. See id.\119\ The 
Department's proposal to apply the DBA ``disregard of obligations'' 
standard as the sole debarment standard would maintain safeguards for 
law-abiding contractors and responsible officers by retaining the 
bedrock principle that DBA violations, by themselves, generally do not 
constitute a sufficient predicate for debarment. Moreover, the 
determination of whether debarment is warranted will continue to be 
based on a consideration of the particular facts found in each 
investigation and to include the same procedures and review process 
that are currently in place to determine whether debarment is to be 
pursued.
---------------------------------------------------------------------------

    \119\ For the same reason, except in unusual circumstances, it 
would generally not be appropriate to debar a contractor for 
violations in circumstances where the contracting agency omitted the 
contract clause and the clause was subsequently incorporated 
retroactively or found to be effective by operation of law.
---------------------------------------------------------------------------

    For these reasons and those discussed in more detail below, the 
Department proposes to harmonize debarment standards by reorganizing 
Sec.  5.12. As proposed, paragraph (a)(1) sets forth the disregard of 
obligations debarment standard, which would apply to both DBA and 
Related Acts violations. The proposed changes accordingly remove the 
``willful or aggravated'' language from Sec.  5.12, with conforming 
changes proposed in 29 CFR 5.6(b) and 5.7(a). Proposed paragraph (a)(2) 
combines the parts of current Sec. Sec.  5.12(a)(1) and (a)(2) 
concerning the different procedures for effectuating debarment under 
the DBA and Related Acts.
b. Impacts of Proposed Debarment Standard Change
    Because behavior that is willful or aggravated is also a disregard 
of obligations, in many instances the proposed harmonization of the 
debarment standards would apply to conduct that under the current 
regulations would already be debarrable under both the DBA and Related 
Acts. For example, falsification of certified payrolls to simulate 
compliance with Davis-Bacon labor standards has long warranted 
debarment under both the DBA and Related Acts. See, e.g., R.J. Sanders, 
Inc., WAB No. 90-25, 1991 WL 494734, at *1-2 (Jan. 31, 1991) (DBA); 
Coleman Constr. Co., ARB No. 15-002, 2016 WL 4238468, at *11 (Related 
Acts). Kickbacks also warrant debarment under the DBA and Related Acts. 
See, e.g., Killeen Elec. Co., Inc., WAB No. 87-49, 1991 WL 494685, at 
*5-6 (DBA and Related Act). In fact, any violation that meets the 
``willful or aggravated'' standard would necessarily also be a 
disregard of obligations.
    Under the proposed revisions, the subset of violations that would 
only have been debarrable under the DBA disregard of obligations 
standard now will be potentially subject to debarment under both the 
DBA and Related Acts. The ARB recently discussed one example of this 
type of violation, stating that intentional disregard of obligations 
``may . . . include acts that are not willful attempts to avoid the 
requirements of the DBA'' since contractors may not avoid debarment 
``by asserting that they did not intentionally violate the DBA because 
they were unaware of the Act's requirements.'' Interstate Rock Prods., 
ARB No. 15-024, 2016 WL 5868562, at *4 (citations omitted). Similarly, 
``failures to set up adequate procedures to ensure that their 
employees' labor was properly classified,'' which might not have been 
found to be willful or aggravated Related Act violations, were 
debarrable under the DBA disregard of obligations standard. Id. at *8. 
Under the Department's proposed revisions to Sec.  5.12, these types of 
violations could now result in debarment in Related Acts as well as DBA 
cases. Additionally, under the disregard of obligations standard, prime 
contractors and upper-tier subcontractors may be debarred if they fail 
to flow down the required contract clauses into their lower-tier 
subcontracts as required by Sec.  5.5(a)(6), or if they otherwise fail 
to ensure that their subcontractors are in compliance with the Davis-
Bacon labor standards provisions. See 29 CFR 5.5(a)(6)-(a)(7). See Ray 
Wilson Co., ARB No. 02-086, 2004 WL 384729, at *10 (affirming debarment 
under DBA of upper-tier subcontractor and its principals because of 
subcontractor's ``abdication from--and, thus, its disregard of--its

[[Page 15756]]

obligations to employees of . . . its own lower-tier subcontractor'').
c. Benefits of Proposed Debarment Standard Change
i. Improved Compliance and Enforcement
    Applying the DBA's disregard of obligations debarment standard in a 
uniform, consistent manner would advance the purpose of the DBA, `` `a 
minimum wage law designed for the benefit of construction workers.' '' 
Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1055 (D.C. Cir. 2007) 
(quoting Binghamton Const. Co., 347 U.S. at 178). Both the DBA 
statutory and the Related Acts regulatory debarment sanctions are 
intended to foster compliance with labor standards. Interstate Rock 
Products, ARB No. 15-024, 2016 WL 5868562, at *8 (``Debarment has 
consistently been found to be a remedial rather than punitive measure 
so as to encourage compliance and discourage employers from adopting 
business practices designed to maximize profits by underpaying 
employees in violation of the Act.'' (citations omitted)); Howell 
Constr., Inc., WAB No. 93-12, 1994 WL 269361, at *7 (May 31, 1994). 
Using the disregard of obligations debarment standard for all DBA and 
DBRA work would enhance enforcement of and compliance with Davis-Bacon 
labor standards in multiple ways.
    First, it would better enlist the regulated community in Davis-
Bacon enforcement by increasing their incentive to comply with DBA 
standards. See, e.g., Facchiano Constr., 987 F.2d at 214 (``Both Sec.  
5.12(a)(1) and Sec.  5.12(a)(2) are designed to ensure the cooperation 
of the employer, largely through self-enforcement.''); Brite Maint. 
Corp., WAB No. 87-07, 1989 WL 407462, at *2 (May 12, 1989) (debarment 
is a ``preventive tool to discourage violation[s]'').
    Second, applying the disregard of obligations standard to Related 
Act cases will serve the important public policy of holding 
contractors' responsible officials accountable for non-compliance in a 
more consistent manner, regardless of whether they are performing on a 
Federal or federally funded project. Responsible officials currently 
may be debarred under both the DBA and the Related Acts. See, e.g., 
P.B.M.C., Inc., WAB No. 87-57, 1991 WL 494688, at *7 (Feb. 8, 1991) 
(stating that ``Board precedent does not permit a responsible official 
to avoid debarment by claiming that the labor standards violations were 
committed by agents or employees of the firm'' in Related Act case); 
P.J. Stella Constr. Corp., WAB No. 80-13, 1984 WL 161738, at *3 (Mar. 
1, 1984) (affirming DBA debarment recommendation because ``an employer 
cannot take cover behind actions of his inexperienced agents or 
representatives or the employer's own inexperience in fulfilling the 
requirements of government construction contracts''); see also Howell 
Constr., Inc., WAB No. 93-12, 1994 WL 269361, at *7 (DBA case) 
(debarment could not foster compliance if ``corporate officials . . . 
are permitted to delegate . . . responsibilities . . . , [and] to 
delegate away any and all accountability for any wrong doing''). 
Applying a unitary debarment standard would further incentivize 
compliance by all contractors and responsible officers.
ii. Greater Consistency and Clarity
    The Department also believes that applying the DBA debarment and 
debarment-related standards to all Related Act prevailing wage cases 
would eliminate confusion, and attendant litigation, that have resulted 
from erroneous and inconsistent application of the two different 
standards. The incorrect debarment standard has been applied in various 
cases over the years, continuing to the present, notwithstanding the 
ARB's repeated clarification. See, e.g., J.D. Eckman, Inc., ARB No. 
2017-0023, 2019 WL 3780904, at *3 (July 9, 2019) (ALJ applied 
inapplicable DBA standard rather than applicable aggravated or willful 
standard; legal error of ALJ required remand for consideration of 
debarment under the correct standard); Coleman Constr. Co., ARB No. 15-
002, 2016 WL 4238468, at *9-11 (noting that the ALJ had applied the 
wrong debarment standard but concluding that the ALJ's ``conflat[ion of 
the] two different legal standards'' was harmless error under the 
circumstances). Most recently, the ARB vacated and remanded an ALJ's 
decision to debar a subcontractor and its principal under the DBA, 
noting that, even though the Department had not argued that the DBA 
applied, the ALJ had applied the incorrect standard because ``the 
contract was for a construction project of a non-[F]ederal building 
that was funded by the U.S. Government but did not include the United 
States as a party.'' Jamek Eng'g Servs., Inc., ARB No. 2020-0043, 2021 
WL 2935807, at *8 (June 23, 2021).
    Additionally, the ``aggravated or willful'' Related Acts standard 
has been interpreted inconsistently over the past decades. In some 
cases, the ARB has required actual knowledge of violations, while in 
others it has applied (or at least recited with approval) a less 
stringent standard that encompasses intentional disregard or plain 
indifference to the statutory requirements but does not require actual 
knowledge of the violations. Compare J.D. Eckman, Inc., ARB No. 2017-
0023, 2019 WL 3780904, at *3 (requiring actual knowledge or awareness 
of the violation) and A. Vento Constr., WAB No. 87-51, 1990 WL 484312, 
at *3 (Oct. 17, 1990) (aggravated or willful violations are 
``intentional, deliberate, knowing violations of the [Related Acts'] 
labor standards provisions'') with Fontaine Bros., Inc., ARB No. 96-
162, 1997 WL 578333, at *3 (Sept. 16, 1997) (stating in Related Act 
case that ``mere inadvertent or negligent conduct would not warrant 
debarment, [but] conduct which evidences an intent to evade or a 
purposeful lack of attention to, a statutory responsibility does'' and 
that ``[b]lissful ignorance is no defense to debarment''); see also 
Pythagoras Gen. Cont. Corp., ARB Nos. 08-107, 09-007, 2011 WL 1247207, 
at *12 (``[A] `willful' violation encompasses intentional disregard or 
plain indifference to the statutory requirements.''), aff'd sub. nom. 
on other grounds Pythagoras Gen. Cont. Corp. v. U.S. Dept. of Labor, 
926 F. Supp. 2d 490 (S.D.N.Y. 2013).
    The Department believes that a single debarment standard would 
provide consistency for the regulated community. Under the proposed 
single ``disregard of obligations'' debarment standard, purposeful 
inattention and gross negligence with regard to Davis-Bacon labor 
standards obligations--as well as actual knowledge of or participation 
in violations--could warrant debarment. The Department would continue 
to carefully consider all of the facts involved in determining whether 
a particular contractor's actions meet the proposed single standard.
(2) Length of Debarment Period
    The Department also proposes to revise Sec.  5.12 (see proposed 
Sec.  5.12(a)(1) and (2)) to make 3-year debarment mandatory under both 
the DBA and Related Acts and to eliminate the regulatory provision 
permitting early removal from the debarment list under the Related 
Acts.
    As noted above, since 1935, the DBA has mandated a 3-year debarment 
of contractors whose conduct has met the relevant standard. In 1964, 
the Department added two regulatory provisions that permit Related Acts 
debarment for less than 3 years as well as early removal from the 
debarment list. According to the final rule preamble, the Department 
added these provisions ``to improve the debarment

[[Page 15757]]

provisions under Reorganization Plan No. 14 of 1950 by providing for a 
flexible period of debarment up to three years and by providing for 
removal from the debarred bidders list upon a demonstration of current 
responsibility.'' 29 FR 95.
    The Department's experience over the nearly 60 years since then has 
shown that those Related Act regulatory provisions that differ from the 
DBA standard have not improved the debarment process for any of its 
participants. Rather, they have added another element of confusion and 
inconsistency to the administration and enforcement of the DBA and 
Related Acts. For example, contractors and subcontractors have been 
confused about which provision applies. See, e.g., Bob's Constr. Co., 
Inc., WAB No. 87-25, 1989 WL 407467, at *1 (May 11, 1989) (stating that 
``[t]he [DBA] does not provide for less than a 3-year debarment'' in 
response to contractor's argument that ``if the Board cannot reverse 
the [ALJ's DBA] debarment order, it should consider reducing the 3-year 
debarment.'').
    Requiring a uniform 3-year debarment period would reduce confusion. 
Although the regulations currently provide for an exception to 3-year 
debarment, debarment in Related Acts cases is usually, but not always, 
for 3 years. At times, the WAB has treated a 3-year debarment period as 
presumptive and therefore has reversed ALJ decisions imposing debarment 
for fewer than 3 years. See, e.g., Brite Maint. Corp., WAB No. 87-07, 
at *1, *3 (imposing a 3-year debarment instead of the 2-year debarment 
ordered by the ALJ); Early & Sons, Inc., WAB No. 86-25, at *1-2 (same); 
Warren E. Manter Co., Inc., WAB No. 84-20, 1985 WL 167228, at *2-3 
(June 21, 1985) (same). Under current case law, ``aggravated or 
willful'' violations of the Related Acts labor standards provisions 
warrant a three-year debarment period ``absent extraordinary 
circumstances.'' A. Vento Constr., WAB No. 87-51, 1990 WL 484312, at *6 
(emphasis added). ALJs have grappled with what constitutes 
``extraordinary circumstances,'' and when to consider the factors 
outlined in the DBRA early removal process. Id.; see also current 29 
CFR 5.12(a)(1) and (c).\120\ The Department believes that setting a 
uniform 3-year debarment period would provide clarity and promote 
consistency.
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    \120\ See 29 CFR 5.12(a)(1) (``shall be ineligible for a period 
not to exceed 3 years (from the date of publication by the 
Comptroller General of the name or names of said contractor or 
subcontractor on the ineligible list'' (emphasis added)); 29 CFR 
5.12(c) (``Any person or firm debarred under paragraph (a)(1) of 
this section may in writing request removal from the debarment list 
after six months from the date of publication by the Comptroller 
General of such person or firm's name on the ineligible list.'' 
(emphasis added)).
---------------------------------------------------------------------------

    Further, the Department has concluded that in instances--usually 
decades ago--when debarment for a period of less than 3 years was 
warranted, it has not improved the debarment process or compliance. 
See, e.g., Rust Constr. Co., Inc., WAB No. 87-15, 1987 WL 247054, at *2 
(Oct. 2, 1987) (1-year debarment), aff'd sub nom. Rust Constr. Co., 
Inc. v. Martin, 779 F. Supp. 1030, 1031-32 (E.D. Mo. 1992) (affirming 
WAB's imposition of 1-year debarment instead of no debarment, noting 
``plaintiffs could have easily been debarred for three years.''); 
Progressive Design & Build Inc., WAB No. 87-31, 1990 WL 484308, at *3 
(Feb. 21, 1990) (18-month debarment); Morris Excavating Co., Inc., WAB 
No. 86-27, 1987 WL 247046, at *1 (Feb. 4, 1987) (6-month, instead of 
no, debarment).
    For the above reasons, the Department proposes to modify the period 
of Related Acts debarment to mirror the DBA's mandatory 3-year 
debarment when contractors are found to have disregarded their 
obligations to workers or subcontractors.
    The Department also proposes to eliminate the provision at 29 CFR 
5.12(c) that allows for Related Acts contractors and subcontractors the 
possibility of early removal from the debarment list. Just as Related 
Acts debarment for fewer than 3 years has rarely been permitted, early 
removal from the debarment list has seldom been requested, and has been 
granted even less often. The Department's experience has shown that the 
possibility of early removal from the debarment list has not improved 
the debarment process. Likewise, the ARB and WAB do not appear to have 
addressed early removal for decades. At that time, the ARB and WAB 
affirmed denials of early removal requests. See Atlantic Elec. Servs., 
AES, Inc., ARB No. 96-191, 1997 WL 303981, at *1-2 (May 28, 1997); Fred 
A. Nemann, WAB No. 94-08, 1994 WL 574114, at *1, 3 (June 27, 1994). 
Around the same time, early removal was affirmed on the merits in only 
one case. See IBEW Loc. No. 103, ARB No. 96-123, 1996 WL 663205, at *4-
6 (Nov. 12, 1996). Additionally, the early-removal provision has caused 
confusion among judges and the regulated community concerning the 
proper debarment standard. For example, an ALJ erroneously relied on 
the regulation for early relief from Related Acts debarment in 
recommending that a DBA contractor not be debarred. Jen-Beck Assocs., 
Inc., WAB No. 87-02, 1987 WL 247051, at *1-2 (July 20, 1987) (remanding 
case to ALJ for a decision ``in accordance with the proper standard for 
debarment for violations of the [DBA]''). Accordingly, the Department 
proposes to amend Sec.  5.12 by deleting paragraph (c) and renumbering 
the remaining paragraph to accommodate this revision.
(3) Debarment of Responsible Officers
    The Department also proposes to revise 29 CFR 5.12 to expressly 
state that responsible officers of both DBA and Related Acts 
contractors and subcontractors may be debarred if they disregard 
obligations to workers or subcontractors. The purpose of debarring 
individuals along with the entities in which they are, for example, 
owners, officers, or managers is to close a loophole where such 
individuals could otherwise continue to receive Davis-Bacon contracts 
by forming or controlling another entity that was not debarred. The 
current regulations mention debarment of responsible officers only in 
the paragraph addressing the DBA debarment standard. See 29 CFR 
5.12(a)(2). But it is well-settled that they can be debarred under both 
the DBA and Related Acts. See Facchiano Constr. Co., 987 F.2d at 213-14 
(noting that debarment of responsible officers is ``reasonable in 
furthering the remedial goals of the Davis-Bacon Act and Related Acts'' 
and that there is ``no rational reason for including debarment of 
responsible officers in one regulation, but not the other''); Hugo 
Reforestation, Inc., ARB No. 99-003, 2001 WL 487727, at *12 (Apr. 30, 
2001) (CWHSSA; citing Related Acts cases); see also Coleman Constr. 
Co., ARB No. 15-002, 2016 WL 4238468, at *12. Thus, by expressly 
stating that responsible officers may be debarred under both the DBA 
and Related Acts, this proposed revision is consistent with current 
law. The Department intends that Related Acts debarment of individuals 
will continue to be interpreted in the same way as debarment of DBA 
responsible officers has been interpreted.
(4) Debarment of Other Entities
    The Department proposes another revision so that the Related Acts 
regulations mirror the DBA regulations not only in practice, but also 
in letter. Specifically, the Department proposes to revise 29 CFR 
5.12(a)(1) (with conforming changes in 5.12 and elsewhere in part 5) to 
state that ``any firm, corporation, partnership, or association in 
which such contractor, subcontractor, or responsible officer has

[[Page 15758]]

an interest'' must be debarred under the Related Acts, as well as the 
DBA. The DBA states that ``No contract shall be awarded to persons 
appearing on the list or to any firm, corporation, partnership, or 
association in which the persons have an interest . . .'' 40 U.S.C. 
3144(b)(2) (emphasis added); see also 29 CFR 5.12(a)(2). In contrast, 
the current regulations for Related Acts require debarment of ``any 
firm, corporation, partnership, or association in which such contractor 
or subcontractor has a substantial interest.'' 29 CFR 5.12(a)(1) 
(emphasis added); see also 29 CFR 5.12(b)(1), (d).
    The 1982 final rule preamble for these provisions indicates that 
the determination of ``interest'' (DBA) and ``substantial interest'' 
(Related Acts) are intended to be the same: ``In both cases, the intent 
is to prohibit debarred persons or firms from evading the ineligibility 
sanctions by using another legal entity to obtain Government 
contracts.'' 47 FR 23658, 23661, implemented by 48 FR 19540. It is 
``not intended to prohibit bidding by a potential contractor where a 
debarred person or firm holds only a nominal interest in the potential 
contractor's firm'' and ``[d]ecisions as to whether `an interest' 
exists will be made on a case-by-case basis considering all relevant 
factors.'' 47 FR 23658, 23661. The Department now proposes to eliminate 
any confusion by requiring the DBA ``interest'' standard to be the 
standard for both DBA and Related Acts debarment.
(5) Debarment Scope
    The Department proposes to revise the scope of Related Acts 
debarment so that it mirrors the scope of DBA debarment set out in 
current 29 CFR 5.12(a)(1). Currently, under the Related Acts, 
contractors are not generally debarred from being awarded any contracts 
or subcontracts of the United States or the District of Columbia, but 
rather are only barred from being awarded contracts subject to Davis-
Bacon prevailing wage standards. As proposed in revised Sec.  
5.12(a)(1), in Related Acts as well as DBA cases, any debarred 
contractor, subcontractor, or responsible officer would be barred for 3 
years from ``[being] awarded any contract or subcontract of the United 
States or the District of Columbia and any contract or subcontract 
subject to the labor standards provisions of any of the statutes 
referenced by Sec.  5.1.''
    The Department believes that there is no reasoned basis to prohibit 
debarred contractors or subcontractors whose violations have warranted 
debarment for Related Acts violations from receiving Related Acts 
contracts or subcontracts, but to permit them to continue to be awarded 
direct DBA contracts during the Related Acts debarment period. The 
proposed changes to Sec.  5.12(a)(1) would eliminate this anomalous 
situation, and apply debarment consistently to contractors, 
subcontractors, and their responsible officers who have disregarded 
their obligations to workers or subcontractors, regardless of the 
source of Federal funding or assistance for the work.
xxii. Employment Relationship Not Required
    The Department proposes a few changes to reinforce the well-
established principle that Davis-Bacon labor standards requirements 
apply even when there is no employment relationship between a 
contractor and worker.
    The DBA states that ``the contractor or subcontractor shall pay all 
mechanics and laborers employed directly on the site of the work, 
unconditionally and at least once a week, and without subsequent 
deduction or rebate on any account, the full amounts accrued at time of 
payment, computed at wage rates not less than those stated in the 
advertised specifications, regardless of any contractual relationship 
which may be alleged to exist between the contractor or subcontractor 
and the laborers and mechanics.'' 40 U.S.C. 3142(c)(1). The Department 
has interpreted this coverage to include ``[a]ll laborers and mechanics 
employed or working upon the site of the work,'' Sec.  5.5(a)(1)(i), 
and the definitions of ``employed'' in parts 3 and 5 similarly make it 
clear that the term includes all workers on the project and extends 
beyond the traditional common-law employment relationship. See 
Sec. Sec.  3.2(e) (``Every person paid by a contractor or subcontractor 
in any manner for his labor . . . is employed and receiving wages, 
regardless of any contractual relationship alleged to exist between him 
and the real employer.'' (emphasis in original)); 5.2(o) (``Every 
person performing the duties of a laborer or mechanic [on DBRA work] is 
employed regardless of any contractual relationship alleged to exist 
between the contractor and such person.'' (emphasis in original)); cf. 
41 U.S.C. 6701(3)(B) (defining ``service employee'' under the Service 
Contract Act to ``include[ ] an individual without regard to any 
contractual relationship alleged to exist between the individual and a 
contractor or subcontractor''); 29 CFR 4.155 (providing that whether a 
person is a ``service employee'' does not depend on any alleged 
contractual relationship).
    The ARB and its predecessors have reached similar conclusions. See 
Star Brite Constr. Co., Inc., ARB No. 98-113, 2000 WL 960260, at *5 
(June 30, 2000) (``the fact that the workers [of a subcontractor] were 
engaged in construction of the . . . project triggered their coverage 
under the prevailing wage provisions of the [DBA]; lack of a 
traditional employee/employer relationship between [the prime 
contractor] and these workers did not absolve [the prime contractor] 
from the responsibility to insure that they were compensated in 
accordance with the requirements of the [DBA].''); Labor Servs., Inc., 
WAB No. 90-14, 1991 WL 494728, at *2 (May 24, 1991) (stating that the 
predecessor to section 3142(c) `` `applies a functional rather than a 
formalistic test to determine coverage: If someone works on a project 
covered by the Act and performs tasks contemplated by the Act, that 
person is covered by the Act, regardless of any label or lack thereof,' 
'' and requiring a contractor to pay DBA prevailing wages to workers 
labeled as ``subcontractors''). This broad scope of covered workers 
also extends to CWHSSA, the Copeland Act, and other Related Acts. See 
40 U.S.C. 3703(e) (Reorganization Plan No. 14 of 1950 and 40 U.S.C. 
3145--the authority for the 29 CFR parts 3 and 5 regulations-- apply to 
CWHSSA); 29 CFR 3.2(e); see also, e.g., Ray Wilson Co., ARB No. 02-086, 
2004 WL 384729, at *6 (finding workers met the DBA's ``functional 
[rather than formalistic] test of employment'' and affirming ALJ's 
order of prevailing wages and overtime due workers of second-tier 
subcontractor); Joseph Morton Co., WAB No. 80-15, 1984 WL 161739, at 
*2-3 (July 23, 1984) (rejecting contractor's argument that workers were 
subcontractors not subject to DBA requirements and affirming ALJ 
finding that contractor owed prevailing wage and overtime back wages on 
contract subject to DBA and CWHSSA); cf. Charles Igwe, ARB No. 07-120, 
2009 WL 4324725, at *3-5 (Nov. 25, 2009) (rejecting contractors' claim 
that workers were independent contractors not subject to SCA wage 
requirements, and affirming finding that contractors ``violated both 
the SCA and the CWHSSA by failing to pay required wages, overtime, 
fringe benefits, and holiday pay, and failing to keep proper 
records'').
    The Department proposes a few specific changes to the regulations 
in recognition of this principle. First, the Department proposes to 
amend Sec. Sec.  1.2 and 3.2 to include a definition of ``employed'' 
that is substantively

[[Page 15759]]

identical to the definition in Sec.  5.2. This change would clarify 
that the DBA's expansive scope of ``employment'' also applies in the 
context of wage surveys and determinations under part 1 and certified 
payrolls under part 3. Second, references to employment (e.g., 
employee, employed, employing, etc.) in Sec.  5.5(a)(3) and (c), as 
well as elsewhere in the regulations, have been revised to refer 
instead to ``workers,'' ``laborers and mechanics,'' or ``work.'' 
Notwithstanding the broad scope of employment reflected in the existing 
and proposed definitions and in case law, the Department believes that 
this language, particularly in the contract clauses themselves, will 
clarify this principle and eliminate ambiguity. Consistent with the 
above, however, to the extent that the words ``employee,'' 
``employed,'' or ``employment'' are used in this preamble or in the 
regulations, the Department intends that those words be interpreted 
expansively to not limit coverage to workers in an employment 
relationship. Finally, the Department proposes to clarify in the 
definitions of ``employed'' in parts 1, 3, and 5 that the broad 
definition applies equally to ``public building[s] or public work[s]'' 
and to ``building[s] or work[s] financed in whole or in part by 
assistance from the United States through loan, grant, loan guarantee 
or insurance, or otherwise.''
xxiii. Withholding
    The DBA, CWHSSA, and the regulations at 29 CFR part 5 authorize 
withholding from the contractor accrued payments or advances equal to 
the amount of unpaid wages due laborers and mechanics under the DBRA. 
See 40 U.S.C. 3142(c)(3), 3144(a)(1) (DBA withholding), 3702(d), 
3703(b)(2) (CWHSSA withholding); 29 CFR 5.5(a)(2) and (b)(3) and 5.9. 
Withholding helps to realize the goal of protecting workers by ensuring 
that money is available to pay them for the work they performed but for 
which they were undercompensated. Withholding plays an important role 
in the statutory schemes to ensure payment of prevailing wages and 
overtime to laborers and mechanics on Federal and federally assisted 
construction projects. The regulations currently require, among other 
things, that upon a request from the Department, contracting agencies 
must withhold so much of the contract funds as may be considered 
necessary to pay the full amount of wages required by the contract, and 
in the case of CWHSSA, liquidated damages. See 29 CFR 5.5(a)(2) and 
(b)(3) and 5.9. The Department proposes a number of regulatory 
revisions to reinforce the current withholding provisions.
(A) Cross-Withholding
    Cross-withholding is currently permitted and is a procedure through 
which agencies withhold contract monies due a contractor from contracts 
other than those on which the alleged violations occurred. Prior to the 
1981-1982 rulemaking, Federal agencies generally refrained from cross-
withholding for DBRA liabilities because neither the DBA nor the CWHSSA 
regulations specifically provided for it. In 1982, however, the 
Department amended the contract clauses to specifically provide for 
cross-withholding. See 47 FR 23658, 23659-60 \121\ (cross-withholding 
permitted as stated in Sec.  5.5(a)(2) and (b)(3)); Group Dir., Claims 
Grp./GGD, B-225091 et al., 1987 WL 101454, at *2 (Comp. Gen. Feb. 20, 
1987) (the Department's 1983 Davis-Bacon regulatory revisions, e.g., 
Sec.  5.5(a)(2), ``now provide that the contractor must consent to 
cross-withholding by an explicit clause in the contract'').
---------------------------------------------------------------------------

    \121\ The May 28, 1982 final rule was implemented in part, 
including Sec. Sec.  5.5(a)(2) and 5.5(b)(3), in 1983. 48 FR 19540, 
19540, 19545-47 (Apr. 29, 1983).
---------------------------------------------------------------------------

    The Department proposes additional amendments to the cross-
withholding contract clause language at Sec.  5.5(a)(2) and (b)(3) to 
strengthen the Department's ability to cross-withhold when contractors 
use single-purpose entities, joint ventures or partnerships, or other 
similar vehicles to bid on and enter into DBRA-covered contracts. As 
noted above with reference to the proposed definition of prime 
contractor, the interposition of another entity between the agency and 
the general contractor is not a new phenomenon. In general, however, 
the use of single-purpose limited liability company (LLC) entities and 
similar joint ventures and teaming agreements in government contracting 
has been increasing in recent decades. See, e.g., John W. Chierichella 
& Anne Bluth Perry, Fed. Publ'ns LLC, Teaming Agreements and Advanced 
Subcontracting Issues, TAASI GLASS-CLE A at *1-6 (2007); A. Paul 
Ingrao, Joint Ventures: Their Use in Federal Government Contracting, 20 
Pub. Cont. L.J. 399 (1991).
    In response to this increase in the use of such single-purpose 
legal entities or arrangements, Federal agencies have often required 
special provisions to assure that liability among joint venturers will 
be joint and several. See, e.g., Ingrao, supra, at 402-03 (``Joint and 
several liability special provisions vary with each procuring agency 
and range from a single statement to complex provisions regarding joint 
and several liability to the government or third parties.''). While the 
corporate form may be a way for joint venturers to attempt to insulate 
themselves from liability, commentators have noted that this 
``advantage will rarely be available in a Government contracts context, 
because the Government will customarily demand financial and 
performance guarantees from the parent companies as a condition of its 
`responsibility' determination.'' Chierichella & Perry, supra, at *15-
16.
    Without amendment to the existing regulations, however, the 
Government is not able to effectively demand similar guarantees to 
secure performance of Davis-Bacon prevailing wage requirements. Unless 
the cross-withholding regulations are amended, the core DBRA remedy of 
cross-withholding may be of limited effectiveness as to joint ventures 
and other similar contracting vehicles such as single-purpose LLCs. 
This enforcement gap exists because, as a general matter, cross-
withholding (referred to as ``offset'' under the common law) is not 
available unless there is a ``mutuality of debts'' in that the creditor 
and debtor involved are exactly the same person or legal entity. See 
R.P. Newsom, 39 Comp. Gen. 438, 439 (1959). That general rule, however, 
can be waived by agreement of the parties. See Lila Hannebrink, 48 
Comp. Gen. 365, 365 (1968) (allowing cross-withholding against a joint 
venture for debt of an individual joint venturer on a prior contract, 
where all parties agreed).
    The structure of the Davis-Bacon Act, with its implementation in 
part through the mechanism of contract clauses, provides both the 
opportunity and the responsibility of the Government to ensure--by 
contract--that the use of the corporate form does not interfere with 
Congress's mandate that workers be paid the required prevailing wage 
and that withholding ensures the payment of any back wages owed. It is 
a cardinal rule of law that ``the interposition of a corporation will 
not be allowed to defeat a legislative policy, whether that was the aim 
or only the result of the arrangement.'' Anderson v. Abbott, 321 U.S. 
349, 363 (1944). This principle is generally applied to allow, in 
appropriate circumstances, for corporate forms to be disregarded by 
``piercing of corporate veil.'' \122\ However, where a

[[Page 15760]]

policy is enacted by contract, it is inefficient and unnecessary to 
rely on post hoc veil-piercing to assure that the legislative policy is 
enacted. The Government can instead, by contract, assure that the use 
of single-purpose entities, subsidiaries, or joint ventures interposed 
as nominal ``prime contractors'' does not inhibit the application of 
the Congressional mandate to assure back wages are recovered through 
withholding.\123\
---------------------------------------------------------------------------

    \122\ The Department has long applied corporate veil-piercing 
principles under the DBRA. See, e.g., Thomas J. Clements, Inc., ALJ 
No. 82-DBA-27, 1984 WL 161753, at *9 (June 14, 1984) (recognizing, 
in the context of a Davis-Bacon Act enforcement action, that a court 
may ``pierce the corporation veil where failure to do so will 
produce an unjust result''), aff'd, WAB No. 84-12, 1985 WL 167223, 
at *1 (Jan. 25, 1985) (adopting ALJ's decision as the Wage Appeals 
Board's own decision); Griffin v. Sec'y of Labor, ARB Nos. 00-032, 
00-033, 2003 WL 21269140, at *8, n.2 (May 30, 2003) (various 
contractors and their common owner, who ``made all decisions 
regarding operations of all of the companies,'' were one another's 
``alter egos'' in Act debarment action).
    \123\ Cf. Robert W. Hamilton, The Corporate Entity, 49 Tex. L. 
Rev. 979, 984 (1971) (noting the difference in application of 
``piercing the veil'' concepts in contract law because ``the 
creditor more or less assumed the risk of loss when he dealt with a 
`shell'; if he was concerned, he should have insisted that some 
solvent third person guarantee the performance by the 
corporation'').
---------------------------------------------------------------------------

    Accordingly, the Department proposes amending the withholding 
contract clauses at Sec.  5.5(a)(2) and (b)(3) to ensure that any 
entity that directly enters into a contract covered by the DBRA must 
agree to cross-withholding against it to cover any violations of 
specified affiliates under other covered contracts entered into by 
those affiliates. The covered affiliates are those entities included 
within the proposed definition of prime contractor in Sec.  5.2: 
Controlling shareholders or members, joint venturers or partners, and 
contractors (e.g., general contractors) that have been delegated 
significant construction and/or compliance responsibilities. Thus, for 
example, if a general contractor secures two prime contracts for two 
Related Act-covered housing projects through separate single-purpose 
entities that it controls, the new cross-withholding language would 
allow the Department to seek cross-withholding on either contract even 
though the contracts are nominally with separate legal entities. Or, if 
a general contractor is delegated all of the construction and 
compliance duties on a first contract held by an unrelated developer-
owner, but the general contractor itself holds a prime contract on a 
separate second contract, the Department could seek cross-withholding 
from the general contractor on the second contract, which it holds 
directly, to remedy violations on the first contract.
    The Department also proposes to add language to Sec.  5.5(a)(2) and 
(b)(3) to clarify that the Government may pursue cross-withholding 
regardless of whether the contract on which withholding is sought was 
awarded by, or received Federal assistance from, the same agency that 
awarded or assisted the prime contract on which the violations 
necessitating the withholding occurred. This revision is in accordance 
with the Department's longstanding policy, the current language of the 
withholding clauses, and case law on the use of setoff procedures in 
other contexts dating to 1946. See, e.g., United States v. Maxwell, 157 
F.3d 1099, 1102 (7th Cir. 1998) (``[T]he [F]ederal [G]overnment is 
considered to be a single-entity that is entitled to set off one 
agency's debt to a party against that party's debt to another 
agency.''); Cherry Cotton Mills v. United States, 327 U.S. 536, 539 
(1946) (same). However, because the current Davis-Bacon regulatory 
language does not explicitly state that funds may be withheld from 
contracts awarded by other agencies, some agencies have questioned 
whether cross-withholding is appropriate in such circumstances. This 
proposed addition would expressly dispel any such uncertainty or 
confusion. Conforming edits have also been proposed for Sec.  5.9.
    The Department also proposes certain non-substantive changes to 
streamline the withholding clauses. The Department proposes to include 
in the withholding clause at Sec.  5.5(a)(2)(i) similar language as in 
the CWHSSA withholding clause at Sec.  5.5(b)(3) authorizing 
withholding necessary ``to satisfy the liabilities . . . for the full 
amount of wages . . .and monetary relief'' of the contractor or 
subcontractor under the contract--instead of the specific language 
currently in Sec.  5.5(a)(2) that re-states the lists of the types of 
covered employees already listed in Sec.  5.5(a)(1)(i). The Department 
also proposes using the same term ``so much of the accrued payments or 
advances'' in both Sec.  5.5(a)(2) and (b)(3), instead of simply 
``sums'' as currently written in Sec.  5.5(b)(3). Finally, the 
Department also proposes to adopt in Sec.  5.5(b)(3) the use of the 
term ``considered,'' as used in Sec.  5.5(a)(2), instead of 
``determined'' as currently used in Sec.  5.5(b)(3), to refer to the 
determination of the amount of funds to withhold, as this mechanism 
applies in the same manner under both clauses.
    Conforming edits for each of the above changes to the withholding 
clauses at Sec.  5.5(a)(2) and (b)(3) have also been proposed for the 
explanatory section at Sec.  5.9. In addition, the Department proposes 
clarifying in a new paragraph (c) of Sec.  5.9 that cross-withholding 
from a contract held by a different legal entity is not appropriate 
unless the withholding provisions in that entity's contract were 
incorporated in full or by reference. Absent exceptional circumstances, 
cross-withholding would not be permitted from a contract held by a 
different legal entity where the labor standards were incorporated only 
by operation of law into that contract.
(B) Suspension of Funds for Recordkeeping Violations
    The Department also proposes to add language clarifying that, as 
proposed in Sec.  5.5(a)(3)(iv), funds may be suspended when a 
contractor has refused to submit certified payroll or provide the 
required records as set forth at Sec.  5.5(a)(3).
(C) The Department's Priority To Withheld Funds
    The Department proposes revising Sec. Sec.  5.5(a)(2) and (b)(3) 
and 5.9 to codify the Department's longstanding position that, 
consistent with the DBRA's remedial purpose to ensure that prevailing 
wages are fully paid to covered workers, the Department has priority to 
funds withheld (including funds that have been cross-withheld) for 
violations of Davis-Bacon prevailing wage requirements and CWHSSA 
overtime requirements. See also PWRB,\124\ DBA/DBRA/CWHSSA Withholding 
and Disbursement, at 4. In order to ensure that underpaid workers 
receive the monies to which they are entitled, contract funds that are 
withheld to reimburse workers owed Davis-Bacon or CWHSSA wages, or 
both, must be reserved for that purpose and may not be used or set 
aside for other purposes until such time as the prevailing wage and 
overtime issues are resolved.
---------------------------------------------------------------------------

    \124\ See note 14, supra.
---------------------------------------------------------------------------

    Affording the Department first priority to withheld funds, above 
competing claims, ``effectuate[s] the plain purpose of these Federal 
labor standards laws . . . [to] insure that every laborer and mechanic 
is paid the wages and fringe benefits to which [the DBA and DBRA] 
entitle them.'' Quincy Hous. Auth. LaClair Corp., WAB No. 87-32, 1989 
WL 407468, at *3 (Feb. 17, 1989) (holding that ``the Department of 
Labor has priority rights to all funds remaining to be paid on a 
[F]ederal or federally assisted contract, to the extent necessary to 
pay laborers and mechanics employed by contractors and subcontractors 
under such contract the full amount of wages required by [F]ederal 
labor standards laws and the contract . . .''). The proposed 
withholding priority serves an

[[Page 15761]]

important public policy of providing restitution for work that laborers 
and mechanics have already performed, but for which they were not paid 
the full DBA or DBRA wages they were owed in the first place.
    Specifically, the Department proposes to set forth expressly that 
it has priority to funds withheld for DBA, CWHSSA, and other Related 
Act wage underpayments over competing claims to such withheld funds by:
    (1) A contractor's surety(ies), including without limitation 
performance bond sureties, and payment bond sureties;
    (2) A contracting agency for its reprocurement costs;
    (3) A trustee(s) (either a court-appointed trustee or a U.S. 
trustee, or both) in bankruptcy of a contractor, or a contractor's 
bankruptcy estate;
    (4) A contractor's assignee(s);
    (5) A contractor's successor(s); or
    (6) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
3907.
    To the extent that a contractor did not have rights to funds 
withheld for Davis-Bacon wage underpayments, nor do their sureties, 
assignees, successors, creditors (e.g., the U.S. Internal Revenue 
Service), or bankruptcy estates have greater rights than the 
contractor. See, e.g., Liberty Mut. Ins. Co., ARB No. 00-018, 2003 WL 
21499861, at *7-9 (DOL priority to DBA withheld funds where surety 
``ha[d] not satisfied all of the bonded [and defaulted prime] 
contractor's obligations, including the obligation to ensure the 
payment of prevailing wages''); Unity Bank & Trust Co. v. United 
States, 5 Cl. Ct. 380, 384 (1984) (assignees acquire no greater rights 
than their assignors); Richard T. D'Ambrosia, 55 Comp. Gen. 744, 746 
(1976) (IRS tax levy cannot attach to money withheld for DBA 
underpayments in which contractor has no interest).
    Withheld funds always should, for example, be used to satisfy DBA 
and DBRA wage claims before any reprocurement costs (e.g., following a 
contractor's default or termination from all or part of the covered 
work) are collected by the Government. See WHD Opinion Letter DBRA-132 
(May 8, 1985). The Department has explained that ``[t]o hold otherwise 
. . . would be inequitable and contrary to public policy since the 
affected employees already have performed work from which the 
Government has received the benefit and that to give contracting agency 
reprocurement claims priority in such instances would essentially 
require the employees to unfairly pay for the breach of contract 
between their employer and the Government.'' Id.; see also PWRB, DBA/
DBRA/CWHSSA Withholding and Disbursement, at 4.\125\ This rationale 
applies with equal force in support of the Department's priority to 
withheld funds over the other types of competing claims listed in this 
proposed regulation.
---------------------------------------------------------------------------

    \125\ See note 14, supra.
---------------------------------------------------------------------------

    The Department's rights to withheld funds for unpaid earnings also 
are superior to performance and payment bond sureties of a DBA or DBRA 
contractor. See Westchester Fire Ins. Co. v. United States, 52 Fed. Cl. 
567, 581-82 (2002) (surety did not acquire rights that contractor 
itself did not have); Liberty Mut. Ins. Co., ARB No. 00-018, 2003 WL 
21499861 at *7-9 (ARB found that Administrator's claim to withheld 
contract funds for DBA wages took priority over performance (and 
payment) bond surety's claim); see also Quincy Hous. Auth. LaClair 
Corp., WAB No. 87-32, 1989 WL 407468, at *3. The Department can 
withhold unaccrued funds such as advances until ``sufficient funds are 
withheld to compensate employees for the wages to which they are 
entitled'' under the DBA. Liberty Mut. Ins. Co., ARB No. 00-018, 2003 
WL 21499861, at *6; see also 29 CFR 5.9.
    Similarly, the Department has priority over assignees (e.g., 
assignees under the Assignment Claims Act, see 31 U.S.C. 3727, 41 
U.S.C. 6305) to DBRA withheld funds. For example, in Unity Bank & Trust 
Co., 5 Cl. Ct. at 383, the employees' claim to withheld funds for a 
subcontractor's DBA wage underpayments had priority over a claim to 
those funds by the assignee--a bank that had lent money to the 
subcontractor to finance the work.
    Nor are funds withheld pursuant to the DBRA for prevailing wage 
underpayments property of a contractor's (debtor's) bankruptcy estate. 
See In re Quinta Contractors, Inc., 34 B.R. 129 (Bankr. M.D. Pa. 1983); 
cf. Pearlman v. Reliance Ins. Co., 371 U.S. 132, 135-36 (1962) 
(concluding, in a case under the Miller Act, that ``the Bankruptcy Act 
simply does not authorize a trustee to distribute other people's 
property among a bankrupt's creditors''). When a contractor has 
violated its contract with the government--as well as the DBA or DBRA--
by failing to pay required wages and fringe benefits, it has not earned 
its contractual payment. Therefore, withheld funds are not property of 
the contractor-debtor's bankruptcy estate. Cf. Professional Tech. 
Servs., Inc. v. IRS, No. 87-780C(2), 1987 WL 47833, at *2 (E.D. Mo. 
Oct. 15, 1987) (when DOL finds [an SCA] violation and issues a 
withholding letter, that act ``extinguishe[s]'' whatever property right 
the debtor (contractor) might otherwise have had to the withheld funds, 
subject to administrative review if the contractor chooses to pursue 
it); In re Frank Mossa Trucking, Inc., 65 B.R. 715, 7-18 (Bankr. D. 
Mass. 1985) (pre-petition and post-petition SCA withholding was not 
property of the contractor-debtor's bankruptcy estate).
    Various Comptroller General decisions further underscore these 
principles. See, e.g., Carlson Plumbing & Heating, B-216549, 1984 WL 
47039 (Comp. Gen. Dec. 5, 1984) (DBA and CWHSSA withholding has first 
priority over IRS tax levy, payment bond surety, and trustee in 
bankruptcy); Watervliet Arsenal, B-214905, 1984 WL 44226, at *2 (Comp. 
Gen. May 15, 1984) (DBA and CWHSSA wage claims for the benefit of 
unpaid workers had first priority to retained contract funds, over IRS 
tax claim and claim of payment bond surety), aff'd sub nom on 
reconsideration Int'l Fidelity Ins. Co., B-214905, 1984 WL 46318 (Comp. 
Gen. July 10, 1984); Forest Serv. Request for Advance Decision, B-
211539, 1983 WL 27408, at *1 (Comp. Gen. Sept. 26, 1983) (DOL's 
withholding claim for unpaid DBA wages prevailed over claims of payment 
bond surety and trustee in bankruptcy).
    The Department proposes codifying its position that DBRA 
withholding has priority over claims under the Prompt Payment Act, 31 
U.S.C. 3901-3907. The basis for this proposed provision is that a 
contractor's right to prompt payment does not have priority over 
legitimate claims--such as withholding--arising from the contractor's 
failure to fully satisfy its obligations under the contract. See, e.g., 
31 U.S.C. 3905(a) (concerning requirement that payments to prime 
contractors be for performance by such contractor that conforms to the 
specifications, terms, and conditions of its contract).
    The Department welcomes comments on whether the listed priorities 
should be effectuated by different language in the contract clause, 
such as an agreement between the parties that a contractor forfeits any 
legal or equitable interest in withheld payments once it commits 
violations, subject to procedural requirements that allow the 
contractor to contest the violations.
xxiv. Subpart C--Severability
    The Department proposes to add a new subpart C, titled 
``Severability'', which would contain a new Sec.  5.40, also titled 
``Severability.'' The proposed severability provision explains that 
each provision is capable of operating independently from one another, 
and

[[Page 15762]]

that if any provision of part 5 is held to be invalid or unenforceable 
by its terms, or as applied to any person or circumstance, or stayed 
pending further agency action, the Department intends that the 
remaining provisions remain in effect.
4. Non-Substantive Changes
xxv. Plain Language
    The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal 
agencies to write documents in a clear, concise, well-organized manner. 
The Department has written this document to be consistent with the 
Plain Writing Act as well as the Presidential Memorandum, ``Plain 
Language in Government Writing,'' published June 10, 1998 (63 FR 
31885). The Department requests comment on the proposed rule with 
respect to clarity and effectiveness of the language used.
xxvi. Other Changes
    The Department proposes to make non-substantive revisions 
throughout the regulations to address typographical and grammatical 
errors and to remove or update outdated or incorrect regulatory and 
statutory cross-references. The Department also proposes to adopt more 
inclusive language, including terminology that is gender-neutral, in 
the proposed regulations. These changes are consistent with general 
practice for Federal government publications; for example, guidance 
from the Office of the Federal Register advises agencies to avoid using 
gender-specific job titles (e.g., ``foremen'').\126\ These non-
substantive revisions do not alter the substantive requirements of the 
regulations.
---------------------------------------------------------------------------

    \126\ See Office of the Federal Register, Drafting Legal 
Documents: Principles of Clear Writing Sec.  18, available at 
https://www.archives.gov/Federal-register/write/legal-docs/clear-writing.html.
---------------------------------------------------------------------------

IV. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., 
and its attendant regulations, 5 CFR part 1320, require the Department 
to consider the agency's need for its information collections, their 
practical utility, as well as the impact of paperwork and other 
information collection burdens imposed on the public, and how to 
minimize those burdens. The PRA typically requires an agency to provide 
notice and seek public comments on any proposed collection of 
information contained in a proposed rule. See 44 U.S.C. 3506(c)(2)(B); 
5 CFR 1320.8.
    This rulemaking would affect existing information collection 
requirements previously approved under OMB control number 1235-0008 
(Davis-Bacon Certified Payroll) and OMB control number 1235-0023 
(Requests to Approve Conformed Wage Classifications and Unconventional 
Fringe Benefit Plans Under the Davis-Bacon and Related Acts/Contract 
Work Hours and Safety Standards Act). As required by the PRA, the 
Department has submitted information collection revisions to OMB for 
review to reflect changes that will result from the proposed rule.
    Summary: This rulemaking proposes to amend regulations issued under 
the Davis-Bacon and Related Acts that set forth rules for the 
administration and enforcement of the Davis-Bacon labor standards that 
apply to Federal and federally assisted construction projects. The 
Department proposes to add two new recordkeeping requirements 
(telephone number and email address) to the collection under 1235-0008; 
however, it does not propose that such data be added to the certified 
weekly payroll submission. The Department proposes to add paragraph 
(a)(3)(iii) to 29 CFR 5.5, which will require all contractors, 
subcontractors, and recipients of Federal assistance to maintain and 
preserve Davis-Bacon contracts, subcontracts, and related documents for 
3 years after all the work on the prime contract is completed. These 
related documents include contractor and subcontractor bids and 
proposals, amendments, modifications, and extensions to contracts, 
subcontracts, and agreements. The Department notes that it is a normal 
business practice to keep such documents and does not expect an 
increase in burden associated with this requirement. The Department 
requests public comment on its assumption that contractors and 
subcontractors already maintain these records as a matter of good 
business practice. Further, the Department adds proposed regulatory 
citations to the collection under 1235-0023, however there is no change 
in burden.
    Purpose and use: This proposed rule continues the already existing 
requirements that contractors and subcontractors must certify their 
payrolls by attesting that persons performing work on DBRA covered 
contracts have received the proper payment of wages and fringe 
benefits. Contracting officials and WHD personnel use the records and 
certified payrolls to verify contractors pay the required rates for 
work performed.
    Additionally, the Department reviews a proposed conformance action 
report to determine the appropriateness of a conformance action. Upon 
completion of review, the Department approves, modifies, or disapproves 
a conformance request and issues a determination. The Department also 
reviews requests for approval of unfunded fringe benefit plans to 
determine the propriety of the plans.
    WHD obtains PRA clearance under control number 1235-0008 for an 
information collection covering the Davis-Bacon Certified Payroll and 
certain proposed new recordkeeping requirements. An Information 
Collection Request has been submitted to revise the approval to 
incorporate the regulatory citations in this proposed rule applicable 
to the proposed rule and adjust burden estimates to reflect a slight 
increase in burden associated with the proposed new recordkeeping 
requirements.
    WHD obtains PRA clearance under OMB control number 1235-0023 for an 
information collection related to reporting requirements related to 
Conformance Reports and Unfunded Fringe Benefit Plans. This Information 
Collection Request is being submitted as the proposed rule proposes to 
revise the location within the regulatory text of certain requirements. 
An Information Collection Request has been submitted to OMB to revise 
the approval to incorporate the regulatory citations in this proposed 
rule.
    Information and technology: There is no particular order or form of 
records prescribed by the proposed regulations. A respondent may meet 
the requirements of this proposed rule using paper or electronic means.
    Public comments: The Department seeks comments on its analysis that 
this NPRM creates a slight increase in paperwork burden associated with 
ICR 1235-0008 and no increase in burden to ICR 1235-0023. Commenters 
may send their views on the Department's PRA analysis in the same way 
they send comments in response to the NPRM as a whole (e.g., through 
the www.regulations.gov website), including as part of a comment 
responding to the broader NPRM. While much of the information provided 
to OMB in support of the information collection request appears in the 
preamble, interested parties may obtain a copy of the full copy of the 
supporting statements by sending a written request to the mail address 
shown in the ADDRESSES section at the beginning of this preamble or by 
calling the number listed in the ADDRESSES section of this preamble. 
Alternatively, a copy of the ICR with applicable supporting 
documentation; including a description of the likely respondents, 
proposed frequency of response, and estimated

[[Page 15763]]

total burden may be obtained free of charge from the RegInfo.gov 
website on the day following publication of this notice or by visiting 
http://www.reginfo.gov/public/do/PRAMain website. In addition to having 
an opportunity to file comments with the Department, comments about the 
paperwork implications of the proposed regulations may be addressed to 
the OMB. Comments to the OMB should be directed to: Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Attention: Desk Officer for WHD, New Executive Office Building, Room 
10235, Washington, DC 20503. The OMB will consider all written comments 
that the agency receives during the comment period of this proposed 
rule. As previously indicated, written comments directed to the 
Department may be submitted during the comment period of this proposed 
rule.
    The OMB and the Department are particularly interested in comments 
that:
     Evaluate whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
agency, including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    Total burden for the subject information collections, including the 
burdens that will be unaffected by this proposed rule and any changes 
are summarized as follows:
    Type of review: Revisions to currently approved information 
collections.
    Agency: Wage and Hour Division, Department of Labor.
    Title: Davis-Bacon Certified Payroll.
    OMB Control Number: 1235-0008.
    Affected public: Private sector, businesses or other for-profits 
and Individuals or Households.
    Estimated number of respondents: 154,500 (0 from this rulemaking).
    Estimated number of responses: 9,194,616 (1,200,000 from this 
rulemaking).
    Frequency of response: On occasion.
    Estimated annual burden hours: 7,464,975 (3,333 burden hours due to 
this NPRM).
    Capital/Start-up costs: $0 ($0 from this rulemaking).
    Title: Requests to Approve Conformed Wage Classifications and 
Unconventional Fringe Benefit Plans Under the Davis-Bacon and Related 
Acts and Contract Work Hours and Safety Standards Act.
    OMB Control Number: 1235-0023.
    Affected public: Private sector, businesses or other for-profits 
and Individuals or Households.
    Estimated number of respondents: 8,518 (0 from this rulemaking).
    Estimated number of responses: 8,518 (0 from this rulemaking).
    Frequency of response: on occasion.
    Estimated annual burden hours: 2,143 (0 from this rulemaking).
    Estimated annual burden costs: 0.

V. Executive Order 12866, Regulatory Planning and Review; Executive 
Order 13563, Improved Regulation and Regulatory Review

    Under Executive Order 12866, OMB's Office of Information and 
Regulatory Affairs (OIRA) determines whether a regulatory action is 
significant and, therefore, subject to the requirements of the 
Executive Order and OMB review.\127\ Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action'' as a regulatory 
action that is likely to result in a rule that may: (1) Have an annual 
effect on the economy of $100 million or more, or adversely affect in a 
material way a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities (also referred to as economically 
significant); (2) create serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order. OIRA has determined that this proposed rule is a ``significant 
regulatory action'' under section 3(f) of Executive Order 12866 and is 
economically significant. Although the Department has only quantified 
costs of $12.6 million in Year 1, there are multiple components of the 
rule that could not be quantified due to data limitations, so it is 
possible that the aggregate effect of the rule is larger.
---------------------------------------------------------------------------

    \127\ See 58 FR 51735, 51741 (Oct. 4, 1993).
---------------------------------------------------------------------------

    Executive Order 13563 directs agencies to, among other things, 
propose or adopt a regulation only upon a reasoned determination that 
its benefits justify its costs; that it is tailored to impose the least 
burden on society, consistent with obtaining the regulatory objectives; 
and that, in choosing among alternative regulatory approaches, the 
agency has selected those approaches that maximize net benefits. 
Executive Order 13563 recognizes that some costs and benefits are 
difficult to quantify and provides that, when appropriate and permitted 
by law, agencies may consider and discuss qualitatively values that are 
difficult or impossible to quantify, including equity, human dignity, 
fairness, and distributive impacts. The analysis below outlines the 
impacts that the Department anticipates may result from this proposed 
rule and was prepared pursuant to the above-mentioned executive orders.

A. Introduction

1. Background and Need for Rulemaking
    In order to provide greater clarity and enhance their usefulness in 
the modern economy, the Department proposes to update and modernize the 
regulations that implement the Davis-Bacon and Related Acts. The Davis-
Bacon Act (DBA), enacted in 1931, requires the payment of locally 
prevailing wages and fringe benefits on Federal contracts for 
construction. See 40 U.S.C. 3142. The law applies to workers on 
contracts awarded directly by Federal agencies and the District of 
Columbia that are in excess of $2,000 and for the construction, 
alteration, or repair of public buildings or public works. Congress 
subsequently incorporated DBA prevailing wage requirements into 
numerous statutes (referred to as Related Acts) under which Federal 
agencies assist construction projects through grants, loans, 
guarantees, insurance, and other methods.
    The Department seeks to address a number of outstanding challenges 
in the program while also providing greater clarity in the DBA and 
Related Acts (collectively, the DBRA) regulations and enhancing their 
usefulness in the modern economy. In this rulemaking, the Department 
proposes to update and modernize the regulations implementing the DBRA 
at 29 CFR parts 1, 3, and 5. Among other proposals as discussed more 
fully earlier in this preamble, the Department proposes:
     To return to the definition of ``prevailing wage'' in 
Sec.  1.2 that it used

[[Page 15764]]

from 1935 to 1983.\128\ Currently, a single wage rate may be identified 
as prevailing in the area only if it is paid to a majority of workers 
in a classification on the wage survey; otherwise a weighted average is 
used. The Department proposes to return instead to the ``three-step'' 
method in effect before 1983. Under that method (also known as the 30-
percent rule), in the absence of a wage rate paid to a majority of 
workers in a particular classification, a wage rate will be considered 
prevailing if was paid to at least 30 percent of such workers. Only if 
no single wage rate is paid to at least 30 percent of workers in a 
classification will an average rate be used.
---------------------------------------------------------------------------

    \128\ The 1981-1982 rulemaking went into effect April 29, 1983. 
48 FR 19532.
---------------------------------------------------------------------------

     To revise Sec.  1.6(c)(1) to provide a mechanism to 
regularly update certain non-collectively bargained prevailing wage 
rates based on the Bureau of Labor Statistics Employment Cost Index. 
The mechanism is intended to keep such rates more current between 
surveys so that they do not become out-of-date and fall behind 
prevailing wage rates in the area.
     To expressly give the Administrator authority and 
discretion to adopt State or local wage determinations as the Davis-
Bacon prevailing wage where certain specified criteria are satisfied.
     To return to a prior policy made during the 1981-1982 
rulemaking related to the delineation of wage survey data submitted for 
``metropolitan'' or ``rural'' counties in Sec.  1.7(b). Through this 
change, the Department seeks to more accurately reflect modern labor 
force realities, to allow more wage rates to be determined at smaller 
levels of geographical aggregation, and to increase the sufficiency of 
data at the statewide level.
     To include provisions to reduce the need for the use of 
``conformances'' where the Department has received insufficient data to 
publish a prevailing wage for a classification of worker--a process 
that currently is burdensome for contracting agencies, contractors, and 
the Department.
     To strengthen enforcement, including by making effective 
by operation of law contract clauses or wage determinations that were 
wrongly omitted from contracts, and by codifying the principle of 
annualization used to calculate the amount of Davis-Bacon credit that a 
contractor may receive for contributions to a fringe benefit plan when 
the contractor's workers also work on private projects.
     To clarify and strengthen the scope of coverage under the 
DBRA, including by revising the definition of ``site of the work'' to 
further encompass certain construction of significant portions of a 
building or work at secondary worksites, to better clarify when 
demolition and similar activities are covered by the Davis-Bacon labor 
standards, and to clarify that the regulatory definitions of ``building 
or work'' and ``public building or public work'' can be met even when 
the construction activity involves only a portion of an overall 
building, structure, or improvement.
2. Summary of Affected Contractors, Workers, Costs, Transfers, and 
Benefits
    The Department evaluates the impacts of two components of this 
proposed rule in this regulatory impact analysis:
     The return to the ``three-step'' method for determining 
the prevailing wage and
     The provision of a mechanism to regularly update certain 
non-collectively bargained prevailing wage rates based on the Bureau of 
Labor Statistics Employment Cost Index.
    This proposed rule predominantly affects firms that hold federally 
funded or assisted construction contracts because of its impact on 
prevailing wage and fringe benefit rate determinations. The Department 
identified a range of potentially affected firms. The more narrowly 
defined population (those actively holding DBRA-covered contracts) 
includes 113,900 firms. The broader population (including those bidding 
on contracts but without active contracts, or those considering bidding 
in the future) includes 154,800 firms. Only a subset of potentially 
affected firms will be substantively affected and fewer may experience 
a change in payroll costs because some firms already pay above the 
prevailing wage rates that may result from this proposal. The 
Department estimated there are 1.2 million workers on DBRA covered 
contracts and therefore potentially affected by this proposed rule. 
Some of these workers will not be affected because they work in 
occupations not covered by DBRA or, if they are covered by DBRA, 
workers may not be affected by the prevailing wage updates of this 
proposed rule because they may already earn above the updated 
prevailing wage and fringe benefit rates.
    The Department estimated both regulatory familiarization costs and 
implementation costs for affected firms. Year 1 costs are estimated to 
total $12.6 million. Average annualized costs across the first 10 years 
are estimated to be $3.9 million (using a 7 percent discount rate). The 
transfer analysis discussed in Section IV.D. draws on two illustrative 
analyses conducted by the Department. However, the Department does not 
definitively quantify annual transfer payments due to data limitations 
and uncertainty. Similarly, benefits are discussed qualitatively due to 
data limitations and uncertainty. See Table 1 for a summary of affected 
contractor firms, workers, and costs.

                        Table 1--Summary of Affected Contractor Firms, Workers, and Costs
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                                           Future years              Average annualized value
                                      Year 1     ---------------------------------------------------------------
                                                      Year 2          Year 10      3% real rate    7% real rate
----------------------------------------------------------------------------------------------------------------
Firms: Narrow Definition \a\....         154,500         154,500         154,500  ..............  ..............
Firms: Broad Definition \b\.....         192,400         192,400         192,400  ..............  ..............
Potentially Affected Workers                 1.2             1.2             1.2  ..............  ..............
 (millions).....................
Direct employer costs (million).           $12.6            $2.5            $2.5            $3.7            $3.9
    Regulatory familiarization..           $10.1            $0.0            $0.0             1.2             1.4
    Implementation..............            $2.5            $2.5            $2.5             2.5             2.5
----------------------------------------------------------------------------------------------------------------
\a\ Firms actively holding DBRA-covered contracts.
\b\ Firms who may be bidding on DBA contracts or considering bidding in the future.


[[Page 15765]]

B. Number of Potentially Affected Contractor Firms and Workers

1. Number of Potentially Affected Contractor Firms
    The Department identified a range of potentially affected firms. 
This includes both firms impacted by the DBA and firms impacted by the 
Related Acts. The more narrowly defined population (firms actively 
holding DBRA-covered contracts) includes 154,500 firms: 61,200 Impacted 
by DBA and 93,300 impacted by the Related Acts (Table 2). The broader 
population (including those bidding on DBA contracts but without active 
contracts, or those considering bidding in the future) includes 192,400 
firms: 99,100 Impacted by DBA and 93,300 impacted by the Related Acts. 
Additionally, only a subset of these firms will experience a change in 
payroll costs. Those firms that already pay above the new wage 
determination rates calculated under the 30-percent rule will not be 
substantively affected. Because there is no readily usable source of 
data on the earnings of workers of these affected firms, the Department 
cannot definitively identify the number of firms that will experience 
changes in payroll costs due to changes in prevailing wage rates.
i. Firms Currently Holding DBA Contracts
    USASpending.gov--the official source for spending data for the U.S. 
Government--contains Government award data from the Federal Procurement 
Data System Next Generation (FPDS-NG), which is the system of record 
for Federal procurement data. The Department used these data to 
identify the number of firms that currently hold DBA contracts. 
Although more recent data are available, the Department used data from 
2019 to avoid any shifts in the data associated with the COVID-19 
pandemic in 2020. Any long-run impacts of COVID-19 are speculative 
because this is an unprecedented situation, so using data from 2019 may 
be the best approximation the Department has for future impacts. The 
pandemic could cause structural changes to the economy, resulting in 
shifts in industry employment and wages. The Department welcomes 
comments and data on how the COVID-19 pandemic has impacted firms and 
workers on DBRA contracts, as well as the impact on construction and 
other affected industries as a whole.
    The Department identified firms working on DBRA contracts as 
contracts with an assigned NAICS code of 23 or if the ``Construction 
Wage Rate Requirements'' element is ``Y,'' meaning that the contracting 
agency flagged that the contract is covered by DBRA.\129\ \130\ The 
Department also excluded (1) contracts for financial assistance such as 
direct payments, loans, and insurance; and (2) contracts performed 
outside the U.S. because DBA coverage is limited to the 50 states, the 
District of Columbia, and the U.S. territories.\131\
---------------------------------------------------------------------------

    \129\ The North American Industry Classification System (NAICS) 
is a method by which Federal statistical agencies classify business 
establishments in order to collect, analyze, and publish data about 
certain industries. Each industry is categorized by a sequence of 
codes ranging from 2 digits (most aggregated level) to 6 digits 
(most granular level). https://www.census.gov/naics/.
    \130\ The Department acknowledges that there may be affected 
firms that fall under other NAICS codes and for which the 
contracting agency did not flag in the FPDS-NG system that the 
contract is covered by DBRA. Including these additional NAICS codes 
could result in an overestimate because they would only be affected 
by this proposed rule if Davis-Bacon covered construction occurs. 
The data does not allow the Department to determine this.
    \131\ The DBA only applies in the 50 states and the District of 
Columbia and does not apply in the territories. However, some 
Related Acts provided Federal funding of construction in the 
territories that, by virtue of the Related Act, is subject to DBA 
prevailing wage requirements. For example, the DBA does not apply in 
Guam, but a Related Act provides that base realignment construction 
in Guam is subject to DBA requirements.
---------------------------------------------------------------------------

    In 2019, there were 14,000 unique prime contractors with active 
construction contracts in USASpending. However, subcontractors are also 
impacted by this proposed rule. The Department examined 5 years of 
USASpending data (2015 through 2019) and identified 47,200 unique 
subcontractors who did not hold contracts as primes in 2019. The 
Department used 5 years of data for the count of subcontractors to 
compensate for lower-tier subcontractors that may not be included in 
USASpending.gov. In total, the Department estimates 61,200 firms 
currently hold DBA contracts and are potentially affected by this 
rulemaking under the narrow definition; however, to the extent that any 
of these firms already pay above the prevailing wage rates as 
determined under this proposed rule they will not actually be impacted 
by the rule.
ii. All Potentially Affected Contractors (DBA Only)
    The Department also cast a wider net to identify other potentially 
affected contractors, both those directly affected (i.e., holding 
contracts) and those that plan to bid on DBA-covered contracts in the 
future. To determine the number of these firms, the Department 
identified construction firms registered in the General Services 
Administration's (GSA) System for Award Management (SAM) since all 
entities bidding on Federal procurement contracts or grants must 
register in SAM. The Department believes that firms registered in SAM 
represent those that may be affected if the proposed rulemaking impacts 
their decision to bid on contracts or their competitiveness in the 
bidding process. However, it is possible that some firms that are not 
already registered in SAM could decide to bid on DBA-covered contracts 
after this proposed rulemaking; these firms are not included in the 
Department's estimate. The proposed rule could also impact them if they 
are awarded a future contract.
    Using May 2021 SAM data, the Department identified 51,900 
registered firms with construction listed as the primary NAICS 
code.\132\ The Department excluded firms with expired registrations, 
firms only applying for grants,\133\ government entities (such as city 
or county governments),\134\ foreign organizations, and companies that 
only sell products and do not provide services. SAM includes all prime 
contractors and some subcontractors (those who are also prime 
contractors or who have otherwise registered in SAM). However, the 
Department is unable to determine the number of subcontractors that are 
not in the SAM database. Therefore, the Department added the 
subcontractors identified in USASpending to this estimate. Adding these 
47,200 firms identified in USASpending to the number of firms in SAM, 
results in 99,100 potentially affected firms.
---------------------------------------------------------------------------

    \132\ Data released in monthly files. Available at: https://www.sam.gov/SAM/pages/public/extracts/samPublicAccessData.jsf.
    \133\ Entities registering in SAM are asked if they wish to bid 
on contracts. If the firm answers ``yes,'' then they are included as 
``All Awards'' in the ``Purpose of Registration'' column in the SAM 
data. The Department included only firms with a value of ``Z2,'' 
which denotes ``All Awards.''
    \134\ The Department believes that there may be certain limited 
circumstances in which State and local governments may be 
contractors, but believes that this number would be minimal and 
including government entities would result in an inappropriate 
overestimation.
---------------------------------------------------------------------------

iii. Firms Impacted by the Related Acts
    USASpending does not adequately capture all work performed under 
the Related Acts. Additionally, there is not a central database, such 
as SAM, where contractors working on Related Acts contracts must 
register. Therefore, the Department used a different methodology to 
estimate the number of firms impacted by the Related Acts. The 
Department estimated 883,900 workers work on Related Acts contracts 
(see section V.B.2.iii.), then divided that number by the average 
number of workers per firm (9.5) in the

[[Page 15766]]

construction industry.\135\ This results in 93,300 firms. Some of these 
firms likely also perform work on DBA contracts. However, because the 
Department has no information on the size of this overlap, the 
Department has assumed all are unique firms. The Department welcomes 
comments and data on the number of firms working on Related Acts 
contracts.
---------------------------------------------------------------------------

    \135\ 2018 Statistics of U.S. Businesses (SUSB). U.S., NAICS 
sectors, larger employment sizes up to 20,000+. https://www.census.gov/data/tables/2018/econ/susb/2018-susb-annual.html.

         Table 2--Range of Number of Potentially Affected Firms
------------------------------------------------------------------------
                         Source                               Number
------------------------------------------------------------------------
               Total Count (Davis-Bacon and Related Acts)
------------------------------------------------------------------------
Narrow definition \a\...................................         154,500
Broad definition \b\....................................         192,400
------------------------------------------------------------------------
                         DBA (Narrow Definition)
------------------------------------------------------------------------
Total...................................................          61,200
    Prime contractors from USASpending..................          14,000
    Subcontractors from USASpending.....................          47,200
------------------------------------------------------------------------
                         DBA (Broad Definition)
------------------------------------------------------------------------
Total...................................................          99,100
    SAM.................................................          51,900
    Subcontractors from USASpending.....................          47,200
------------------------------------------------------------------------
                              Related Acts
------------------------------------------------------------------------
Total...................................................          93,300
    Related Acts workers................................         883,900
    Employees per firm (SUSB)...........................             9.5
------------------------------------------------------------------------
\a\ Firms actively holding DBRA-covered contracts.
\b\ Firms who may be bidding on DBA contracts or considering bidding in
  the future.

2. Number of Potentially Affected Workers
    There are no readily available government data on the number of 
workers working on DBA contracts; therefore, to estimate the number of 
these workers, the Department employed the approach used in the 2021 
final rule, ``Increasing the Minimum Wage for Federal Contractors,'' 
which implements Executive Order 14026.\136\ That methodology is based 
on the 2016 rulemaking implementing Executive Order 13706's paid sick 
leave requirements, which contained an updated version of the 
methodology used in the 2014 rulemaking for Executive Order 13658.\137\ 
Using this methodology, the Department estimated the number of workers 
who work on DBRA contracts, representing the number of ``potentially 
affected workers,'' is 1.2 million potentially affected workers. Some 
of these workers will not be affected because while they work on DBRA-
covered contracts they are not in occupations covered by the DBRA 
prevailing wage determinations (e.g., laborers or mechanics).
---------------------------------------------------------------------------

    \136\ See 86 FR 38816, 38816-38898.
    \137\ See 81 FR 9591, 9591-9671 and 79 FR 60634-60733.
---------------------------------------------------------------------------

    The Department estimated the number of potentially affected workers 
in three parts. First, the Department estimated employees and self-
employed workers working on DBA contracts in the 50 States and the 
District of Columbia. Second, the Department estimated the number of 
workers and self-employed DBRA workers in the U.S. territories. Third, 
the Department estimated the number of potentially affected workers 
working on contracts covered by Davis-Bacon Related Acts.
i. Workers on DBA Contracts in the 50 States and the District of 
Columbia
    DBA contract employees were estimated by calculating the ratio of 
Federal contracting expenditures to total output in NAICS 23: 
Construction. Total output is the market value of the goods and 
services produced by an industry. This ratio is then applied to total 
private employment in that industry (Table 3).
[GRAPHIC] [TIFF OMITTED] TP18MR22.036

    The Department used Federal contracting expenditures from 
USASpending.gov data excluding (1) financial assistance such as direct 
payments, loans, and insurance; and (2) contracts performed outside the 
U.S.
    To determine the share of all output associated with Federal 
Government contracts, the Department divided contracting expenditures 
by gross output in NAICS 23.\138\ This results in an estimated 3.27 
percent of output in

[[Page 15767]]

the construction industry covered by Federal Government contracts 
(Table 3). The Department then multiplied the ratio of covered-to-gross 
output by private sector employment in the construction industry (9.1 
million) to estimate the share of employees working on covered 
contracts. The Department's private sector employment number is 
primarily comprised of construction industry employment from the May 
2019 Occupational Employment and Wage Statistics (OEWS), formerly the 
Occupational Employment Statistics.\139\ However, the OEWS excludes 
unincorporated self-employed workers, so the Department supplemented 
OEWS data with data from the 2019 Current Population Survey Merged 
Outgoing Rotation Group (CPS MORG) to include unincorporated self-
employed in the estimate of workers.
---------------------------------------------------------------------------

    \138\ Bureau of Economic Analysis. (2020). Table 8. Gross Output 
by Industry Group. https://www.bea.gov/news/2020/gross-domestic-product-industry-fourth-quarter-and-year-2019. ``Gross output of an 
industry is the market value of the goods and services produced by 
an industry, including commodity taxes. The components of gross 
output include sales or receipts and other operating income, 
commodity taxes, plus inventory change. Gross output differs from 
value added, which measures the contribution of the industry's labor 
and capital to its gross output.''
    \139\ Bureau of Labor Statistics. OEWS. May 2019. Available at: 
http://www.bls.gov/oes/.
---------------------------------------------------------------------------

    According to this methodology, the Department estimated there are 
297,900 workers on DBA covered contracts in the 50 States and the 
District of Columbia. However, these laws only apply to wages for 
mechanics and laborers, so some of these workers would not be affected 
by these changes to DBA.
    This methodology represents the number of year-round-equivalent 
potentially affected workers who work exclusively on DBA contracts. 
Thus, when the Department refers to potentially affected employees in 
this analysis, the Department is referring to this conceptual number of 
people working exclusively on covered contracts. The total number of 
potentially affected mechanics and laborers will likely exceed this 
number because affected workers likely do not work exclusively on DBA 
contracts.
ii. Workers on DBRA Contracts in the U.S. Territories
    The methodology to estimate potentially affected workers in the 
U.S. territories is similar to the methodology above for the 50 States 
and the District of Columbia. The primary difference is that data on 
gross output in the territories are not available, and so the 
Department had to make some additional assumptions. The Department 
approximated gross output in the territories by calculating the ratio 
of gross output to Gross Domestic Product (GDP) for the U.S. (1.8), 
then multiplying that ratio by GDP in each territory to estimate total 
gross output.\140\ To limit gross output to the construction industry, 
the Department multiplied it by the share of the territory's payroll in 
NAICS 23. For example, the Department estimated that Puerto Rico's 
gross output in the construction industry totaled $3.6 billion.\141\
---------------------------------------------------------------------------

    \140\ GDP limited to personal consumption expenditures and gross 
private domestic investment.
    \141\ In Puerto Rico, personal consumption expenditures plus 
gross private domestic investment equaled $71.2 billion. Therefore, 
Puerto Rico gross output was calculated as $71.2 billion x 1.8 x 2.7 
percent.
---------------------------------------------------------------------------

    The rest of the methodology follows the methodology for the 50 
States and the District of Columbia. To determine the share of all 
output associated with Government contracts, the Department divided 
contract expenditures by gross output. Federal contracting expenditures 
from USASpending.gov data show that the Government spent $993.3 million 
on construction contracts in 2019 in American Samoa, the Commonwealth 
of the Northern Mariana Islands Guam, Puerto Rico, and the U.S. Virgin 
Islands. The Department then multiplied the ratio of covered contract 
spending to gross output by private sector employment to estimate the 
number of workers working on covered contracts (6,100).\142\
---------------------------------------------------------------------------

    \142\ For the U.S. territories, the unincorporated self-employed 
are excluded because CPS data are not available on the number of 
unincorporated self-employed workers in U.S. territories.
---------------------------------------------------------------------------

iii. Workers on Related Acts Contracts
    This proposed rulemaking will also impact workers on DBRA-covered 
contracts in the 50 States and the District of Columbia. Data are not 
available on the number of workers covered by the Related Acts. 
Additionally, neither USASpending nor any other database fully captures 
this population.\143\ Therefore, the Department used a different 
approach to estimate the number of potentially affected workers for 
DBRA contracts.
---------------------------------------------------------------------------

    \143\ USASpending includes information on grants, assistance, 
and loans provided by the Federal government. However, this does not 
include all covered projects, it does not capture the full value of 
the project because it is just the Federal share (i.e., excludes 
spending by State and local governments or private institutions that 
are also subject to DBRA labor standards because of the Federal 
share on the project), and it cannot easily be restricted to 
construction projects because there is no NAICS or product service 
code (PSC) variable.
---------------------------------------------------------------------------

    The Department identified that the total State and local government 
construction spending as reported by the Census Bureau was $318 billion 
in 2019.\144\ The Department then applied adjustment factors to adjust 
for the share of State and local expenditures that are covered by the 
Related Acts. Data on the share of State and local expenditures covered 
by the Related Acts are not available, therefore the Department used 
rough approximations. The Department requests comments and data on the 
appropriate adjustment factors. The Department assumed half of the 
total State and local government construction expenditures are subject 
to a DBRA, resulting in estimated expenditures of $158 billion. To 
this, the Department added $3 billion to represent U.S. Department of 
Housing and Urban Development (HUD) backed mortgage insurance for 
private construction projects.\145\
---------------------------------------------------------------------------

    \144\ Census Bureau. Annual Value of Public Construction Put in 
Place 2009-2020. Available at: https://www.census.gov/construction/c30/historical_data.html.
    \145\ Estimate based on personal communications with the Office 
of Labor Standards Enforcement and Economic Opportunity at HUD.
---------------------------------------------------------------------------

    As was done for DBA, the Department divided contracting 
expenditures by gross output, and multiplied that ratio by the estimate 
of private sector employment used above to estimate the share of 
workers working on Related Acts-covered contracts (883,900).

                                 Table 3--Number of Potentially Affected Workers
----------------------------------------------------------------------------------------------------------------
                                                    Contracting    Share output   Private-sector   Workers DBRA
                                  Private output      output       from covered       workers        contracts
                                  (billions) \a\  (millions) \b\    contracting    (1,000s) \c\    (1,000s) \d\
----------------------------------------------------------------------------------------------------------------
DBA, excl. territories..........          $1,662         $54,400           3.27%           9,100           297.9
DBRA, territories...............               5             993           (\e\)              35             6.1
Related Acts....................           1,667         161,297           9.68%           9,135           883.9
                                 -------------------------------------------------------------------------------

[[Page 15768]]

 
    Total.......................  ..............         216,700  ..............  ..............         1,188.0
----------------------------------------------------------------------------------------------------------------
\a\ Bureau of Economic Analysis, NIPA Tables, Gross output. 2019. For territories, gross output estimated by
  multiplying (1) total GDP for the territory by the ratio of total gross output to total GDP for the U.S. and
  (2) the share of national gross output in the construction industry.
\b\ For DBA, and DBRA in the territories, data from USASpending.gov for contracting expenditures for covered
  contracts in 2019. For Related Acts, data from Census Bureau on value of State and local government
  construction put in place, adjusted for coverage ratios. The Census data includes some data for territories
  but may be underestimated.
\c\ OEWS May 2019. For non-territories, also includes unincorporated self-employed workers from the 2019 CPS
  MORG.
\d\ Assumes share of expenditures on contracting is same as share of employment. Assumes workers work
  exclusively, year-round on DBRA covered contracts.
\e\ Varies by U.S. Territory.

3. Demographics of the Construction Industry
    In order to provide information on the types of workers that may be 
affected by this rule, the Department presents demographic 
characteristics of production workers in the construction industry. For 
purposes of this demographic analysis only, the Department is defining 
the construction industry as workers in the following occupations:

 Construction and extraction occupations
 Installation, maintenance, and repair occupations
 Production occupations
 Transportation and material moving occupations

    The Department notes that the demographic characteristics of 
workers on DBRA projects may differ from the general construction 
industry; however, data on the demographics of workers on DBRA projects 
is unavailable. Demographics of the general workforce are also 
presented for comparison. The Department welcomes comments and data on 
how the demographics of workers on DBRA projects would differ from the 
demographics of workers in the construction industry as a whole. 
Tabulated numbers are based on 2019 CPS data for consistency with the 
rest of the analysis and to avoid potential impacts of COVID-19. 
Additional information on the demographics of workers in the 
construction industry can be found in The Construction Chart Book: The 
U.S. Construction Industry and Its Workers.\146\
---------------------------------------------------------------------------

    \146\ Dong, Xiuwen, Xuanwen Wang, Rebecca Katz, Gavin West, and 
Bruce Lippy. The Construction Chart Book: The U.S. Construction 
Industry and Its Workers, 6th ed. Silver Spring: CPWR-The Center for 
Construction Research and Training, 2018, 18. https://www.cpwr.com/wp-content/uploads/publications/The_6th_Edition_Construction_eChart_Book.pdf.
---------------------------------------------------------------------------

    The vast majority of workers in the construction industry are men, 
97 percent (Table 4), which is significantly higher than the general 
workforce where 53 percent are men. Workers in construction are also 
significantly more likely to be Hispanic than the general workforce; 38 
percent of construction workers are Hispanic, compared with 18 percent 
of the workforce. Lastly, while many construction workers may have 
completed registered apprenticeship programs 84 percent of workers in 
the construction industry have a high school diploma or less, compared 
with 54 percent of the general workforce.

      Table 4--Demographics of Workers in the Construction Industry
------------------------------------------------------------------------
                                  Production workers    Total workforce
                                    in construction           (%)
------------------------------------------------------------------------
                                By Region
------------------------------------------------------------------------
Northeast.......................                16.4                17.9
Midwest.........................                16.4                21.9
South...........................                41.7                36.9
West............................                25.5                23.3
------------------------------------------------------------------------
                                 By Sex
------------------------------------------------------------------------
Male............................                97.1                53.4
Female..........................                 2.9                46.6
------------------------------------------------------------------------
                                 By Race
------------------------------------------------------------------------
White only......................                87.1                77.2
Black only......................                 7.5                12.4
All others......................                 5.4                10.4
------------------------------------------------------------------------
                              By Ethnicity
------------------------------------------------------------------------
Hispanic........................                38.0                18.1
Not Hispanic....................                62.0                81.9
------------------------------------------------------------------------

[[Page 15769]]

 
                          By Race and Ethnicity
------------------------------------------------------------------------
White only, Not Hispanic........                52.2                61.1
Black only, Not Hispanic........                 6.2                11.6
------------------------------------------------------------------------
                                 By Age
------------------------------------------------------------------------
16-25...........................                15.2                16.7
26-55...........................                71.6                64.2
56+.............................                13.3                19.1
------------------------------------------------------------------------
                              By Education
------------------------------------------------------------------------
No degree.......................                23.0                 8.9
High school diploma.............                60.6                45.3
Associate's degree..............                 9.3                10.7
Bachelor's degree or advanced...                 7.2                35.1
------------------------------------------------------------------------
Note: CPS data for 2019.

    The Department has also presented some demographic data on 
Registered Apprentices, as they are the pipeline for future 
construction workers. These demographics come from Federal Workload 
data, which covers the 25 states administered by the U.S. Department of 
Labor's Office of Apprenticeship and national registered apprenticeship 
programs.\147\ Note that this data includes apprenticeships for other 
industries beyond construction, but 68 percent of the active 
apprentices are in the construction industry, so the Department 
believes this data could be representative of that industry. Of the 
active apprentices in this data set, 9.1 percent are female and 90.9 
percent are male. The data show that 58.4 percent of active apprentices 
are White, 10.5 percent are Black or African American, 2.4 percent are 
American Indian or Alaska Native, 1.5 percent are Asian, and 0.8 
percent are Native Hawaiian or Other Pacific Islander. The data also 
show that 23.6 percent of active apprentices are Hispanic.
---------------------------------------------------------------------------

    \147\ FY2019 Data and Statistics, U.S. Department of Labor, 
Office of Apprenticeship. https://www.dol.gov/agencies/eta/apprenticeship/about/statistics/2019.
---------------------------------------------------------------------------

C. Costs of the Proposed Rule

    This section quantifies direct employer costs 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, as will be discussed below. 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). Transfers resulting from 
these provisions are discussed in section V.D.
1. Regulatory Familiarization Costs
    The proposed rule will impose direct costs on some covered 
contractors who will review the regulations to understand how the 
prevailing wage determination methodology will change and how certain 
non-collectively bargained rates will be periodically updated. However, 
the Department believes these time costs will be small. Firms are 
simply required to pay no less than the prevailing wage and fringe 
benefit rates set forth in the wage determinations applicable to their 
covered contracts; they do not need to familiarize themselves with the 
methodology used to develop those prevailing wage rates in order to 
comply with them. Costs associated with ensuring compliance are 
included as implementation costs.
    For this analysis, the Department has included all firms who either 
hold DBA or Related Acts contracts or who are considering bidding on 
work (192,400 firms). However, this may be an overestimate, because 
firms who are registered in SAM might not bid on a DBA contract, and 
therefore may not review these regulations. The Department assumes 
that, on average, 1 hour of a human resources staff member's time will 
be spent reviewing the rulemaking. Some firms will spend more time 
reviewing the rule, but others will spend less or no time reviewing the 
rule. The cost of this time is the median loaded wage for a 
Compensation, Benefits, and Job Analysis Specialist of $52.65 per 
hour.\148\ Therefore, the Department has estimated regulatory 
familiarization costs to be $10.1 million ($52.65 per hour x 1.0 hour x 
192,400 contractors) (Table 5). The Department has included all 
regulatory familiarization costs in Year 1. New entrants will not incur 
any additional regulatory familiarization costs attributable to this 
rule; had this rule not been proposed, they still would have incurred 
the costs of regulatory familiarization with existing provisions. 
Average annualized regulatory familiarization costs over 10 years, 
using a 7 percent discount rate, are $1.4 million.
---------------------------------------------------------------------------

    \148\ This includes the median base wage of $32.30 from the 2020 
OEWS plus benefits paid at a rate of 46 percent of the base wage, as 
estimated from the BLS's Employer Costs for Employee Compensation 
(ECEC) data, and overhead costs of 17 percent. OEWS data available 
at: http://www.bls.gov/oes/current/oes131141.htm.
---------------------------------------------------------------------------

2. Implementation Costs
    Firms will incur costs associated with implementing updated 
prevailing wage rates. When preparing a bid on a DBRA-covered contract, 
the contractor must review the wage determination identified by the 
contracting agency as appropriate for the work and determine the wage 
rates applicable for each occupation or classification to perform work 
on the contract. Once that contract

[[Page 15770]]

is signed, the specified prevailing wages generally remain in effect 
through the life of that contract.\149\
---------------------------------------------------------------------------

    \149\ With the exception of certain significant changes; see 
section III.B.1.vi.(B).
---------------------------------------------------------------------------

    The proposed periodic adjustment rule will generally affect the 
frequency with which prevailing wage rates are updated through both the 
provision to update old, outmoded rates, and moving forward, the 
provision to periodically update rates when that does not occur through 
the survey process (see section V.D.). Implementation costs may be 
incurred by affected firms through the need to update compensation 
rates in their relevant payroll systems. Currently, only a fraction of 
prevailing wages can be expected to change each year. Because the 
Department intends to update older rates to more accurately represent 
wages and benefits being paid in the construction industry, and, moving 
forward, more published wage rates will change more frequently than in 
the past, firms will spend more time updating prevailing wage rates for 
contractual purposes than they have in the past.
    To estimate the additional cost attributable to the need to update 
out-of-date rates, it is necessary to estimate the number of firms that 
need to update rates each year and the additional time these firms will 
spend implementing the new wage and fringe benefit rates due to this 
provision. The Department estimates that on average new wage rates are 
published from 7.8 surveys per year.\150\ These surveys may cover an 
entire State or a subset of counties, and multiple construction types 
or a single type of construction. For simplicity, the Department 
assumed that each survey impacts all contractors in the State, all 
construction types, and all classes of laborers and mechanics covered 
by DBRA. Under these assumptions, the Department assumed that each year 
15.6 percent of firms with DBRA contracts, roughly 24,100 firms (0.156 
x 154,500 firms), might already be affected by changes in prevailing 
wage rates in any given year and thus will not incur additional 
implementation costs attributable to the rule.\151\
---------------------------------------------------------------------------

    \150\ The Department used the number of surveys started between 
2002 (first year with data readily available) and 2019 (last year 
prior to COVID-19) to estimate that 7.8 surveys are started 
annually. This is a proxy for the number of surveys published on 
average in a year.
    \151\ The Department divided 7.8 surveys per year by 50 states. 
The District of Columbia and the territories were excluded from the 
denominator because these tend to be surveyed less often (with the 
exception of Guam which is surveyed regularly due to Related Act 
funding).
---------------------------------------------------------------------------

    Additionally, there may be some firms that already update 
prevailing wage rates periodically to reflect CBA increases. These 
firms generally will not incur any additional implementation costs 
because of this rule. The Department lacks specific data on how many 
firms fall into this category, but used information on the share of 
rates that are collectively bargained under the current method to help 
refine the estimate of firms with implementation costs. According to 
section V.D., 24 percent of rates are CBA rates under the current 
method, meaning 37,080 firms (0.24 x 154,500) might already be affected 
by changes in prevailing wages in any given year. Combining this number 
with the 24,100 firms calculated above, 61,180 firms in total would not 
incur additional implementation costs with this rule. The Department 
welcomes comments and data on what is the appropriate share of firms 
who already update wage rates due to CBA increases.
    Therefore, 93,320 firms (154,500 firms - 61,180 firms) are assumed 
to not update prevailing wage information in any given year because 
prevailing wage rates were unchanged in their areas of operation, and 
would therefore incur implementation costs. Under the proposed 
provisions, the Department intends to first update certain outdated 
non-collectively bargained rates \152\ (currently designated as ``SU'' 
rates) up to their current value to better track wages and benefits 
being paid in the construction industry over a staggered period. Then, 
in the future, the Department intends to update non-collectively 
bargained rates afterward as needed, and not more frequently than every 
3 years. Therefore, all firms that intend to bid on future contracts 
may need to update relevant prevailing wage rates and thus incur 
implementation costs. The Department therefore assumes that these 
93,230 firms may be expected to incur additional costs updating rates 
each year. The Department acknowledges that this estimate of firms may 
be an overestimate, because this proposed rule states that rates will 
be updated no more frequently than every 3 years. In each year, only a 
fraction of firms will have to update their prevailing wage rates, but 
the Department has included all firms in the estimate so as to not 
underestimate costs.
---------------------------------------------------------------------------

    \152\ The ``SU'' designation currently is used on general wage 
determinations when the prevailing wage is set through the weighted 
average method based on non-collectively bargained rates or a mix of 
collectively bargained rates and non-collectively bargained rates, 
or when a non-collectively bargained rate prevails.
---------------------------------------------------------------------------

    The Department estimated it will take a half hour on average for 
firms to adjust their wage rates each year for purposes of bidding on 
DBRA contracts. The Department believes that this average estimated 
time is appropriate because some firms will spend no time on 
implementation costs. Only a subset of firms will experience a change 
in payroll costs, because those firms that already pay above the new 
wage determination rates calculated under the 30-percent rule will not 
need to incur any implementation costs.
    Implementation time will be incurred by human resource workers (or 
a similarly compensated employee) who will implement the changes. As 
with previous costs, these workers earn a loaded hourly wage of $52.65. 
Therefore, total Year 1 implementation costs were estimated to equal 
$2.5 million ($52.65 x 0.5 hour x 93,320 firms). The average annualized 
implementation cost over 10 years, using a 7 percent discount rate, is 
$2.5 million. The Department welcomes comments on exactly how long it 
will take firms to adjust their wage rates each year.

                                            Table 5--Summary of Costs
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                              Regulatory
                      Variable                               Total          familiarization     Implementation
                                                                                 costs               costs
----------------------------------------------------------------------------------------------------------------
                                                  Year 1 Costs
----------------------------------------------------------------------------------------------------------------
Potentially affected firms..........................  ..................             192,400              93,320
Hours per firm......................................  ..................                   1                 0.5
Loaded wage rate \a\................................  ..................              $52.65              $52.65

[[Page 15771]]

 
Cost ($1,000s)......................................             $12,600             $10,100              $2,500
----------------------------------------------------------------------------------------------------------------
                                              Years 2-10 ($1,000s)
----------------------------------------------------------------------------------------------------------------
Annual cost.........................................              $2,500                  $0              $2,500
----------------------------------------------------------------------------------------------------------------
                                       Average Annualized Costs ($1,000s)
----------------------------------------------------------------------------------------------------------------
3% discount rate....................................              $3,700              $1,200              $2,500
7% discount rate....................................              $3,900              $1,400              $2,500
----------------------------------------------------------------------------------------------------------------
\a\ 2020 OEWS median wage for Compensation, Benefits, and Job Analysis Specialists (SOC 13-1141) of $32.30
  multiplied by 1.63: The ratio of loaded wage to unloaded wage from the 2020 ECEC (46 percent) plus 17 percent
  for overhead.

3. Other Provisions Not Analyzed
    For certain provisions contained in this proposal, the Department 
expects that any impacts of the provision would be negligible, as 
discussed below. The Department welcomes comments with data to help 
analyze these provisions.
    The Department proposes that prevailing wage rates set by State and 
local governments may be adopted as Davis-Bacon prevailing wage rates 
under specified conditions. Specifically, the Department proposes that 
the Administrator may adopt such a rate if the Administrator determines 
that: (1) The State or local government sets wage rates, and collects 
relevant data, using a survey or other process that is open to full 
participation by all interested parties; (2) the wage rate reflects 
both a basic hourly rate of pay as well as any prevailing fringe 
benefits, each of which can be calculated separately; (3) the State or 
local government classifies laborers and mechanics in a manner that is 
recognized within the field of construction; and (4) the State or local 
government's criteria for setting prevailing wage rates are 
substantially similar to those the Administrator uses in making wage 
determinations. These conditions are intended to provide WHD with the 
flexibility to adopt State and local rates where appropriate while also 
ensuring that adoption of such rates is consistent with the statutory 
requirements of the Davis-Bacon Act. These conditions are also intended 
to ensure that arbitrary distinctions are not created between 
jurisdictions where WHD makes wage determinations using its own surveys 
and jurisdictions where WHD adopts State or local prevailing wage 
rates.
    The Department does not possess sufficient data to conduct an 
analysis comparing prevailing wage rates set by State and local 
governments nationwide to those established by the Administrator. 
However, by definition, any adopted State or local prevailing wage must 
be set using criteria that are substantially similar to those used by 
the Administrator, so the resulting wage rates are likely to be similar 
to those which would have been established by the Administrator. The 
proposed change would also allow WHD to have more current rates in 
places where wage surveys are out-of-date, and to avoid WHD duplicating 
wage survey work that states and localities are already doing. The 
Department believes that this proposal could result in cost savings, 
which are discussed further in section V.E.
    The Department also proposes to eliminate the across-the-board 
restriction on mixing rural and metropolitan county data to allow for a 
more flexible case-by-case approach to using such data. Under this 
proposal, if sufficient data were not available to determine a 
prevailing wage in a county, the Department would be permitted to use 
data from surrounding counties whether those counties may be designated 
overall as rural or metropolitan. While sufficient data for analyzing 
the impact of this proposal are not available, the Department believes 
this proposal will improve the quality and accuracy of wage 
determinations by including data from counties that likely share and 
reflect the same labor market conditions when appropriate.
    The proposal to expressly authorize WHD to list classifications and 
corresponding wage and fringe benefit rates on wage determinations even 
when WHD has received insufficient data through its wage survey process 
is expected to ease the burden on contracting entities, both public and 
private, by improving the timeliness of information about conformed 
wage rates. For classifications for which conformance requests are 
regularly submitted, the Administrator would be authorized to list the 
classification on the wage determination along with wage and fringe 
benefit rates that bear a ``reasonable relationship'' to the wage and 
fringe benefit rates contained in the wage determination, in the same 
manner that such classifications and rates are currently conformed by 
WHD pursuant to current Sec.  5.5(a)(1)(ii)(A)(3). In other words, for 
a classification for which conformance requests are regularly 
submitted, WHD would be expressly authorized to essentially ``pre-
approve'' certain conformed classifications and wage rates, thereby 
providing contracting agencies, contractors and workers with advance 
notice of the minimum wage and fringe benefits required to be paid for 
work within those classifications, reducing uncertainty and costly 
delays in determining wage rates for the classifications.
    For example, suppose the Department was not able to publish a 
prevailing wage rate for carpenters on a building wage determination 
for a county due to insufficient data. Currently, every contractor in 
that county working on a Davis-Bacon building project that needed a 
carpenter would have to submit a conformance request for each of their 
building projects in that county. Moreover, because conformances cannot 
be submitted until after contract award, those same contractors would 
have a certain degree of uncertainty in their bidding procedure, as 
they would not know the exact rate that they would have to pay to their 
carpenters. This proposal would eliminate that requirement for 
classifications where conformance requests are common. While the 
Department does not have information on how much administrative time 
and money is spent on these tasks, for the commonly-requested 
classifications, this proposal

[[Page 15772]]

could make things more streamlined and efficient for the contractors.
    There are a few places in the NPRM where the Department is 
proposing to add language that clarifies existing policies. For 
example, the Department proposes to add language to the definitions of 
``building or work'' and ``public building or public work'' to clarify 
that these definitions can be met even when the construction activity 
involves only a portion of an overall building, structure, or 
improvement. Also, the Department proposes to add language regarding 
the ``material suppliers'' exemption. Although this language is just a 
clarification of existing guidelines and not a change in policy, the 
Department understands that contracting agencies may have differed in 
their implementation of Davis-Bacon labor standards. In these cases, 
there may be firms who are newly applying Davis-Bacon labor standards 
because of the clarifications in this rule. This could result in 
additional rule familiarization and implementation costs for these 
firms, and transfers to workers in the form of higher in wages if the 
contractors are currently paying below the prevailing wage.
    The Department does not have data to estimate to what extent 
contracting agencies have not been implementing Davis-Bacon labor 
standards but welcomes comments and data to help inform an estimate of 
the impact of these provisions. Specifically, the Department welcomes 
comments from commercial building owners who lease space to the Federal 
Government on how this provision would affect costs and the wages paid 
to workers.
    Other proposed provisions are also likely to have no significant 
economic impact, such as the proposed clarification of the ``material 
supplier'' exception in Sec.  5.2, and the proposal regarding the 
applicable apprenticeship ratios and wage rates when work is performed 
by apprentices in a different State than the State in which the 
apprenticeship program was originally registered.

D. Transfer Payments

1. The Return to the ``Three-Step'' Method for Determining the 
Prevailing Wage
i. Overview
    The proposed revision to the definition of prevailing wage (i.e., 
the return to the ``three-step process'') may lead to income transfers 
to or from workers. Under the ``three-step process'' when a wage rate 
is not paid to a majority of workers in a particular classification, a 
wage rate will be considered prevailing if it is paid to at least 30 
percent of such workers. Thus, under this proposal fewer future wage 
determinations will be established based on a weighted average. 
Consequently, some future wage determinations may be different than 
they otherwise would as a result of this proposed provision. The 
Department is not able to quantify the impact of this proposed change 
because it will apply to surveys yet to be conducted, covering 
classifications and projects in locations not yet determined. 
Nonetheless in an effort to illustrate the potential impact, the 
Department conducted a retrospective analysis that considers the impact 
of the 30-percent rule had it been used to set the wage determinations 
for a few occupations in recent years.
    Specifically, to demonstrate the impact of this provision, the 
Department compiled data for seven select classifications from 19 
surveys across 17 states from 2015 to 2018 (see Appendix A).\153\ This 
sample of rates covers all four construction types, and includes metro 
and rural counties, and a variety of geographic regions. The seven 
select key classifications considered are as follows:
---------------------------------------------------------------------------

    \153\ Data were obtained from the Automated Survey Data System 
(ASDS), the data system used by the Department to compile and 
process WD-10 submissions. Out of the 21 surveys that occurred 
during this time period and met sufficiency standards, these 19 
surveys are all of the ones with usable data for this analysis.
---------------------------------------------------------------------------

     Building and residential construction: Bricklayers, common 
laborers, plumbers, and roofers.
     Heavy and highway construction: Common laborers, cement 
masons, and electricians.
    In total, the sample is comprised of 3,097 county-classification 
observations. Because this sample only covers seven out of the many 
occupations covered by DBRA and all classification-county observations 
are weighted equally in the analysis, the Department believes the 
results need to be interpreted with care and cannot be extrapolated to 
definitively quantify the overall impact of the 30-percent rule. 
Instead, these results should be viewed as an informative illustration 
of the potential direction and magnitude of transfers that will be 
attributed to this proposed provision.
    The Department began its retrospective analysis by applying the 
current prevailing wage setting protocols (see Appendix B) to this 
sample of wage data to calculate the current prevailing wage and fringe 
benefit rates.\154\ The Department then applied the proposed 30-percent 
rule to the same sample of wage data.\155\ Then the Department compared 
the wage rates determined by the proposed protocol with current wage 
determinations. Results are reported at the county level (i.e., one 
observation represents one classification in one county).
---------------------------------------------------------------------------

    \154\ The Department chose to calculate prevailing wages under 
the current and proposed definitions to ensure comparability between 
the methods. The Department compared calculated current rates to the 
published wage determinations to verify the accuracy of its method. 
The calculated current rates generally match the wage and the fringe 
benefit rates within a few cents. However, there are a few instances 
that do not match, but the Department does not believe these 
differences bias the comparisons to the calculated proposed 30 
percent prevailing definition.
    \155\ This model, while useful for this illustrative analysis, 
may not be relevant for future surveys. The methodology assumes that 
the level of participation by firms in WHD's wage survey process 
would be the same if the standard were 30 percent and is mostly 
reflective of states with lower union densities.
---------------------------------------------------------------------------

    The results differ depending on how heavily unionized the 
construction industry is in the states analyzed (and thus how many 
union rates are submitted in response to surveys). In Connecticut, for 
example, the Department found that estimated rates were little changed 
because the construction industry in Connecticut is highly unionized 
and union rates prevail under both the 30 percent and the 50 percent 
threshold. Conversely, in Florida, which is less unionized, there is 
more variation in how wage rates would change. For Florida, calculated 
prevailing wage rates generally changed from an average rate (e.g., 
insufficient identical rates to determine a single prevailing rate 
under the current protocol) to a non-collectively bargained single 
prevailing rate. Depending on the classification and county, the 
prevailing hourly wage rate may have increased or decreased because of 
the change in methodology.
    Results may also differ by construction type. In particular, 
changes to highway prevailing wages may differ from changes in other 
construction types because they frequently rely on certified payroll. 
Thus, many of the wages used to calculate the prevailing wage reflect 
prevailing wages at the time of the survey.
ii. Results
    Table 6 compares the share of counties with calculated wage 
determinations by ``publication rule'' (i.e., the rule under which the 
wage rate was or would be published): (1) An average rate, (2) a 
collectively bargained

[[Page 15773]]

single prevailing rate, and (3) a non-collectively bargained single 
prevailing rate. Fringe benefit rate results also include the number of 
counties where the majority of workers received zero fringe benefits. 
It also shows the change in the number of rates in each publication 
rule category.
    For the surveys analyzed, the majority of current county wage rates 
were based on averages (1,954 / 3,097 = 63 percent), about 25 percent 
were a single prevailing collectively bargained rate, and 12 percent 
were a single prevailing non-collectively bargained rate. Using the 30 
percent requirement for a single prevailing rate, the number of county 
wage rates that would be based on averages decreased to 31 percent (948 
/ 3,097). The percentage of rates that would be based on a single wage 
rate increased for both non-collectively bargained and collectively 
bargained rates, although more wage rates would be based on non-
collectively bargained rates than collectively bargained rates.
    For fringe benefit rates, fringe benefits do not prevail for a 
similar percent in both scenarios, (i.e., ``no fringes''): 50 percent 
of current rates, 48 percent of proposed ``three-step process'' rates. 
The share determined as average rates decreased from 22 percent to 10 
percent. The prevalence of single prevailing fringe benefit rates 
increased for both non-collectively bargained and collectively 
bargained rates, with slightly more becoming collectively bargained 
rates than non-collectively bargained rates.
    The total number of counties will differ by classification based on 
the State, applicable survey area (e.g., statewide, metro only), and 
whether the data submitted for the classification met sufficiency 
requirements.

                                         Table 6--Prevalence of Calculated Prevailing Wages by Publication Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Laborers        Plumbers         Roofers       Bricklayers   Cement  masons   Elec-tricians       Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Count...................................             949             504             545             379             360             360           3,097
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Current Hourly Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             82%             57%             55%             42%             68%             53%             63%
Single Prevailing--Union................             12%             40%             23%             39%              4%             44%             25%
Single Prevailing--Non-Union............              6%              3%             22%             19%             28%              4%             12%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Proposed ``Three-Step Process'' Hourly Rate \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             47%             22%             26%             18%             40%             11%             31%
Single Prevailing--Union................             21%             46%             25%             45%              7%             80%             34%
Single Prevailing--Non-Union............             32%             31%             49%             37%             53%              9%             36%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Change for Hourly Rate (Percentage Points)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             -35             -35             -29             -23             -28             -42             -32
Single Prevailing--Union................               9               7               2               5               3              36               9
Single Prevailing--Non-Union............              26              28              27              18              25               5              23
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Current Fringe Benefit Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             23%             27%             12%             13%              9%             48%             22%
Single Prevailing--Union................             14%             41%             23%             39%              4%             44%             25%
Single Prevailing--Non-Union............              4%              5%              3%              2%              2%              0%              3%
No fringes..............................             59%             27%             62%             46%             85%              8%             50%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Proposed ``Three-Step Process'' Fringe Benefit Rate \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             13%             13%              9%              6%              5%             13%             10%
Single Prevailing--Union................             21%             47%             25%             46%              7%             80%             34%
Single Prevailing--Non-Union............              9%             13%              4%              2%              3%              7%              7%
No fringes..............................             57%             27%             62%             46%             85%              0%             48%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Change for Fringe Benefit Rate (Percentage Points)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average.................................             -11             -14              -3              -7              -4             -35             -11
Single Prevailing--Union................               7               6               2               7               3              36               9
Single Prevailing--Non-Union............               6               8               1               0               1               7               4
No fringes..............................              -2               0               0               0               0              -8              -2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Using a threshold of 30 percent of employees' wage or fringe benefit rates being identical.

    Table 7 summarizes the difference in calculated prevailing wage 
rates using the proposed three-step process compared to the current 
process. The results highlighted in Table 7 show both average changes 
across all observations and average changes when limited to those 
classification-county observations where rates are different (about 32 
percent of all observations in the sample). Notably, all 
classification-counties are weighted equally in the calculations. On 
average:
     Across all observations, the average hourly rate increases 
by only one cent. Across affected classification-counties, the 
calculated hourly rate increases by 4 cents on average. However, there 
is significant variation. The calculated hourly rate may increase by as 
much as $7.80 or decrease by as much as $5.78.
     Across all observations, the average hourly fringe benefit 
rate increases by 19 cents. Across affected classification-counties, 
the calculated hourly fringe benefit rate increases by $1.42 on average 
(with a range from -$6.17 to $11.16).
    Based on this demonstration of the impact of changing from the 
current to the proposed definition of ``prevailing,'' some published 
wage rates and fringe benefit rates may increase and others may 
decrease. In the sample considered, wage rates changed very little on 
average but fringe benefit rates increased on average. As discussed 
above, the Department believes that these results need to be 
interpreted with

[[Page 15774]]

care and cannot be extrapolated to definitively quantify the overall 
impact of the 30-percent rule. Instead, these results should be viewed 
as an informative illustration of the potential direction and magnitude 
of transfers that will be attributed to this proposed provision.

                                     Table 7--Change in Rates Attributable to Change in Definition of ``Prevailing''
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Laborers        Plumbers         Roofers       Bricklayers   Cement  masons   Electricians        Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Hourly Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...................................             949             504             545             379             360             360           3,097
Number changed..........................             330             175             160              89             101             150           1,005
Percent changed.........................             35%             35%             29%             23%             28%             42%             32%
Average (non-zero)......................           $0.37           $1.10          -$1.06           $0.44          -$1.35           $0.94           $0.04
Average (all)...........................           $0.13           $0.38          -$0.31           $0.10          -$0.38           $0.39           $0.01
Maximum.................................           $7.80           $7.07           $4.40           $1.02           $2.54           $4.14           $7.80
Minimum.................................          -$3.93          -$4.23          -$2.51          -$0.95          -$5.78          -$4.74          -$5.78
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Fringe Benefit Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total...................................             949             504             545             379             360             360           3,097
Number changed..........................             137              69              17              26              14             184             447
Percent changed.........................             14%             14%              3%              7%              4%             51%             14%
Average (non-zero)......................           $2.10           $2.14          -$1.67           $1.21           $0.74           $2.11           $1.42
Average (all)...........................           $0.30           $0.29          -$0.05           $0.08           $0.03           $1.08           $0.19
Max.....................................           $9.42          $11.16           $1.42           $2.19           $6.00           $4.61          $11.16
Min.....................................          -$4.82          -$1.35          -$4.61          -$0.17          -$6.17          -$0.86          -$6.17
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Adjusting Out-of-Date Prevailing Wage and Fringe Benefit Rates
    Updating old Davis-Bacon prevailing wage and fringe benefit rates 
will increase the minimum required hourly compensation required to be 
paid to workers on Davis-Bacon projects. This would result in transfers 
of income to workers on Davis-Bacon projects who are currently being 
paid only the required minimum hourly rate. Because the Federal 
Government generally pays for increases to the prevailing wage through 
higher contract bids, an increase in the prevailing wage will transfer 
income from the Federal Government to the worker. This transfer will be 
reflected in increased costs paid by the Federal Government for 
construction.
    However, to estimate a transfer estimate, many assumptions need to 
be made with little or no supporting evidence. For example, the 
Department would need to determine if workers really are being paid the 
prevailing wage rate; some published rates are so outdated that it is 
highly likely effective labor market rates exceed the published rates, 
and the published prevailing wage rates are functionally irrelevant. In 
addition, the Department would need to predict which Davis-Bacon 
projects would occur each year, in which counties these projects will 
occur, and the number of hours of work required from each class of 
laborer and mechanic. Because of many uncertainties, the Department 
instead characterizes the number and size of the changes in published 
Davis-Bacon hourly rates and fringe benefits rather than formally 
estimating the income change to those potentially affected by the 
proposal to update rates.
    To provide an illustrative analysis, the Department used the entire 
set of wage and fringe benefit rates on Wage Determinations (WDs) as of 
May 2019 to demonstrate the potential changes in Davis-Bacon wage and 
fringe benefit rates resulting from updating old rates to 2021 values 
using the Bureau of Labor Statistics' (BLS) Employment Cost Index 
(ECI).\156\ For this demonstration, the Department considered the 
impact of updating rates for key classification wage and fringe benefit 
rates published prior to 2019 that were based on weighted averages, 
which comprises 172,088 wage and fringe benefit rates lines in 3,997 
WDs.\157\ The Department has focused on wage and fringe benefit rates 
prior to 2019 because these are the universe of key classification 
rates that may be more than 3 years old by the time a final rule is 
issued, and the proposal calls for updating non-collectively-bargained 
wage rates that are more than 3 years old.
---------------------------------------------------------------------------

    \156\ At the time of the analysis, ECI was only available for 
the first two quarters of 2021. Thus, the wage and fringe benefit 
rates were updated to values representative of the first half of 
2021.
    \157\ In each type of construction covered by the Davis-Bacon 
and Related Acts, some classifications are called ``key'' because 
most projects require these workers. Building construction currently 
has 16 key classifications, residential construction has 12 key 
classifications and heavy and highway construction each have the 
same eight key classifications. A line reflects a wage rate (or 
fringe benefit rate) for a key classification by construction type 
in a specific geographic area. For example, a line could reflect a 
plumber in building construction in Fulton County, GA.
---------------------------------------------------------------------------

    After dropping hourly wages greater than $100 and wage rates that 
were less than $7.25 but were updated to $7.25, 159,545 wage rates were 
updated for this analysis.\158\ To update these wage rates, the 
Department used the BLS' ECI, which measures the change over time in 
the cost of labor total compensation.\159\ The Department believes that 
the ECI for private industry workers, total compensation, 
``construction, and extraction, farming, fishing, and forestry'' 
occupations, not seasonally adjusted is the most appropriate index. 
However, the index for this group is only available starting in 2001. 
Thus, for updating wages and fringe benefits from 1979 through 2000, 
the Department determined the ECI for private industry workers in the 
goods-producing industries was the most appropriate series to use that 
was available back to 1979.\160\
---------------------------------------------------------------------------

    \158\ The 54 wage rates greater than $100 were day or shift 
rates. The remaining 12,489 rates excluded were less than $7.25 
prior to July 24, 2009, but were published from surveys conducted 
before the establishment of DOL's Automated Survey Data System 
(ASDS) in 2002. The Department no longer has records of the original 
published wage rates in these cases.
    \159\ Available at: https://www.bls.gov/ect/.
    \160\ Continuous Occupational and Industry Series, Table 5. 
https://www.bls.gov/web/eci/eci-continuous-dollar.txt.
---------------------------------------------------------------------------

    To consider potential transfers to workers due to changes in wages, 
the full increase in the hourly rate would only occur if workers on 
DBRA projects are currently paid the original published rates.\161\ 
However, due to market conditions in some areas, workers may be 
receiving more than the published

[[Page 15775]]

rate. While completely comparable data on wages paid to workers on DBRA 
projects in specific classifications and counties are not readily 
available and usable for this analysis, the BLS's Occupational 
Employment and Wage Statistics (OEWS) data provide a general estimate 
of wages paid to certain categories of workers performing construction 
and construction-related duties. Although the OEWS data can be 
informative for this illustrative analysis, it is not a representative 
data set of professional construction workers performing work on DBRA 
projects. To estimate the approximate median 2021 wage rates, the 
Department used the median hourly wage rate for each key classification 
in the construction industry in the State 2020 OEWS data, then 
approximated a 2021 value using ECI.\162\
---------------------------------------------------------------------------

    \161\ The hourly wage rate increase would only occur when the 
next contract goes into effect and a new WD with an updated wage 
rate is incorporated into the contract.
    \162\ Because the May 2021 OEWS data are not yet available, the 
Department used the ECI for private industry workers, wages and 
salaries, ``construction, and extraction, farming, fishing, and 
forestry'' occupations, not seasonally adjusted, applied to the May 
2020 OEWS estimates to approximate the median wage rates for May 
2021. May 2020, Sectors 21, 22, & 23: Mining, Utilities, and 
Construction. https://www.bls.gov/oes/special.requests/oes_research_2020_sec_21-22-23.xlsx.
---------------------------------------------------------------------------

    To provide an example of transfers, the Department compared the 
ECI-updated Davis-Bacon wage rates to the applicable median hourly rate 
in the OEWS data.\163\ Using the OEWS as a general measure of the 
market conditions for construction worker wages in a given State, the 
Department assumed that an updated Davis-Bacon wage rate below the 
median OEWS rates would likely not lead to any income transfers to 
construction workers because most workers are likely already paid more 
than the updated Davis-Bacon rate. After removing the 99,111 updated 
Davis-Bacon wage rates that were less than the OEWS median, there 
remained 60,434 updated Davis-Bacon wage rates that may result in 
transfers to workers. However, the Department notes that some of the 
updated Davis-Bacon rates may be lower because they are a wage rate for 
a rural county, and the OEWS data represents the statewide median.
---------------------------------------------------------------------------

    \163\ The Department used OEWS data for certain occupations 
matching key classifications in the construction industry by State.
---------------------------------------------------------------------------

    Further investigating the ECI-updated Davis-Bacon wage rates that 
were substantially above the OEWS median wage rate, the Department 
found that 24,044 of the originally published Davis-Bacon wage rates 
were already higher than the OEWS median. For at least some of these 
wage rates, the comparison to the OEWS median may not be appropriate 
because such Davis-Bacon wage rates are for work in specialty 
construction. For example, most of the prevailing wage rates published 
specifically for a 2014 WD for Iowa Heavy Construction River Work 
exceed the 2021 OEWS median rates for the same classifications in 
Iowa.\164\ This may be an indication that comparing Davis-Bacon rates 
for this type of construction to a more general measure of wages may 
not be appropriate because workers are generally paid more for this 
type of specialty construction than for more other types of 
construction work measured by the OEWS data.
---------------------------------------------------------------------------

    \164\ WD IA20190002.
---------------------------------------------------------------------------

    Therefore, to measure possible transfers per hour to workers on 
Davis-Bacon projects due to the updating of wage rates, the Department 
began by taking the lesser of:
     The difference between the updated wage rate and the OEWS 
median wage rate.
     The difference between the updated and originally 
published wage rates.
    The second difference accounts for the 24,044 Davis-Bacon wage 
rates that were higher than the 2021 OEWS median rate even before they 
were updated because otherwise the Department would overestimate the 
potential hourly wage transfer.
    The Department also examined an additional adjustment for DBA wage 
rates because they are also subject to Executive Order 13658: 
Establishing a Minimum Wage for Contractors, which sets the minimum 
wage paid to workers on Federal contracts at $11.25 in 2022.\165\ Thus, 
the Department analyzed an additional restriction that the maximum 
possible hourly transfer to workers on Davis-Bacon projects cannot 
exceed the difference between the updated wage rate and $11.25.
---------------------------------------------------------------------------

    \165\ The Department also ran an analysis using the minimum wage 
of $15.00 as proposed by Executive Order 14026, ``Increasing the 
Minimum Wage for Federal Contractors.'' The results were similar.
---------------------------------------------------------------------------

    However, the added restriction has no impact on estimated transfers 
because any updated wage rates that were less than $11.25 were also 
less than the OEWS median wage rate. Thus, the maximum possible hourly 
transfers attributable to updated Davis-Bacon wage rates are identical 
for construction projects covered by the Davis-Bacon Act and by the 
Related Acts.
    Table 8 provides the summary statistics of the per hour transfers 
to workers that may occur due to updating old Davis-Bacon wage rates. 
Among the wage rates considered in this demonstration, there are 60,434 
wage rates updates that may result in transfers to workers. On average, 
the maximum hourly transfer is $3.92.

                   Table 8--Distribution of Potential per-Hour Transfers Due to Updated Rates
----------------------------------------------------------------------------------------------------------------
                                                     Number of                                       Standard
                    Coverage                           rates           Mean           Median         deviation
----------------------------------------------------------------------------------------------------------------
                                                      Wages
----------------------------------------------------------------------------------------------------------------
Davis-Bacon Related Acts........................          60,434           $3.92           $3.11           $3.92
Davis-Bacon Act.................................          60,434            3.92            3.11            3.92
----------------------------------------------------------------------------------------------------------------
                                                 Fringe Benefits
----------------------------------------------------------------------------------------------------------------
Davis-Bacon and Related Acts....................          75,495            1.43            1.02            1.58
----------------------------------------------------------------------------------------------------------------
                                               Total Compensation
----------------------------------------------------------------------------------------------------------------
Davis-Bacon and Related Acts....................          94,547            3.65            2.13            4.62
----------------------------------------------------------------------------------------------------------------

    Of the 172,088 pre-2019 SU key classification wage and fringe 
benefit rates, 75,495 were non-zero, and thus would be updated, 
possibly resulting in some transfers to workers (Table 8). On

[[Page 15776]]

average, these non-zero fringe benefits would increase by $1.43 per 
hour.
    Adding the required Davis-Bacon wage and fringe benefit rates 
together measures the required total compensation rate on DBRA 
projects. Due to updating old rates, 94,547 Davis-Bacon total 
compensation hourly rates would increase by $3.65 on average.\166\
---------------------------------------------------------------------------

    \166\ The average increase in total compensation is less than 
the average wage increase because more wage and fringe benefit lines 
are included for total compensation.
---------------------------------------------------------------------------

    The Department conducted these two demonstrations to provide an 
indication of the possible changes to Davis-Bacon wage rates and fringe 
benefit rates attributable to the proposed provision revising the 
definition of ``prevailing,'' and the provision to update out-of-date 
SU rates using the ECI (only one of which would affect a location-
occupation pair at a particular time). Both provisions may lead to 
higher hourly payments, while the former also has the potential to lead 
to lower hourly payments.
    However, because accurate data to measure the current county-level 
labor conditions for specific construction classifications are not 
available, it is unclear if an increase or decrease in Davis-Bacon 
minimum required rates will impact what workers earn on DBRA projects. 
Furthermore, even if some of these rate changes do lead to different 
rates paid to workers on DBRA projects, data are not available to 
estimate how large transfers might be. To do so would require detailed 
information on what federally funded construction contracts will be 
issued, the types of projects funded, where the projects will occur 
(specific county or counties), the value of the projects, and the labor 
mix needed to complete the project. Due to these many uncertainties in 
calculating a transfer estimate, the Department instead tried to 
characterize what changes in rates might occur as a result of the 
rulemaking.

E. Cost Savings

    This proposed rule could lead to cost savings for both contractors 
and the Federal Government, because the clarifications made in the rule 
would reduce ambiguity and increase efficiency, which could reduce the 
amount of time necessary to comply with the rule. For example, as 
discussed in section V.C.3, the proposal to expressly authorize WHD to 
list classifications and corresponding wage and fringe benefit rates on 
wage determinations even when WHD has received insufficient data 
through its wage survey process will increase certainty and reduce 
administrative burden for contracting entities. It would reduce the 
number of compliance requests needed, which could save time for the 
contractors, contracting agencies, and the Department. Additionally, 
the proposal which permits the Administrator to adopt prevailing wage 
rates set by State and local governments could result in cost savings 
for the Department, because it avoids WHD duplicating wage survey work 
that states and localities are already doing. It could also result in 
cost savings in the form of time savings for contractors, as they will 
only have one wage determination that they will have to reference.
    Additionally, the Department is providing clarifications throughout 
the rule, which will make clear which contract workers are covered by 
DBRA. For example, the Department is clarifying provisions related to 
the site of work, demolition and removal workers, and truck drivers and 
their assistants, among others. These clarifications will make it clear 
to both contractors and contract workers who is covered, and therefore 
could help reduce legal disputes between the two, resulting in cost 
savings.
    Because the Department does not have information on how much 
additional time contractors and the Federal Government currently spend 
complying with this rule due to lack of clarity, these cost savings are 
discussed qualitatively. However, the Department welcomes any comments 
and data that could inform a quantitative analysis of these cost 
savings.

F. Benefits

    Among the multiple proposals discussed above, the Department 
recognizes that the proposal to update the definition of prevailing 
wage using the ``30 percent rule'' could have various impacts on wage 
rates. The effect of this proposal on actual wages paid is uncertain 
for the reasons discussed in Section V.D.1. However, the Department's 
proposal to update out-of-date wage rates using the ECI would result in 
higher prevailing wage rates due to the increases in employer costs 
over time. Any DBRA-covered workers that were not already being paid 
above these higher wage rates would receive a raise when these updated 
rates were implemented. These higher wages could lead to benefits such 
as improved government services, increased productivity, and reduced 
turnover, which are all discussed here qualitatively. The magnitude of 
these wage increases could influence the magnitude of these benefits.
    The Department notes that the literature cited in this section 
sometimes does not directly consider changes in the DBRA prevailing 
wages. Additionally, much of the literature is based on voluntary 
changes made by firms. However, the Department has presented the 
information here because the general findings may still be applicable 
in this context. The Department welcomes comments and data on the 
benefits of this proposed rulemaking.
1. Improved Government Services
    For workers who are paid higher wage rates as a result of this 
proposed rulemaking, the Department expects that the quality of 
construction could improve. Higher wages can be associated with a 
higher number of bidders for Government contracts, which can be 
expected to generate greater competition and an improved pool of 
contractors. Multiple studies have shown that the bidding for municipal 
contracts remained competitive or even improved when living wage 
ordinances were implemented (Thompson and Chapman, 2006).\167\ In a 
study on the impact of bid competition on final outcomes of State 
Department of Transportation (DOT) construction projects, Delaney 
(2018) demonstrated that each additional bidder reduces final project 
cost overruns by 2.2 percent and increases the likelihood of achieving 
a high-quality bid by 4.9 times.\168\
---------------------------------------------------------------------------

    \167\ Thompson, J. and J. Chapman. (2006). ``The Economic Impact 
of Local Living Wages,'' Economic Policy Institute, Briefing Paper 
#170, 2006.
    \168\ Delaney, J. (2018). The Effect of Competition on Bid 
Quality and Final Results on State DOT Projects. https://www.proquest.com/openview/33655a0e4c7b8a6d25d30775d350b8ad/1?pq-origsite=gscholar&cbl=18750.
---------------------------------------------------------------------------

2. Increased Productivity
    For workers whose wages increase as a result of the Department's 
proposal to update out-of-date wage rates, these increases could result 
in increased productivity. Increased productivity could occur through 
numerous channels, such as employee morale, level of effort, and 
reduced absenteeism. A strand of economic research, commonly referred 
to as ``efficiency wage'' theory, considers how an increase in 
compensation may be met with greater productivity.\169\ Efficiency 
wages may elicit greater effort on the

[[Page 15777]]

part of workers, making them more effective on the job.\170\
---------------------------------------------------------------------------

    \169\ Akerlof, G.A. (1982). Labor Contracts as Partial Gift 
Exchange. The Quarterly Journal of Economics, 97(4), 543-569.
    \170\ Another model of efficiency wages, which is less 
applicable here, is the adverse selection model in which higher 
wages raise the quality of the pool of applicants.
---------------------------------------------------------------------------

    Allen (1984) estimates the ratio of the marginal product of union 
and non-union labor.\171\ He finds that union workers are 17 to 22 
percent more productive than non-union members. Although it is unclear 
whether this entire productivity difference is attributable to higher 
wages, it is likely a large contributing factor. The Construction Labor 
Research Council (2004) compared the costs to build a mile of highway 
in higher wage and lower wage states using data reported to the Federal 
Highway Administration from 1994 to 2002.\172\ They found that in 
higher wage states, 32 percent fewer labor hours are needed to complete 
a mile of highway than in lower wage states, despite hourly wage rates 
being 69 percent higher in those states. While this increased worker 
productivity could be due in part to other factors such as greater 
worker experience or more investment in capital equipment in higher 
wage states, the higher wages likely contribute.
---------------------------------------------------------------------------

    \171\ Allen, S.G. (1984). Unionized Construction Workers are 
More Productive. The Quarterly Journal of Economics, 251-174.
    \172\ The Construction Labor Research Council (2004). The Impact 
of Wages on Highway Construction Costs. http://niabuild.org/WageStudybooklet.pdf.
---------------------------------------------------------------------------

    Conversely, Vedder (1999) compared output per worker across states 
with and without prevailing wage laws.\173\ Data on construction 
workers is from the Department of Labor and data on construction 
contracts is from the Department of Commerce. A worker in a prevailing 
wage law State produced $63,116 of value in 1997 while a worker from a 
non-prevailing wage law State produced $65,754. Based on this simple 
comparison, workers are more productive without prevailing wage laws. 
However, this is a somewhat basic comparison in that it does not 
control for other differences between states that may influence 
productivity (for example, the amount of capital used or other State 
regulations).
---------------------------------------------------------------------------

    \173\ Vedder, R. (1999). Michigan's Prevailing Wage Law and Its 
Effects on Government Spending and Construction Employment. Midland, 
Michigan: Mackinac Center for Public Policy.
---------------------------------------------------------------------------

    Studies on absenteeism have demonstrated that there is a negative 
effect on firm productivity as absentee rates increase.\174\ Zhang et 
al., in their study of linked employer-employee data in Canada, found 
that a 1 percent decline in the attendance rate reduces productivity by 
0.44 percent.\175\ Allen (1983) similarly noted that a 10-percentage 
point increase in absenteeism corresponds to a decrease of 1.6 percent 
in productivity.\176\ Hanna et al. (2005) find that while absenteeism 
rates of between 0 and 5 percent among contractors on electrical 
construction projects lead to no loss of productivity, absenteeism 
rates of between 6 and 10 percent can spark a 24.4 percent drop in 
productivity.\177\
---------------------------------------------------------------------------

    \174\ Allen, S.G. (1983). How Much Does Absenteeism Cost? 
Journal of Human Resources, 18(3), 379-393. https://www.jstor.org/stable/145207?seq=1.
    \175\ Zhang, W., Sun, H., Woodcock, S., & Anis, A. (2013). 
Valuing Productivity Loss Due to Absenteeism: Firm-level Evidence 
from a Canadian Linked Employer-Employee Data. Health Economics 
Review, 7(3). https://healtheconomicsreview.biomedcentral.com/articles/10.1186/s13561-016-0138-y.
    \176\ Allen, S.G. (1983). How Much Does Absenteeism Cost? 
Journal of Human Resources, 18(3), 379-393. https://www.jstor.org/stable/145207?seq=1.
    \177\ Hanna, A., Menches, C., Sullivan, K., & Sargent, J. (2005) 
Factors Affecting Absenteeism in Electrical Construction. Journal of 
Construction Engineering and Management 131(11). https://ascelibrary.org/doi/abs/10.1061/(ASCE)0733-9364(2005)131:11(1212).
---------------------------------------------------------------------------

    Fairris et al. (2005) demonstrated that as a worker's wage 
increases there is a reduction in unscheduled absenteeism.\178\ They 
attribute this effect to workers standing to lose more if forced to 
look for new employment and an increase in pay paralleling an increase 
in access to paid time off. Pfeifer's (2010) study of German companies 
provides similar results, indicating a reduction in absenteeism if 
workers experience an overall increase in pay.\179\ Conversely, Dionne 
and Dostie (2007) attribute a decrease in absenteeism to mechanisms 
other than an increase in worker pay, specifically scheduling that 
provides both the option to work-at-home and for fewer compressed work 
weeks.\180\ However, the relevance of such policies in the context of 
construction is unclear. The Department believes both the connection 
between prevailing wages and absenteeism, and the connection between 
absenteeism and productivity are well enough established that this is a 
feasible benefit of the proposed rule.
---------------------------------------------------------------------------

    \178\ Fairris, D., Runstein, D., Briones, C., & Goodheart, J. 
(2005). Examining the Evidence: The Impact of the Los Angeles Living 
Wage Ordinance on Workers and Businesses. LAANE. https://laane.org/downloads/Examinig_the_Evidence.pdf.
    \179\ Pfeifer, C. (2010). Impact of Wages and Job Levels on 
Worker Absenteeism. International Journal of Manpower 31(1), 59-72. 
https://doi.org/10.1108/01437721011031694.
    \180\ Dionne, G., & Dostie, B. (2007). New Evidence on the 
Determinants of Absenteeism Using Linked Employer-Employee Data. 
Industrial and Labor Relations Review 61(1), 108-120. https://journals.sagepub.com/doi/abs/10.1177/001979390706100106.
---------------------------------------------------------------------------

3. Reduced Turnover
    Little evidence is available on the impact of prevailing wage laws 
and turnover, but an increase in the minimum wage has been shown to 
decrease both turnover rates and the rate of worker separation (Dube, 
Lester and Reich, 2011; Liu, Hyclak and Regmi, 2015; Jardim et al., 
2018).\181\ This decrease in turnover and worker separation can lead to 
an increase in the profits of firms, as the hiring process can be both 
expensive and time consuming. A review of 27 case studies found that 
the median cost of replacing an employee was 21 percent of the 
employee's annual salary.\182\ Fairris et al. (2005) \183\ found the 
cost reduction due to lower turnover rates ranges from $137 to $638 for 
each worker. Although the impacts cited here are not limited to 
government construction contracting, because data specific to 
government contracting and turnover are not available, the Department 
believes that a reduction in turnover could be observed among those 
workers on DBRA contracts whose wages increase following this proposed 
rule. The potential reduction in turnover is a function of several 
variables: The current wage, the change in the wage rate, hours worked 
on covered contracts, and the turnover rate. Therefore, the Department 
has not quantified the impacts of potential reduction in reduction in 
turnover.
---------------------------------------------------------------------------

    \181\ Dube, A., Lester, T.W., & Reich, M. (2011). Do Frictions 
Matter in the Labor Market? Accessions, Separations, and Minimum 
Wage Effects. (Discussion Paper No. 5811). IZA. https://www.iza.org/publications/dp/5811/do-frictions-matter-in-the-labor-market-accessions-separations-and-minimum-wage-effects.
    Liu, S., Hyclak, T. J., & Regmi, K. (2015). Impact of the 
Minimum Wage on Youth Labor Markets. Labour 29(4). doi: 10.1111/
labr.12071.
    Jardim, E., Long, M.C., Plotnick, R., van Inwegen, E., Vigdor, 
J., & Wething, H. (2018, October). Minimum Wage Increases and 
Individual Employment Trajectories (Working paper No. 25182). NBER. 
doi:10.3386/w25182.
    \182\ Boushey, H. and Glynn, S. (2012). There are Significant 
Business Costs to Replacing Employees. Center for American Progress. 
Available at: http://www.americanprogress.org/wp-content/uploads/2012/11/CostofTurnover.pdf.
    \183\ Fairris, D., Runstein, D., Briones, C., & Goodheart, J. 
(2005). Examining the Evidence: The Impact of the Los Angeles Living 
Wage Ordinance on Workers and Businesses. LAANE. https://laane.org/downloads/Examinig_the_Evidence.pdf.
---------------------------------------------------------------------------

VI. Initial Regulatory Flexibility Act (IRFA) Analysis

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121 (March 29, 1996), requires Federal agencies 
engaged in rulemaking to consider the impact of

[[Page 15778]]

their proposals on small entities, consider alternatives to minimize 
that impact, and solicit public comment on their analyses. The RFA 
requires the assessment of the impact of a regulation on a wide range 
of small entities, including small businesses, not-for profit 
organizations, and small governmental jurisdictions. Agencies must 
perform a review to determine whether a proposed or final rule would 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 603, 604.

A. Why the Department Is Considering Action

    In order to provide greater clarity and enhance their usefulness in 
the modern economy, the Department proposes to update and modernize the 
regulations at 29 CFR parts 1, 3, and 5, which implement the Davis-
Bacon Act and the Davis-Bacon Related Acts (collectively, the DBRA). 
The Department has not undertaken a comprehensive revision of the DBRA 
regulations since 1982. Since that time, Congress has expanded the 
reach of the DBRA regulations significantly, adding numerous new 
Related Act statutes to which they apply. The Davis-Bacon Act (DBA) and 
now 71 active Related Acts collectively apply to an estimated tens of 
billions of dollars in Federal and federally assisted construction 
spending per year and provide minimum wage rates for hundreds of 
thousands of U.S. construction workers. The Department expects these 
numbers to continue to grow as Congress seeks to address the 
significant infrastructure needs in the country, including, in 
particular, energy and transportation infrastructure necessary to 
address climate change. These regulations will provide additional 
clarity that will be helpful given the increased number of construction 
projects subject to Davis-Bacon requirements, due to the substantial 
increases in federally funded construction provided for in legislation 
such as the Infrastructure Investment and Jobs Act.
    In addition to expanding coverage of the prevailing wage rate 
requirements of the DBA, the Federal contracting system itself has 
undergone significant changes since 1982. Federal agencies have 
increased spending through the use of interagency Federal schedules. 
Contractors have increased their use of single-purpose entities such as 
joint ventures and teaming agreements. Off-site construction of 
significant components of public buildings and works has also 
increased. The regulations need to be updated to assure their continued 
effectiveness in the face of changes such as these.

B. Objectives of and Legal Basis for the Proposed Rule

    In this NPRM, the Department seeks to address a number of 
outstanding challenges in the program while also providing greater 
clarity in the DBRA regulations and enhancing their usefulness in the 
modern economy. Specifically, the Department proposes to return to the 
definition of ``prevailing wage'' that was used from 1935 to 1983 to 
address the overuse of average rates and ensure that prevailing wages 
reflect actual wages paid to workers in the local community. The 
Department also proposes to periodically update non-collectively 
bargained prevailing wage rates to address out-of-date wage rates. The 
Department proposes to give WHD broader authority to adopt State or 
local wage determinations as the Federal prevailing wage where certain 
specified criteria are satisfied, to issue supplemental rates for key 
classifications where there is insufficient survey data, to modernize 
the scope of work to include energy infrastructure and the site of work 
to include prefabricated buildings, to ensure that DBRA requirements 
protect workers by operation of law, and to strengthen enforcement 
including debarment and anti-retaliation. See Section III.B. for a full 
discussion of the Department's proposed changes to these regulations.
    Congress has delegated authority to the Department to issue 
prevailing wage determinations and prescribe rules and regulations for 
contractors and subcontractors on DBRA-covered construction 
projects.\184\ See 40 U.S.C. 3142, 3145. It has also directed the 
Department, through Reorganization Plan No. 14 of 1950, to ``prescribe 
appropriate standards, regulations and procedures'' to be observed by 
Federal agencies responsible for the administration of the Davis-Bacon 
and Related Acts. 5 U.S.C. app. 1, effective May 24, 1950, 15 FR 3176, 
64 Stat. 1267. These regulations, which have been updated and revised 
periodically over time, are primarily located in parts 1, 3, and 5 of 
title 29 of the Code of Federal Regulations.
---------------------------------------------------------------------------

    \184\ The DBA and the Related Acts apply to both prime contracts 
and subcontracts of any tier thereunder. In this NPRM, as in the 
regulations themselves, where the terms ``contracts'' or 
``contractors'' are used, they are intended to include reference 
both prime contracts and contractors and subcontracts and 
subcontractors of any tier.
---------------------------------------------------------------------------

C. Estimating the Number of Small Businesses Affected by the Rulemaking

    As discussed in section V.B., the Department identified a range of 
firms potentially affected by this rulemaking. This includes both firms 
impacted by the Davis-Bacon Act and firms impacted by the Related Acts. 
The more narrowly defined population includes firms actively holding 
Davis-Bacon contracts and firms affected by the Related Acts. The 
broader population includes those bidding on Davis-Bacon and Related 
Acts contracts but without active contracts, or those considering 
bidding in the future. As described in section V.B., the total number 
of potentially affected firms ranges from 154,500 to 192,400. This 
includes firms that pay at or above the new wage determination rates 
and thus will not be substantially affected. The Department does not 
have data to identify the number of firms that will experience changes 
in payroll costs.
    To identify the number of small firms, the Department began with 
the total population of firms and identified some of these firms as 
small based on several methods.
     For prime contractors in USASpending, the Department used 
the variable ``Contracting Officer's Determination of Business Size.'' 
\185\
---------------------------------------------------------------------------

    \185\ The description of this variable in the USAspending.gov 
Data Dictionary is: ``The Contracting Officer's determination of 
whether the selected contractor meets the small business size 
standard for award to a small business for the NAICS code that is 
applicable to the contract.'' The Data Dictionary is available at: 
https://www.usaspending.gov/data-dictionary.
---------------------------------------------------------------------------

     For subcontractors from USASpending, the Department 
identified those with ``small'' or ``SBA'' in the ``Subawardee Business 
Types'' variable.\186\
---------------------------------------------------------------------------

    \186\ The description of this variable in the USAspending.gov 
Data Dictionary is: ``Comma separated list representing sub-
contractor business types pulled from Federal Procurement Data 
System--Next Generation (FPDS-NG) or the System for Award Management 
(SAM).''
---------------------------------------------------------------------------

     For SAM data, the Department used the small business 
determination in the data, in variable ``NAICS Code String.'' This is 
flagged separately for each NAICS reported for the firm; therefore, the 
Department classified a company as a small business if SAM identified 
it as a small business in any 6-digit NAICS beginning with 23.

This results in an estimated number of potentially affected small 
businesses ranging from 103,600 to 135,200.

[[Page 15779]]



      Table 9--Range of Number of Potentially Affected Small Firms
------------------------------------------------------------------------
                        Source                               Small
------------------------------------------------------------------------
               Total Count (Davis-Bacon and Related Acts)
------------------------------------------------------------------------
Narrow definition....................................            103,600
Broad definition.....................................            135,200
------------------------------------------------------------------------
                         DBA (Narrow Definition)
------------------------------------------------------------------------
Total................................................             26,700
    Prime contractors from USASpending...............             11,200
    Subcontractors from USASpending \a\..............             15,500
------------------------------------------------------------------------
                         DBA (Broad Definition)
------------------------------------------------------------------------
Total................................................             58,300
    SAM..............................................             42,800
    Subcontractors from USASpending \a\..............             15,500
------------------------------------------------------------------------
                              Related Acts
------------------------------------------------------------------------
Total................................................             77,000
------------------------------------------------------------------------
\a\ Determination based on inclusion of ``small'' or ``SBA'' in the
  business types.

    The Department estimated in section V.B. that 1.2 million employees 
are potentially affected by the rulemaking. That methodology does not 
include a variation to identify only workers employed by small firms. 
The Department therefore assumed that the share of contracting 
expenditures attributed to small businesses is the best approximation 
of the share of employment in small businesses. In USASpending, 
expenditures are available for by firm size. For example, in 2019, 
$55.4 billion was spent on DBA covered contracts (see section V.B.2.) 
and of that, $19.8 billion (36 percent) was awarded to small business 
prime contractors.\187\ Data on expenditures by firm size are 
unavailable for the Related Acts (Table 10). Therefore, the Department 
assumed the same percentage applies to such expenditures as for Davis-
Bacon contracts. In total, an estimated 424,800 workers are employed by 
potentially affected small businesses.
---------------------------------------------------------------------------

    \187\ If subcontractors are more likely to be small businesses 
than prime contractors, then this methodology may underestimate the 
number of workers who are employed by small businesses.

               Table 10--Number of Potentially Affected Workers in Small Covered Contracting Firms
----------------------------------------------------------------------------------------------------------------
                                                                                Percent of
                                                           Total workers     expenditures in    Workers in small
                                                            (thousands)     small contracting      businesses
                                                                                firms \a\         (thousands)
----------------------------------------------------------------------------------------------------------------
DBA, excl. territories.................................              297.9              35.7%              106.4
DBA, territories.......................................                6.1              38.2%                2.3
Related Acts \b\.......................................              883.9              35.8%              316.0
                                                        --------------------------------------------------------
    Total..............................................            1,188.0  .................              424.8
----------------------------------------------------------------------------------------------------------------
\a\ Source: USASpending.gov. Percentage of contracting expenditures for covered contracts in small businesses in
  2019.
\b\ Because data on expenditures by firm size are unavailable for Related Acts. The Department assumed the same
  percentage applied as for Davis-Bacon.

    In several places in the NPRM, the Department is proposing to add 
or revise language to clarify existing policies rather than to 
substantively change them. For example, the Department proposes to add 
language to the definitions of ``building or work'' and ``public 
building or public work'' to clarify that these definitions can be met 
even when the construction activity involves only a portion of an 
overall building, structure, or improvement. Also, the Department 
proposes to add language clarifying the applicability of the ``material 
supplier'' exemption to coverage, the applicability of the DBRA to 
truck drivers and flaggers, and the extent to which demolition 
activities are covered by the DBRA. However, the Department 
acknowledges that some contracting agencies may not have been applying 
Davis-Bacon in accordance with those policies. Where this was the case, 
the clarity provided by this proposed rule could lead to expanded 
application of the Davis-Bacon labor standards, which could lead to 
more small firms being required to comply with Davis-Bacon labor 
standards. Additionally, the Department's proposes to revise the 
definition of ``site of the work'' to further encompass certain 
construction of significant portions of a building or work at secondary 
worksites, which could clarify and strengthen the scope of coverage 
under DBA, which would also lead to more small firms being required to 
comply with Davis-Bacon labor standards. The Department does not have 
data to determine how many of these small firms exist and welcomes data 
and information on the extent to which small firms would newly be 
applying

[[Page 15780]]

Davis-Bacon and what potential compliance costs they could incur.

D. Compliance Requirements of the Proposed Rule, Including Reporting 
and Recordkeeping

    Many of the proposals in this rule only affect how the prevailing 
wage rate is calculated. For these proposals there will be no new 
compliance requirements for small firms, as they will still need to pay 
the published prevailing wage. The Department is also proposing a 
number of revisions to existing recordkeeping requirements to better 
effectuate compliance and enforcement, including revisions to clarify 
the record retention period and add requirements to maintain worker 
telephone numbers and email addresses. The Department is proposing to 
clarify language used to better distinguish the records that 
contractors must make and maintain (regular payrolls and other basic 
records) from the payroll documents that contractors must submit weekly 
to contracting agencies (certified payrolls). The Department is also 
proposing to clarify that electronic signatures and certified payroll 
submission methods may be used.

E. Calculating the Impact of the Proposed Rule on Small Business Firms

    The Department considered employer costs associated with both (a) 
the change in determining the prevailing wage based on a 30 percent 
threshold instead of a 50 percent threshold and (b) the incorporation 
of using the change in the ECI to update certain non-collectively 
bargained prevailing wage rates. The Department estimated both 
regulatory familiarization costs and implementation costs. An overview 
of these costs is explained here but additional details can be found in 
section V.C. Non-quantified direct employer costs are explained in 
section V.C.3.
    The Department acknowledges that if some wage rates increase due to 
either of the provisions listed above, there could be an increase in 
payroll costs for some small firms. Due to data limitations and 
uncertainty, the Department did not quantify payroll costs (i.e., 
transfers). The change in the definition of prevailing wage will only 
be applied to wage data received through future surveys, for geographic 
areas and classifications that have not yet been identified. Both this 
provision and the updating of out-of-date rates will not have any 
impact if firms are already paying at or above the new prevailing wage 
rate because of labor market forces. Please see section V.D. for a more 
thorough discussion of these potential payroll costs, including an 
illustrative example of the potential impact of the proposed rule on 
prevailing wage rates.
    The Department welcomes comments and data on whether small firms 
would incur increased payroll costs following this rule, and the extent 
to which firms are paying above the out-of-date prevailing wage rates.
    Year 1 direct employer costs for small businesses are estimated to 
total $8.7 million. Average annualized costs across the first 10 years 
are estimated to be $2.6 million (using a 7 percent discount rate). On 
a per firm basis, direct employer costs are estimated to be $78.97 in 
Year 1.
    The proposed rule will impose direct costs on some covered 
contractors who will review the regulations to understand how the 
prevailing wage setting methodology will change. However, the 
Department believes these regulatory familiarization costs will be 
small because firms are not required to understand how the prevailing 
wage rates are set in order to comply with DBRA requirements, they are 
just required to pay the prevailing wage rates. The Department included 
all small potentially affected firms (135,200 firms). The Department 
assumed that on average, 1 hour of a human resources staff member's 
time will be spent reviewing the rulemaking. The cost of this time is 
the median loaded wage for a Compensation, Benefits, and Job Analysis 
Specialist of $52.65 per hour.\188\ Therefore, the Department has 
estimated regulatory familiarization costs to be $7.1 million ($52.65 
per hour x 1.0 hour x 135,200 contractors) (Table 11). The Department 
has included all regulatory familiarization costs in Year 1. New 
entrants will not incur any additional regulatory familiarization costs 
attributable to this rule. Average annualized regulatory 
familiarization costs over 10 years, using a 7 percent discount rate, 
are $1.0 million.
---------------------------------------------------------------------------

    \188\ This includes the median base wage of $32.30 from the May 
2020 OEWS estimates plus benefits paid at a rate of 46 percent of 
the base wage, as estimated from the BLS's Employer Costs for 
Employee ECEC data, and overhead costs of 17 percent. OEWS data 
available at: http://www.bls.gov/oes/current/oes131141.htm.

                               Table 11--Direct Employer Costs to Small Businesses
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Regulatory
                        Variable                               Total         familiarization     Implementation
                                                                                  costs              costs
----------------------------------------------------------------------------------------------------------------
Year 1 Costs:                                            .................  .................  .................
    Potentially affected firms.........................  .................            135,200             62,574
    Hours per firm.....................................  .................                  1                0.5
    Loaded wage rate...................................  .................             $52.65             $52.65
    Cost ($1,000s).....................................             $8,700             $7,100             $1,600
Years 2-10 ($1,000s):                                    .................  .................  .................
    Annual cost........................................             $1,600                 $0             $1,600
Average Annualized Costs ($1,000s):                      .................  .................  .................
    3% discount rate...................................             $2,400               $835             $1,600
    7% discount rate...................................             $2,600             $1,000             $1,600
----------------------------------------------------------------------------------------------------------------

    When firms update prevailing wage rates, they can incur costs 
associated with adjusting payrolls, adjusting contracts, and 
communicating this information to employees (if applicable). This 
proposed rule would generally affect the frequency with which 
prevailing wage rates are updated through the provision to update old, 
outmoded rates, and moving forward, to periodically update rates when 
that does not occur through the survey process. Currently, only a 
fraction of prevailing wages can be expected to change each year. 
Because the

[[Page 15781]]

Department intends to update older rates to more accurately represent 
wages and benefits being paid in the construction industry, and, moving 
forward, more published wage rates will change more frequently than in 
the past, firms may spend more time updating prevailing wage rates for 
contractual purposes than they have in the past, leading to additional 
implementation costs than there otherwise would have been. The 
Department does not believe that there will be additional 
implementation costs associated with the proposal to update the 
definition of the prevailing wage (30 percent rule). This proposed 
change would only apply to new surveys, for which employers would have 
already had to update wage rates.
    To estimate the size of the implementation cost associated with the 
periodic updates, the Department assumed that each year 39.6 percent of 
firms are already checking rates due to newly published surveys 
(section V.C.2.). Multiplying the remaining 60.4 percent by the 103,600 
small firms holding DBRA contracts results in 62,574 firms impacted 
annually (Table 11). The proposed change to update current non-
collectively bargained rates will have an implementation cost to firms. 
The proposed change to update non-collectively bargained rates moving 
forward will result in ongoing implementation costs. Each time the rate 
is updated, firms will incur some costs to adjust payroll (if 
applicable) and communicate the new rates to employees. The Department 
assumed that this provision would impact all small firms currently 
holding DBRA contracts (62,574 firms). For the initial increase, the 
Department estimated this will take approximately 0.5 hours per year 
for firms to adjust their rates. As with previous costs, implementation 
time costs are based on a loaded hourly wage of $52.65. Therefore, 
total Year 1 implementation costs were estimated to equal $1.6 million 
($52.65 x 0.5 hour x 62,574 firms). The average annualized 
implementation cost over 10 years, using a 7 percent discount rate, is 
$1.6 million.
    To determine direct employer costs on a per firm basis, the 
Department considers only those firms who are fully affected. These are 
firms who seek to bid on DBRA contracts, and who have new wage rates to 
incorporate into their bids and, as needed, into their payroll systems. 
For these firms, the Year 1 costs are estimated as one and a half hours 
of time (1 hour for regulatory familiarization and 0.5 hours for 
implementation) valued at $52.65 per hour. This totals $78.97 in Year 1 
costs per firm. The Department welcomes comments on all of the cost 
estimates presented here.

F. Relevant Federal Rules Duplicating, Overlapping, or Conflicting With 
the Proposed Rule

    The Department is not aware of any relevant Federal rules that 
conflict with this NPRM.

G. Alternative to the Proposed Rule

    The RFA directs agencies to assess the impacts that various 
regulatory alternatives would have on small entities and to consider 
ways to minimize those impacts. Accordingly, the Department considered 
certain regulatory alternatives.
    For one alternative, the Department considered 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. The Department concluded, however, 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 144 (Dec. 27, 1985) and AAM 224 (Jan. 17, 
2017).
    Another alternative that was considered was the use of a different 
index instead of 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 this 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 welcomes comments on these and other alternatives to 
the proposed rule.

VII. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, requires 
agencies to prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing any unfunded 
Federal mandate that may result in excess of $100 million (adjusted 
annually for inflation) in expenditures in any one year by State, 
local, and tribal governments in the aggregate, or by the private 
sector. This rulemaking is not expected exceed that threshold. See 
section V. for an assessment of anticipated costs, transfers, and 
benefits.

VIII. Executive Order 13132, Federalism

    The Department has (1) reviewed this proposed rule in accordance 
with Executive Order 13132 regarding federalism and (2) determined that 
it does not have federalism implications. The proposed rule would not 
have substantial direct effects on the States, on the relationship 
between the National Government and the States, or on the distribution 
of power and responsibilities among the various levels of government.

IX. Executive Order 13175, Indian Tribal Governments

    This proposed rule would not have tribal implications under 
Executive Order 13175 that would require a tribal summary impact 
statement. The proposed rule would not have substantial direct effects 
on one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.

Appendix A--Surveys Included in the Prevailing Wage Demonstration

----------------------------------------------------------------------------------------------------------------
                                                                        Surveys Included
          Survey year              Pub date    -----------------------------------------------------------------
                                                      State           Metro/rural        Construction type(s)
----------------------------------------------------------------------------------------------------------------
2018..........................      12/25/2020  Utah.............  Metro...........  Heavy.
2017..........................      12/14/2018  Nevada...........  Both............  Highway.
2017..........................      12/25/2020  New York.........  Rural...........  Building.

[[Page 15782]]

 
2017..........................      12/25/2020  North Dakota.....  Both............  Heavy.
2017..........................        2/7/2020  Oklahoma.........  Metro...........  Residential.
2017..........................        2/7/2020  Pennsylvania.....  East Metro......  Residential.
2017..........................       1/24/2020  Vermont..........  Both............  Heavy, highway [\a\].
2016..........................      12/14/2018  Connecticut......  Metro [\b\].....  Building.
2016..........................      12/14/2018  New Mexico.......  Metro...........  Building and heavy.
2016..........................       9/29/2017  New York.........  4 metro counties  Building.
2016..........................        2/7/2020  North Carolina...  Both............  Residential.
2016..........................       12/8/2017  South Carolina...  Metro [\c\].....  Residential.
2015..........................       10/6/2017  Alabama..........  Both [\d\]......  Building and heavy.
2016..........................        2/7/2020  Alabama..........  Both............  Highway.
2015..........................       4/21/2017  Arkansas.........  Both............  Building and heavy.
2015..........................       9/28/2018  Minnesota........  Both............  Building.
2015..........................       7/28/2017  Mississippi......  Both............  Building and heavy.
2015..........................       9/29/2017  New Hampshire....  Both............  Building and heavy.
2014..........................      12/16/2016  Florida..........  Metro [\c\].....  Building.
----------------------------------------------------------------------------------------------------------------
[\a\] Building component not sufficient.
[\b\] Only one rural county so excluded.
[\c\] Rural component of survey was not sufficient.
[\d\] Excludes heavy rural which were not sufficient.

    This includes most surveys with published rates that began in 2015 
or later. They include all four construction types, metro and rural 
counties, and a variety of geographic regions. Two surveys were 
excluded because they did not meet sufficiency standards (2016 Alaska 
residential and 2015 Maryland highway). A few surveys were excluded due 
to anomalies that could not be reconciled. These include:

 2016 Kansas highway
 2016 Virginia highway

Appendix B: Current DOL Wage Determination Protocols

    Sufficiency requirement is: For a classification to have sufficient 
responses there generally must be data on at least six employees from 
at least three contractors. Additionally, if data is received for 
either exactly six employees or exactly three contractors, then no more 
than 60 percent of the total employees can be employed by any one 
contractor. Exceptions to these criteria are allowed under limited 
circumstances. Examples include: Surveys conducted in rural counties, 
or residential and heavy surveys with limited construction activity, or 
for highly specialized classifications. In these circumstances, the 
rule can be three employees and two contractors.
    Aggregation: If the classification is not sufficient at the county 
level, data are aggregated to the group level, supergroup level, and 
State level (metro or rural), respectively. For building and 
residential construction, at each level of aggregation (as well as at 
the county level) WHD first attempts to calculate a prevailing rate 
using data only for projects not subject to Davis-Bacon labor 
standards; if such data are insufficient to calculate a prevailing 
rate, then data for projects subject to Davis-Bacon labor standards is 
also included.
    Majority rate: If more than 50 percent of employees are paid the 
exact same hourly rate, then that rate prevails. If not, the Department 
calculates a weighted average. If more than 50 percent are not exactly 
the same, but 100 percent of the data are union, then a union weighted 
average is calculated.
    Prevailing fringe benefits: Before a fringe benefit is applicable, 
it must prevail. The first step is to determine if more than 50 percent 
of the workers in the reported classification receive a fringe benefit. 
If more than 50 percent of the employees in a single classification are 
paid any fringe benefits, then fringe benefits prevail. If fringe 
benefits prevail in a classification and:
     More than 50 percent of the employees receiving fringe 
benefits are paid the same total fringe benefit rate, then that total 
fringe benefit rate prevails.
     more than 50 percent of the employees receiving benefits 
are not paid at the same total rate, then the average rate of fringe 
benefits weighted by the number of workers who received fringe benefits 
prevails. If more than 50 percent are not paid the same total rate, but 
100 percent of the data are union, then a union weighted average is 
calculated.
    However, if 50 percent or less of the employees in a single 
classification are paid a fringe benefit, then fringe benefits will not 
prevail, and a fringe benefit rate of $0.00 will be published for that 
classification.

List of Subjects

29 CFR Part 1

    Administrative practice and procedure, Construction industry, 
Government contracts, Government procurement, Law enforcement, 
Reporting and recordkeeping requirements, Wages.

29 CFR Part 3

    Administrative practice and procedure, Construction industry, 
Government contracts, Government procurement, Law enforcement, 
Penalties, Reporting and recordkeeping requirements, Wages.

29 CFR Part 5

    Administrative practice and procedure, Construction industry, 
Government contracts, Government procurement, Law enforcement, 
Penalties, Reporting and recordkeeping requirements, Wages.

    For reasons stated in the preamble, the Wage and Hour Division, 
Department of Labor, proposes to amend 29 CFR subtitle A as follows:

PART 1--PROCEDURES FOR PREDETERMINATION OF WAGE RATES

0
1. The authority citation for part 1 is revised to read as follows:

    Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization 
Plan No. 14 of 1950, 5 U.S.C. Appendix; 40 U.S.C. 3141 et seq.; 40 
U.S.C. 3145; 40 U.S.C. 3148; and Secretary of Labor's Order 01-2014 
(Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014); and the laws 
referenced by 29 CFR 5.1.

0
2. Amend Sec.  1.1 by revising paragraphs (a) and (b) to read as 
follows:

[[Page 15783]]

Sec.  1.1  Purpose and scope.

    (a) The procedural rules in this part apply under the Davis-Bacon 
Act (946 Stat. 1494, as amended; 40 U.S.C. 3141 et seq.), and any laws 
now existing or subsequently enacted, which provide for the payment of 
minimum wages, including fringe benefits, to laborers and mechanics 
engaged in construction activity under contracts entered into or 
financed by or with the assistance of agencies of the United States or 
the District of Columbia, based on determinations by the Secretary of 
Labor of the wage rates and fringe benefits prevailing for the 
corresponding classes of laborers and mechanics employed on projects 
similar to the contract work in the local areas where such work is to 
be performed.
    (1) A listing of laws requiring the payment of wages at rates 
predetermined by the Secretary of Labor under the Davis-Bacon Act is 
currently found at www.dol.gov/agencies/whd/government-contracts.
    (2) Functions of the Secretary of Labor under these statutes and 
under Reorganization Plan No. 14 of 1950 (64 Stat. 1267, as amended; 5 
U.S.C. Appendix), except for functions assigned to the Office of 
Administrative Law Judges (see part 6 of this subtitle) and appellate 
functions assigned to the Administrative Review Board (see part 7 of 
this subtitle) or reserved by the Secretary of Labor (see Secretary's 
Order 01-2020 (Feb. 21, 2020) have been delegated to the Administrator 
of the Wage and Hour Division and authorized representatives.
    (b) The regulations in this part set forth the procedures for 
making and applying such determinations of prevailing wage rates and 
fringe benefits pursuant to the Davis-Bacon Act and any laws now 
existing or subsequently enacted providing for determinations of such 
wages by the Secretary of Labor in accordance with the provisions of 
the Davis-Bacon Act.
* * * * *
0
3. Revise Sec.  1.2 to read as follows:


Sec.  1.2  Definitions.

    Administrator. The term ``Administrator'' means the Administrator 
of the Wage and Hour Division, U.S. Department of Labor, or authorized 
representative.
    Agency. The term ``agency'' means any Federal, State, or local 
agency or instrumentality, or other similar entity, that enters into a 
contract or provides assistance through loan, grant, loan guarantee or 
insurance, or otherwise, to a project subject to the Davis-Bacon labor 
standards, as defined in Sec.  5.2 of this subtitle.
    (1) Federal agency. The term ``Federal agency'' means an agency or 
instrumentality of the United States or the District of Columbia, as 
defined in this section, that enters into a contract or provides 
assistance through loan, grant, loan guarantee or insurance, or 
otherwise, to a project subject to the Davis-Bacon labor standards.
    (2) [Reserved]
    Area. The term ``area'' means the city, town, village, county or 
other civil subdivision of the State in which the work is to be 
performed.
    (1) For highway projects, the area may be State department of 
transportation highway districts or other similar State subdivisions.
    (2) Where a project requires work in multiple counties, the area 
may include all counties in which the work will be performed.
    Department of Labor-approved website for wage determinations (DOL-
approved website). The term ``Department of Labor-approved website for 
wage determinations'' means the government website for both Davis-Bacon 
Act and Service Contract Act wage determinations. In addition, the DOL-
approved website provides compliance assistance information. The term 
will also apply to any other website or electronic means that the 
Department of Labor may approve for these purposes.
    Employed. Every person performing the duties of a laborer or 
mechanic in the construction, prosecution, completion, or repair of a 
public building or public work, or building or work financed in whole 
or in part by assistance from the United States through loan, grant, 
loan guarantee or insurance, or otherwise, is employed regardless of 
any contractual relationship alleged to exist between the contractor 
and such person.
    Prevailing wage. The term ``prevailing wage'' means:
    (1) The wage paid to the majority (more than 50 percent) of the 
laborers or mechanics in the classification on similar projects in the 
area during the period in question;
    (2) If the same wage is not paid to a majority of those employed in 
the classification, the prevailing wage will be the wage paid to the 
greatest number, provided that such greatest number constitutes at 
least 30 percent of those employed; or
    (3) If no wage rate is paid to 30 percent or more of those so 
employed, the prevailing wage will be the average of the wages paid to 
those employed in the classification, weighted by the total employed in 
the classification.
    Type of construction (or construction type). The term ``type of 
construction (or construction type)'' means the general category of 
construction, as established by the Administrator, for the publication 
of general wage determinations. Types of construction may include, but 
are not limited to, building, residential, heavy, and highway. As used 
in this part, the terms ``type of construction'' and ``construction 
type'' are synonymous and interchangeable.
    United States or the District of Columbia. The term ``United States 
or the District of Columbia'' means the United States, the District of 
Columbia, and all executive departments, independent establishments, 
administrative agencies, and instrumentalities of the United States and 
of the District of Columbia, and any corporation for which all or 
substantially all of the stock of which is beneficially owned by the 
United States, by the District of Columbia, or any of the foregoing 
departments, establishments, agencies, and instrumentalities.
0
4. Revise Sec.  1.3 to read as follows:


Sec.  1.3  Obtaining and compiling wage rate information.

    For the purpose of making wage determinations, the Administrator 
will conduct a continuing program for the obtaining and compiling of 
wage rate information. In determining the prevailing wages at the time 
of issuance of a wage determination, the Administrator will be guided 
by the definition of prevailing wage in Sec.  1.2 and will consider the 
types of information listed in this section.
    (a) The Administrator will encourage the voluntary submission of 
wage rate data by contractors, contractors' associations, labor 
organizations, public officials and other interested parties, 
reflecting wage rates paid to laborers and mechanics on various types 
of construction in the area. The Administrator may also obtain data 
from agencies on wage rates paid on construction projects under their 
jurisdiction. The information submitted should reflect the wage rates 
paid to workers employed in a particular classification in an area, the 
type or types of construction on which such rate or rates are paid, and 
whether or not such wage rates were paid on Federal or federally 
assisted projects subject to Davis-Bacon prevailing wage requirements.
    (b) The following types of information may be considered in making 
wage rate determinations:

[[Page 15784]]

    (1) Statements showing wage rates paid on projects, including the 
names and addresses of contractors, including subcontractors; the 
locations, approximate costs, dates of construction and types of 
projects, as well as whether or not the projects are Federal or 
federally assisted projects subject to Davis-Bacon prevailing wage 
requirements; and the number of workers employed in each classification 
on each project and the respective wage rates paid such workers.
    (2) Signed collective bargaining agreements, for which the 
Administrator may request that the parties to agreements submit 
statements certifying to their scope and application.
    (3) Wage rates determined for public construction by State and 
local officials pursuant to State and local prevailing wage 
legislation.
    (4) Wage rate data submitted to the Department of Labor by 
contracting agencies pursuant to Sec.  5.5(a)(1)(iii) of this subtitle.
    (5) For Federal-aid highway projects under 23 U.S.C. 113, 
information obtained from the highway department(s) of the State(s) in 
which the project is to be performed. For such projects, the 
Administrator must consult the relevant State highway department and 
give due regard to the information thus obtained.
    (6) Any other information pertinent to the determination of 
prevailing wage rates.
    (c) The Administrator may initially obtain or supplement such 
information obtained on a voluntary basis by such means, including the 
holding of hearings, and from any sources determined to be necessary. 
All information of the types described in paragraph (b) of this 
section, pertinent to the determination of the wages prevailing at the 
time of issuance of the wage determination, will be evaluated in light 
of the definition of prevailing wage in Sec.  1.2.
    (d) In compiling wage rate data for building and residential wage 
determinations, the Administrator will not use data from Federal or 
federally assisted projects subject to Davis-Bacon prevailing wage 
requirements unless it is determined that there is insufficient wage 
data to determine the prevailing wages in the absence of such data. 
Data from Federal or federally assisted projects will be used in 
compiling wage rate data for heavy and highway wage determinations.
    (e) In determining the prevailing wage, the Administrator may treat 
variable wage rates paid by a contractor or contractors to employees 
within the same classification as the same wage where the pay rates are 
functionally equivalent, as explained by a collective bargaining 
agreement or written policy otherwise maintained by the contractor.
    (f) If the Administrator determines that there is insufficient wage 
survey data to determine the prevailing wage for a classification for 
which conformance requests are regularly submitted pursuant to Sec.  
5.5(a)(1)(iii) of this subtitle, the Administrator may list the 
classification and wage and fringe benefit rates for the classification 
on the wage determination, provided that:
    (1) The work performed by the classification is not performed by a 
classification in the wage determination;
    (2) The classification is used in the area by the construction 
industry; and
    (3) The wage rate for the classification bears a reasonable 
relationship to the wage rates contained in the wage determination.
    (g) Under the circumstances described in paragraph (h) of this 
section, the Administrator may make a wage determination by adopting, 
with or without modification, one or more prevailing wage rates 
determined for public construction by State and/or local officials. 
Provided that the conditions in paragraph (h) are met, the 
Administrator may do so even if the methods and criteria used by State 
or local officials differ in some respects from those that the 
Administrator would otherwise use under the Davis-Bacon Act and the 
regulations in this part. Such differences may include, but are not 
limited to, a definition of prevailing wage under a State or local 
prevailing wage law or regulation that differs from the definition in 
Sec.  1.2, a geographic area or scope that differs from the standards 
in Sec.  1.7, and/or the restrictions on data use in paragraph (d) of 
this section.
    (h) The Administrator may adopt a State or local wage rate as 
described in paragraph (g) of this section if the Administrator, after 
reviewing the rate and the processes used to derive the rate, 
determines that:
    (1) The State or local government sets wage rates, and collects 
relevant data, using a survey or other process that is open to full 
participation by all interested parties;
    (2) The wage rate reflects both a basic hourly rate of pay as well 
as any prevailing fringe benefits, each of which can be calculated 
separately;
    (3) The State or local government classifies laborers and mechanics 
in a manner that is recognized within the field of construction; and
    (4) The State or local government's criteria for setting prevailing 
wage rates are substantially similar to those the Administrator uses in 
making wage determinations under this part. This determination will be 
based on the totality of the circumstances, including, but not limited 
to, the State or local government's definition of prevailing wage; the 
types of fringe benefits it accepts; the information it solicits from 
interested parties; its classification of construction projects, 
laborers, and mechanics; and its method for determining the appropriate 
geographic area(s).
    (i) In order to adopt wage rates of a State or local government 
entity pursuant to paragraphs (g) and (h) of this section, the 
Administrator must obtain the wage rates and any relevant supporting 
documentation and data, from the State or local government entity. Such 
information may be submitted via email to 
[email protected], via mail to U.S. Department of Labor, 
Wage and Hour Division, Branch of Wage Surveys, 200 Constitution Avenue 
NW, Washington, DC 20210, or through other means directed by the 
Administrator.
    (j) Nothing in paragraphs (g), (h), and (i) of this section 
precludes the Administrator from otherwise considering State or local 
prevailing wage rates, consistent with paragraph (b)(3) of this 
section, or from giving due regard to information obtained from State 
highway departments, consistent with paragraph (b)(4) of this section, 
as part of the Administrator's process of making prevailing wage 
determinations under this part.
0
5. Revise Sec.  1.4 to read as follows:


Sec.  1.4  Report of agency construction programs.

    At the beginning of each fiscal year, each Federal agency using 
wage determinations under the Davis-Bacon Act or any of the laws 
referenced by Sec.  5.1 of this subtitle, must furnish the 
Administrator with a report that contains a general outline of its 
proposed construction programs for the upcoming 3 fiscal years. This 
report must include a list of proposed projects (including those for 
which options to extend the contract term of an existing construction 
contract are expected during the period covered by the report): the 
estimated start date of construction; the anticipated type or types of 
construction; the estimated cost of construction; the location or 
locations of construction; and any other project-specific information 
that the Administrator requests. The report must also include 
notification of any significant changes to previously reported 
construction programs, such as the delay or cancellation of previously 
reported projects. Reports must be

[[Page 15785]]

submitted no later than April 10th of each year by email to 
[email protected], and must include the name, telephone number, 
and email address of the official responsible for coordinating the 
submission.
0
6. Amend Sec.  1.5 by revising paragraphs (a) and (b) and adding a 
heading to paragraph (c) to read as follows:


Sec.  1.5  Publication of general wage determinations and procedure for 
requesting project wage determinations.

    (a) General wage determinations. A general wage determination 
contains, among other information, a list of wage and fringe benefit 
rates determined to be prevailing for various classifications of 
laborers or mechanics for specified type(s) of construction in a given 
area. The Department of Labor publishes general wage determinations 
under the Davis-Bacon Act on the DOL-approved website.
    (b) Project wage determinations. (1) A project wage determination 
is specific to a particular project. An agency may request a project 
wage determination for an individual project under any of the following 
circumstances:
    (i) The project involves work in more than one county and will 
employ workers who may work in more than one county;
    (ii) There is no general wage determination in effect for the 
relevant area and type(s) of construction for an upcoming project, or
    (iii) All or virtually all of the work on a contract will be 
performed by a classification that is not listed in the general wage 
determination that would otherwise apply, and contract award (or bid 
opening, in contracts entered into in sealed bidding procedures) has 
not yet taken place.
    (2) To request a project wage determination, the agency must submit 
Standard Form (SF) 308, Request for Wage Determination and Response to 
Request, to the Department of Labor, either by mailing the form to U.S. 
Department of Labor, Wage and Hour Division, Branch of Construction 
Wage Determinations, Washington, DC 20210, or by submitting the form 
through other means directed by the Administrator.
    (3) In completing Form SF-308, the agency must include the 
following information:
    (i) A sufficiently detailed description of the work to indicate the 
type(s) of construction involved, as well as any additional description 
or separate attachment, if necessary, for identification of the type(s) 
of work to be performed. If the project involves multiple types of 
construction, the requesting agency must attach information indicating 
the expected cost breakdown by type of construction.
    (ii) The location (city, county, state, zip code) or locations in 
which the proposed project is located.
    (iii) The classifications needed for the project. The agency must 
identify only those classifications that will be needed in the 
performance of the work. Inserting a note such as ``entire schedule'' 
or ``all applicable classifications'' is not sufficient. Additional 
classifications needed that are not on the form may be typed in the 
blank spaces or on a separate list and attached to the form.
    (iv) Any other information requested in Form SF-308.
    (4) A request for a project wage determination must be accompanied 
by any pertinent wage information that may be available. When the 
requesting agency is a State highway department under the Federal-Aid 
Highway Acts as codified in 23 U.S.C. 113, such agency must also 
include its recommendations as to the wages which are prevailing for 
each classification of laborers and mechanics on similar construction 
in the area.
    (5) The time required for processing requests for project wage 
determinations varies according to the facts and circumstances in each 
case. An agency should anticipate that such processing by the 
Department of Labor will take at least 30 days.
    (c) Processing time. * * *
0
7. Revise Sec.  1.6 to read as follows:


Sec.  1.6  Use and effectiveness of wage determinations.

    (a) Application, Validity, and Expiration of Wage Determinations--
(1) Application of incorporated wage determinations. Once a wage 
determination is incorporated into a contract (or once construction has 
started when there is no contract award), the wage determination 
generally applies for the duration of the contract or project, except 
as specified in this section.
    (2) General wage determinations. (i) General wage determinations 
published on the DOL-approved website contain no expiration date. Once 
issued, a general wage determination remains valid until revised, 
superseded, or canceled.
    (ii) If there is a current general wage determination applicable to 
a project, an agency may use it without notifying the Administrator, 
Provided that questions concerning its use are referred to the 
Administrator in accordance with paragraph (b) of this section.
    (iii) When a wage determination is revised, superseded, or 
canceled, it becomes inactive. Inactive wage determinations may be 
accessed on the DOL-approved website for informational purposes only. 
Contracting officers may not use such an inactive wage determination in 
a contract action unless the inactive wage determination is the 
appropriate wage determination that must be incorporated to give 
retroactive effect to the post-award incorporation of a contract clause 
under Sec.  5.6(a)(1)(ii) of this subtitle or a wage determination 
under paragraph (f) of this section. Under such circumstances, the 
agency must provide prior notice to the Administrator of its intent to 
incorporate an inactive wage determination, and may not incorporate it 
if the Administrator instructs otherwise.
    (3) Project wage determinations. (i) Project wage determinations 
initially issued will be effective for 180 calendar days from the date 
of such determinations. If a project wage determination is not 
incorporated into a contract (or, if there is no contract award, if 
construction has not started) in the period of its effectiveness it is 
void.
    (ii) Accordingly, if it appears that a project wage determination 
may expire between bid opening and contract award (or between initial 
endorsement under the National Housing Act or the execution of an 
agreement to enter into a housing assistance payments contract under 
section 8 of the U.S. Housing Act of 1937, and the start of 
construction) the agency shall request a new project wage determination 
sufficiently in advance of the bid opening to assure receipt prior 
thereto.
    (iii) However, when due to unavoidable circumstances a project wage 
determination expires before award but after bid opening (or before the 
start of construction, but after initial endorsement under the National 
Housing Act, or before the start of construction but after the 
execution of an agreement to enter into a housing assistance payments 
contract under section 8 of the U.S. Housing Act of 1937), the head of 
the agency or his or her designee may request the Administrator to 
extend the expiration date of the project wage determination in the bid 
specifications instead of issuing a new project wage determination. 
Such request shall be supported by a written finding, which shall 
include a brief statement of factual support, that the extension of the 
expiration date of the project wage determination is necessary and 
proper in the public interest to prevent injustice or undue hardship or 
to avoid

[[Page 15786]]

serious impairment in the conduct of Government business. The 
Administrator will either grant or deny the request for an extension 
after consideration of all of the circumstances, including an 
examination to determine if the previously issued rates remain 
prevailing. If the request for extension is denied, the Administrator 
will proceed to issue a new wage determination for the project.
    (b) Identifying and incorporating appropriate wage determinations. 
(1) Contracting agencies are responsible for making the initial 
determination of the appropriate wage determination(s) for a project 
and for ensuring that the appropriate wage determination(s) are 
incorporated in bid solicitations and contract specifications and that 
inapplicable wage determinations are not incorporated. When a contract 
involves construction in more than one area, and no multi-county 
project wage determination has been obtained, the solicitation and 
contract must incorporate the applicable wage determination for each 
area. When a contract involves more than one type of construction, the 
solicitation and contract must incorporate the applicable wage 
determination for each type of construction involved that is 
anticipated to be substantial. The contracting agency is responsible 
for designating the specific work to which each incorporated wage 
determination applies.
    (2) The contractor or subcontractor has an affirmative obligation 
to ensure that its pay practices are in compliance with the Davis-Bacon 
Act labor standards.
    (3) Any question regarding application of wage rate schedules or 
wage determinations must be referred to the Administrator for 
resolution. The Administrator should consider any relevant factors when 
resolving such questions, including, but not limited to, relevant area 
practice information.
    (c) Revisions to wage determinations. (1) General and project wage 
determinations may be revised from time to time to keep them current. A 
revised wage determination replaces the previous wage determination. 
``Revisions,'' as used in this section, refers both to modifications of 
some or all of the rates in a wage determination, such as periodic 
updates to reflect current rates, and to instances where a wage 
determination is re-issued entirely, such as after a new wage survey is 
conducted. Revisions also include adjustments to non-collectively 
bargained prevailing wage and fringe benefit rates on general wage 
determinations, with the adjustments based on U.S. Bureau of Labor 
Statistics Employment Cost Index (ECI) data or its successor data. Such 
rates may be adjusted based on ECI data no more frequently than once 
every 3 years, and no sooner than 3 years after the date of the rate's 
publication. Such periodic revisions to wage determinations are 
distinguished from the circumstances described in paragraphs (d), (e), 
and (f) of this section.
    (2)(i) Whether a revised wage determination is effective with 
respect to a particular contract or project generally depends on the 
date on which the revised wage determination is issued. The date on 
which a revised wage determination is ``issued,'' as used in this 
section, means the date that a revised general wage determination is 
published on the DOL-approved website or the date that the contracting 
agency receives actual written notice of a revised project wage 
determination.
    (ii) If a revised wage determination is issued before contract 
award (or the start of construction when there is no award), it is 
effective with respect to the project, except as follows:
    (A) For contracts entered into pursuant to sealed bidding 
procedures, a revised wage determination issued at least 10 calendar 
days before the opening of bids is effective with respect to the 
solicitation and contract. If a revised wage determination is issued 
less than 10 calendar days before the opening of bids, it is effective 
with respect to the solicitation and contract unless the agency finds 
that there is not a reasonable time still available before bid opening 
to notify bidders of the revision and a report of the finding is 
inserted in the contract file. A copy of such report must be made 
available to the Administrator upon request. No such report is required 
if the revision is issued after bid opening.
    (B) In the case of projects assisted under the National Housing 
Act, a revised wage determination is effective with respect to the 
project if it is issued prior to the beginning of construction or the 
date the mortgage is initially endorsed, whichever occurs first.
    (C) In the case of projects to receive housing assistance payments 
under section 8 of the U.S. Housing Act of 1937, a revised wage 
determination is effective with respect to the project if it is issued 
prior to the beginning of construction or the date the agreement to 
enter into a housing assistance payments contract is signed, whichever 
occurs first.
    (D) If, in the case of a contract entered into pursuant to sealed 
bidding procedures under paragraph (c)(2)(ii)(A) of this section the 
contract has not been awarded within 90 days after bid opening, or if, 
in the case of projects assisted under the National Housing Act or 
receiving housing assistance payments section 8 of the U.S. Housing Act 
of 1937 under paragraph (c)(2)(ii)(B) or (C) of this section, 
construction has not begun within 90 days after initial endorsement or 
the signing of the agreement to enter into a housing assistance 
payments contract, any revised general wage determination issued prior 
to award of the contract or the beginning of construction, as 
appropriate, is effective with respect to that contract unless the head 
of the agency or the agency head's designee requests and obtains an 
extension of the 90-day period from the Administrator. Such request 
must be supported by a written finding, which includes a brief 
statement of the factual support, that the extension is necessary and 
proper in the public interest to prevent injustice or undue hardship or 
to avoid serious impairment in the conduct of Government business. The 
Administrator will either grant or deny the request for an extension 
after consideration of all the circumstances.
    (iii) If a revised wage determination is issued after contract 
award (or after the beginning of construction where there is no 
contract award), it is not effective with respect to that project, 
except under the following circumstances:
    (A) Where a contract or order is changed to include additional, 
substantial construction, alteration, and/or repair work not within the 
scope of work of the original contract or order, or to require the 
contractor to perform work for an additional time period not originally 
obligated, including where an agency exercises an option provision to 
unilaterally extend the term of a contract, the contracting agency must 
include the most recent revision of any wage determination(s) at the 
time the contract is changed or the option is exercised. This does not 
apply where the contractor is simply given additional time to complete 
its original commitment or where the additional construction, 
alteration, and/or repair work in the modification is merely 
incidental.
    (B) Some contracts call for construction, alteration, and/or repair 
work over a period of time that is not tied to the completion of any 
particular project. Examples of such contracts include, but are not 
limited to, indefinite-delivery-indefinite-quantity construction 
contracts to perform any necessary repairs to a Federal facility over a 
period of time; long-term operations-and-maintenance contracts

[[Page 15787]]

that may include construction, alteration, and/or repair work covered 
by Davis-Bacon labor standards; or schedule contracts or blanket 
purchase agreements in which a contractor agrees to provide certain 
construction work at agreed-upon prices to Federal agencies. These 
types of contracts often involve a general commitment to perform 
necessary construction as the need arises, but do not necessarily 
specify the exact construction to be performed. For the types of 
contracts described here, the contracting agency must incorporate into 
the contract the most recent revision(s) of any applicable wage 
determination(s) on each anniversary date of the contract's award (or 
each anniversary date of the beginning of construction when there is no 
award), or another similar anniversary date where the agency has sought 
and received prior approval from the Department for the alternative 
date. Such revised wage determination(s) will apply to any construction 
work that begins or is obligated under such a contract during the 12 
months following that anniversary date until such construction work is 
completed, even if the completion of that work extends beyond the 
twelve-month period. Where such contracts have task orders, purchase 
orders, or other similar contract instruments awarded under the master 
contract, the contracting and ordering agency must include the 
applicable updated wage determination in such task orders, purchase 
orders, or other similar contract instrument.
    (d) Corrections for clerical errors. Upon the Administrator's own 
initiative or at the request of an agency, the Administrator may 
correct any wage determination, without regard to paragraph (a) or (c) 
of this section, whenever the Administrator finds that it contains 
clerical errors. Such corrections must be included in any 
solicitations, bidding documents, or ongoing contracts containing the 
wage determination in question, and such inclusion, and application of 
the correction(s), must be retroactive to the start of construction if 
construction has begun.
    (e) Pre-award determinations that a wage determination may not be 
used. If, prior to the award of a contract (or the start of 
construction under the National Housing Act, under section 8 of the 
U.S. Housing Act of 1937, or where there is no contract award), the 
Administrator provides written notice that:
    (1) The wrong wage determination or the wrong schedule was included 
in the bidding documents or solicitation; or
    (2) A wage determination included in the bidding documents or 
solicitation was withdrawn by the Department of Labor as a result of a 
decision by the Administrative Review Board, the wage determination may 
not be used for the contract, without regard to whether bid opening (or 
initial endorsement or the signing of a housing assistance payments 
contract) has occurred.
    (f) Post-award determinations and procedures. (1) If a contract 
subject to the labor standards provisions of the laws referenced by 
Sec.  5.1 of this subtitle is entered into without the correct wage 
determination(s), the agency must, upon the request of the 
Administrator or upon its own initiative, incorporate the correct wage 
determination into the contract or require its incorporation. Where the 
agency is not entering directly into such a contract but instead is 
providing Federal financial assistance, the agency must ensure that the 
recipient or sub-recipient of the Federal assistance similarly 
incorporates the correct wage determination(s) into its contracts.
    (2) The Administrator may require the agency to incorporate a wage 
determination after contract award or after the beginning of 
construction if the agency has failed to incorporate a wage 
determination in a contract required to contain prevailing wage rates 
determined in accordance with the Davis-Bacon Act, or has used a wage 
determination which by its terms or the provisions of this part clearly 
does not apply to the contract. Further, the Administrator may require 
the application of the correct wage determination to a contract after 
contract award or after the beginning of construction when it is found 
that the wrong wage determination has been incorporated in the contract 
because of an inaccurate description of the project or its location in 
the agency's request for the wage determination.
    (3) Under any of the circumstances described in paragraphs (f)(1) 
and (2) of this section, the agency must either terminate and resolicit 
the contract with the correct wage determination, or incorporate the 
correct wage determination into the contract (or ensure it is so 
incorporated) through supplemental agreement, change order, or any 
other authority that may be needed. The method of incorporation of the 
correct wage determination, and adjustment in contract price, where 
appropriate, should be in accordance with applicable law. Additionally, 
the following requirements apply:
    (i) Unless the Administrator directs otherwise, the incorporation 
of the correct wage determination(s) must be retroactive to the date of 
contract award or start of construction if there is no award.
    (ii) If incorporation occurs as the result of a request from the 
Administrator, the incorporation must take place within 30 days of the 
date of that request, unless the agency has obtained an extension from 
the Administrator.
    (iii) Before the agency requires incorporation upon its own 
initiative, it must provide notice to the Administrator of the proposed 
action.
    (iv) The contractor must be compensated for any increases in wages 
resulting from incorporation of a missing wage determination.
    (v) If a recipient or sub-recipient of Federal assistance under any 
of the applicable statutes referenced by Sec.  5.1 of this subtitle 
refuses to incorporate the wage determination as required, the agency 
must make no further payment, advance, grant, loan, or guarantee of 
funds in connection with the contract until the recipient incorporates 
the required wage determination into its contract, and must promptly 
refer the dispute to the Administrator for further proceedings under 
Sec.  5.13 of this subtitle.
    (vi) Before terminating a contract pursuant to this section, the 
agency must withhold or cross-withhold sufficient funds to remedy any 
back-wage liability resulting from the failure to incorporate the 
correct wage determination or otherwise identify and obligate 
sufficient funds through a termination settlement agreement, bond, or 
other satisfactory mechanism.
    (4) Under any of the above circumstances, notwithstanding the 
requirement to incorporate the correct wage determination(s) within 30 
days, the correct wage determination(s) will be effective by operation 
of law, retroactive to the date of award or the beginning of 
construction (under the National Housing Act, under section 8 of the 
U.S. Housing Act of 1937, or where there is no contract award), in 
accordance with Sec.  5.5(e) of this subtitle.
    (g) Approval of Davis-Bacon Related Act Federal funding or 
assistance after contract award. If Federal funding or assistance under 
a statute requiring payment of wages determined in accordance with the 
Davis-Bacon Act is not approved prior to contract award (or the 
beginning of construction where there is no contract award), the 
applicable wage determination must be incorporated based upon the wages 
and fringe benefits found to be prevailing on the date of award or the 
beginning of construction (under the National Housing Act, under 
section 8 of the U.S. Housing Act of 1937, or where there is no 
contract award), as appropriate, and

[[Page 15788]]

must be incorporated in the contract specifications retroactively to 
that date, Provided that upon the request of the head of the Federal 
agency providing the Federal funding or assistance, in individual cases 
the Administrator may direct incorporation of the wage determination to 
be effective on the date of approval of Federal funds or assistance 
whenever the Administrator finds that it is necessary and proper in the 
public interest to prevent injustice or undue hardship, Provided 
further that the Administrator finds no evidence of intent to apply for 
Federal funding or assistance prior to contract award or the start of 
construction, as appropriate.
0
8. Revise Sec.  1.7 to read as follows:


Sec.  1.7  Scope of consideration.

    (a) In making a wage determination, the area from which wage data 
will be drawn will normally be the county unless sufficient current 
wage data (data on wages paid on current projects or, where necessary, 
projects under construction no more than 1 year prior to the beginning 
of the survey or the request for a wage determination, as appropriate) 
is unavailable to make a wage determination.
    (b) If sufficient current wage data is not available from projects 
within the county to make a wage determination, wages paid on similar 
construction in surrounding counties may be considered.
    (c) If sufficient current wage data is not available in surrounding 
counties, the Administrator may consider wage data from similar 
construction in comparable counties or groups of counties in the State, 
and, if necessary, overall statewide data.
    (d) If sufficient current statewide wage data is not available, 
wages paid on projects completed more than 1 year prior to the 
beginning of the survey or the request for a wage determination, as 
appropriate, may be considered.
    (e) The use of helpers and apprentices is permitted in accordance 
with part 5 of this subtitle.
0
9. Revise Sec.  1.8 to read as follows:


Sec.  1.8  Reconsideration by the Administrator.

    (a) Any interested party may seek reconsideration of a wage 
determination issued under this part or of a decision of the 
Administrator regarding application of a wage determination.
    (b) Such a request for reconsideration must be in writing, 
accompanied by a full statement of the interested party's views and any 
supporting wage data or other pertinent information. Requests must be 
submitted via email to [email protected]; by mail to 
Administrator, Wage and Hour Division, U.S. Department of Labor, 200 
Constitution Ave. NW, Washington, DC 20210; or through other means 
directed by the Administrator. The Administrator will respond within 30 
days of receipt thereof, or will notify the requestor within the 30-day 
period that additional time is necessary.
    (c) If the decision for which reconsideration is sought was made by 
an authorized representative of the Administrator of the Wage and Hour 
Division, the interested party seeking reconsideration may request 
further reconsideration by the Administrator of the Wage and Hour 
Division. Such a request must be submitted within 30 days from the date 
the decision is issued; this time may be extended for good cause at the 
discretion of the Administrator upon a request by the interested party. 
The procedures in paragraph (b) of this section apply to any such 
reconsideration requests.
0
10. Add Sec.  1.10 to read as follows:


Sec.  1.10  Severability.

    The provisions of this part are separate and severable and operate 
independently from one another. If any provision of this part is held 
to be invalid or unenforceable by its terms, or as applied to any 
person or circumstance, or stayed pending further agency action, the 
provision is to be construed so as to continue to give the maximum 
effect to the provision permitted by law, unless such holding is one of 
utter invalidity or unenforceability, in which event the provision is 
severable from this part and will not affect the remaining provisions.

Appendix A to Part 1--[Removed]

0
11. Remove appendix A to part 1.

Appendix B to Part 1--[Removed]

0
12. Remove appendix B to part 1.

PART 3-- CONTRACTORS AND SUBCONTRACTORS ON PUBLIC BUILDING OR 
PUBLIC WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM 
THE UNITED STATES

0
13. The authority citation for part 3 continues to read as follows:

    Authority: R.S. 161, 48 Stat. 848, Reorg. Plan No. 14 of 1950, 
64 Stat. 1267; 5 U.S.C. 301; 40 U.S.C. 3145; Secretary's Order 01-
2014 (Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014).

0
14. Revise Sec.  3.1 to read as follows:


Sec.  3.1  Purpose and scope.

    This part prescribes ``anti-kickback'' regulations under section 2 
of the Act of June 13, 1934, as amended (40 U.S.C. 3145), popularly 
known as the Copeland Act. This part applies to any contract which is 
subject to Federal wage standards and which is for the construction, 
prosecution, completion, or repair of public buildings, public works or 
buildings or works financed in whole or in part by loans or grants from 
the United States. The part is intended to aid in the enforcement of 
the minimum wage provisions of the Davis-Bacon Act and the various 
statutes dealing with federally assisted construction that contain 
similar minimum wage provisions, including those provisions which are 
not subject to Reorganization Plan No. 14 of 1950 (e.g., the College 
Housing Act of 1950, the Federal Water Pollution Control Act, and the 
Housing Act of 1959), and in the enforcement of the overtime provisions 
of the Contract Work Hours and Safety Standards Act whenever they are 
applicable to construction work. The part details the obligation of 
contractors and subcontractors relative to the weekly submission of 
statements regarding the wages paid on work covered thereby; sets forth 
the circumstances and procedures governing the making of payroll 
deductions from the wages of those employed on such work; and 
delineates the methods of payment permissible on such work.
0
15. Revise Sec.  3.2 to read as follows:


Sec.  3.2  Definitions.

    As used in the regulations in this part:
    Affiliated person. The term ``affiliated person'' includes a 
spouse, child, parent, or other close relative of the contractor or 
subcontractor; a partner or officer of the contractor or subcontractor; 
a corporation closely connected with the contractor or subcontractor as 
parent, subsidiary, or otherwise, and an officer or agent of such 
corporation.
    Agency. The term ``agency'' means any Federal, State, or local 
government agency or instrumentality, or other similar entity, that 
enters into a contract or provides assistance through loan, grant, loan 
guarantee or insurance, or otherwise, for a project subject to the 
Davis-Bacon labor standards, as defined in Sec.  5.2 of this subtitle.
    (1) Federal agency. The term ``Federal agency'' means an agency or 
instrumentality of the United States or the District of Columbia, as 
defined in this section, that enters into a contract or provides 
assistance through loan, grant, loan guarantee or insurance, or 
otherwise, to a project subject to the Davis-Bacon labor standards.
    (2) [Reserved]

[[Page 15789]]

    Building or work. The term ``building or work'' generally includes 
construction activity of all types, as distinguished from 
manufacturing, furnishing of materials, or servicing and maintenance 
work. The term includes, without limitation, buildings, structures, and 
improvements of all types, such as bridges, dams, solar panels, wind 
turbines, broadband installation, installation of electric car 
chargers, plants, highways, parkways, streets, subways, tunnels, 
sewers, mains, powerlines, pumping stations, heavy generators, 
railways, airports, terminals, docks, piers, wharves, ways, 
lighthouses, buoys, jetties, breakwaters, levees, and canals; dredging, 
shoring, scaffolding, drilling, blasting, excavating, clearing, and 
landscaping. The term ``building or work'' also includes a portion of a 
building or work, or the installation (where appropriate) of equipment 
or components into a building or work.
    (1) Building or work financed in whole or in part by loans or 
grants from the United States. The term ``building or work financed in 
whole or in part by loans or grants from the United States'' includes 
any building or work for which construction, prosecution, completion, 
or repair, as defined in this section, payment or part payment is made 
directly or indirectly from funds provided by loans or grants by a 
Federal agency. The term includes any building or work for which the 
Federal assistance granted is in the form of loan guarantees or 
insurance.
    (2) [Reserved]
    Construction, prosecution, completion, or repair. The term 
``construction, prosecution, completion, or repair'' mean all types of 
work done on a particular building or work at the site thereof as 
specified in Sec.  5.2 of this subtitle, including, without limitation, 
altering, remodeling, painting and decorating, installation on the site 
of the work of items fabricated off-site, transportation as reflected 
in Sec.  5.2, demolition as reflected in Sec.  5.2, and the 
manufacturing or furnishing of materials, articles, supplies, or 
equipment on the site of the building or work, performed by laborers 
and mechanics at the site.
    Employed (and wages). Every person paid by a contractor or 
subcontractor in any manner for their labor in the construction, 
prosecution, completion, or repair of a public building or public work 
or building or work financed in whole or in part by assistance from the 
United States through loan, grant, loan guarantee or insurance, or 
otherwise, is employed and receiving wages, regardless of any 
contractual relationship alleged to exist between him and the real 
employer.
    Public building (or public work). The term ``public building (or 
public work)'' includes a building or work the construction, 
prosecution, completion, or repair of which, as defined in this 
section, is carried on directly by authority of or with funds of a 
Federal agency to serve the general public regardless of whether title 
thereof is in a Federal agency. The construction, prosecution, 
completion, or repair of a portion of a building or work may still be 
considered a public building or work, even where the entire building or 
work is not owned, leased by, or to be used by the Federal agency, as 
long as the construction, prosecution, completion, or repair of that 
portion of the building or work is carried on by authority of or with 
funds of a Federal agency to serve the interest of the general public.
    United States or the District of Columbia. The term ``United States 
or the District of Columbia'' means the United States, the District of 
Columbia, and all executive departments, independent establishments, 
administrative agencies, and instrumentalities of the United States and 
of the District of Columbia, and any corporation for which all or 
substantially all of the stock of which is beneficially owned by the 
United States, by the District of Columbia, or any of the foregoing 
departments, establishments, agencies, and instrumentalities.
0
16. Revise Sec.  3.3 to read as follows:


Sec.  3.3  Certified payrolls.

    (a) [Reserved]
    (b) Each contractor or subcontractor engaged in the construction, 
prosecution, completion, or repair of any public building or public 
work, or building or work financed in whole or in part by loans or 
grants from the United States, each week must provide a copy of its 
weekly payroll for all laborers and mechanics engaged on work covered 
by this part and part 5 of this chapter during the preceding weekly 
payroll period, accompanied by a statement of compliance certifying the 
accuracy of the weekly payroll information. This statement must be 
executed by the contractor or subcontractor or by an authorized officer 
or employee of the contractor or subcontractor who supervises the 
payment of wages, and must be on the back of Form WH-347, ``Payroll 
(For Contractors Optional Use)'' or on any form with identical wording. 
Copies of WH-347 may be obtained from the contracting or sponsoring 
agency or from the Wage and Hour Division website at https://www.dol.gov/agencies/whd/government-contracts/construction/forms or its 
successor site. The signature by the contractor, subcontractor, or the 
authorized officer or employee must be an original handwritten 
signature or a legally valid electronic signature.
    (c) The requirements of this section shall not apply to any 
contract of $2,000 or less.
    (d) Upon a written finding by the head of a Federal agency, the 
Secretary of Labor may provide reasonable limitations, variations, 
tolerances, and exemptions from the requirements of this section 
subject to such conditions as the Secretary of Labor may specify.
0
17. Revise Sec.  3.4 to read as follows:


Sec.  3.4  Submission of certified payroll and the preservation and 
inspection of weekly payroll records.

    (a) Certified payroll. Each certified payroll required under Sec.  
3.3 must be delivered by the contractor or subcontractor, within 7 days 
after the regular payment date of the payroll period, to a 
representative at the site of the building or work of the agency 
contracting for or financing the work, or, if there is no 
representative of the agency at the site of the building or work, the 
statement must be delivered by mail or by any other means normally 
assuring delivery by the contractor or subcontractor, within that 7 day 
time period, to the agency contracting for or financing the building or 
work. After the certified payrolls have been reviewed in accordance 
with the contracting or sponsoring agency's procedures, such certified 
payrolls must be preserved by the Federal agency for a period of 3 
years after all the work on the prime contract is completed and must be 
produced for inspection, copying, and transcription by the Department 
of Labor upon request. The certified payrolls must also be transmitted 
together with a report of any violation, in accordance with applicable 
procedures prescribed by the United States Department of Labor.
    (b) Recordkeeping. Each contractor or subcontractor must preserve 
the regular payroll records for a period of 3 years after all the work 
has been completed on the prime contract. The regular payroll records 
must set out accurately and completely the name; Social Security 
number; last known address, telephone number, and email address of each 
laborer and mechanic; each worker's correct classification(s) of work 
actually performed; hourly rates of wages paid (including rates of 
contributions or costs anticipated for bona fide fringe benefits or 
cash equivalents thereof); daily and

[[Page 15790]]

weekly number of hours actually worked in total and on each covered 
contract; deductions made; and actual wages paid. The contractor or 
subcontractor must make such regular payroll records, as well as copies 
of the certified payrolls provided to the contracting or sponsoring 
agency, available at all times for inspection, copying, and 
transcription by the contracting officer or his authorized 
representative, and by authorized representatives of the Department of 
Labor.
0
18. Revise Sec.  3.5 to read as follows:


Sec.  3.5  Payroll deductions permissible without application to or 
approval of the Secretary of Labor.

    Deductions made under the circumstances or in the situations 
described in the paragraphs of this section may be made without 
application to and approval of the Secretary of Labor:
    (a) Any deduction made in compliance with the requirements of 
Federal, State, or local law, such as Federal or State withholding 
income taxes and Federal social security taxes.
    (b) Any deduction of sums previously paid to the laborer or 
mechanic as a bona fide prepayment of wages when such prepayment is 
made without discount or interest. A bona fide prepayment of wages is 
considered to have been made only when cash or its equivalent has been 
advanced to the person employed in such manner as to give him complete 
freedom of disposition of the advanced funds.
    (c) Any deduction of amounts required by court process to be paid 
to another, unless the deduction is in favor of the contractor, 
subcontractor, or any affiliated person, or when collusion or 
collaboration exists.
    (d) Any deduction constituting a contribution on behalf of the 
laborer or mechanic employed to funds established by the contractor or 
representatives of the laborers or mechanics, or both, for the purpose 
of providing either from principal or income, or both, medical or 
hospital care, pensions or annuities on retirement, death benefits, 
compensation for injuries, illness, accidents, sickness, or disability, 
or for insurance to provide any of the foregoing, or unemployment 
benefits, vacation pay, savings accounts, or similar payments for the 
benefit of the laborers or mechanics, their families and dependents: 
Provided, however, That the following standards are met:
    (1) The deduction is not otherwise prohibited by law;
    (2) It is either:
    (i) Voluntarily consented to by the laborer or mechanic in writing 
and in advance of the period in which the work is to be done and such 
consent is not a condition either for the obtaining of or for the 
continuation of employment; or
    (ii) Provided for in a bona fide collective bargaining agreement 
between the contractor or subcontractor and representatives of its 
laborers or mechanics;
    (3) No profit or other benefit is otherwise obtained, directly or 
indirectly, by the contractor or subcontractor or any affiliated person 
in the form of commission, dividend, or otherwise; and
    (4) The deductions shall serve the convenience and interest of the 
laborer or mechanic.
    (e) Any deduction requested by the laborer or mechanic to enable 
him or her to repay loans to or to purchase shares in credit unions 
organized and operated in accordance with Federal and State credit 
union statutes.
    (f) Any deduction voluntarily authorized by the laborer or mechanic 
for the making of contributions to governmental or quasi-governmental 
agencies, such as the American Red Cross.
    (g) Any deduction voluntarily authorized by the laborer or mechanic 
for the making of contributions to charitable organizations as defined 
by 26 U.S.C 501(c)(3).
    (h) Any deductions to pay regular union initiation fees and 
membership dues, not including fines or special assessments: Provided, 
however, That a collective bargaining agreement between the contractor 
or subcontractor and representatives of its laborers or mechanics 
provides for such deductions and the deductions are not otherwise 
prohibited by law.
    (i) Any deduction not more than for the ``reasonable cost'' of 
board, lodging, or other facilities meeting the requirements of section 
3(m) of the Fair Labor Standards Act of 1938, as amended, and 29 CFR 
part 531. When such a deduction is made the additional records required 
under 29 CFR 516.25(a) shall be kept.
    (j) Any deduction for the cost of safety equipment of nominal value 
purchased by the laborer or mechanic as his or her own property for his 
or her personal protection in his or her work, such as safety shoes, 
safety glasses, safety gloves, and hard hats, if such equipment is not 
required by law to be furnished by the contractor, if such deduction 
does not violate the Fair Labor Standards Act or any other law, if the 
cost on which the deduction is based does not exceed the actual cost to 
the contractor where the equipment is purchased from him or her and 
does not include any direct or indirect monetary return to the 
contractor where the equipment is purchased from a third person, and if 
the deduction is either:
    (1) Voluntarily consented to by the laborer or mechanic in writing 
and in advance of the period in which the work is to be done and such 
consent is not a condition either for the obtaining of employment or 
its continuance; or
    (2) Provided for in a bona fide collective bargaining agreement 
between the contractor or subcontractor and representatives of its 
laborers and mechanics.
0
19. Revise Sec.  3.7 to read as follows:


Sec.  3.7  Applications for the approval of the Secretary of Labor.

    Any application for the making of payroll deductions under Sec.  
3.6 shall comply with the requirements prescribed in the following 
paragraphs of this section:
    (a) The application must be in writing and addressed to the 
Secretary of Labor. The application must be submitted by email to 
[email protected], by mail to the United States Department of 
Labor, Wage and Hour Division, Director, Division of Government 
Contracts Enforcement, 200 Constitution Ave. NW, Room S-3502, 
Washington, DC 20210, or by any other means normally assuring delivery.
    (b) The application need not identify the contract or contracts 
under which the work in question is to be performed. Permission will be 
given for deductions on all current and future contracts of the 
applicant for a period of 1 year. A renewal of permission to make such 
payroll deduction will be granted upon the submission of an application 
which makes reference to the original application, recites the date of 
the Secretary of Labor's approval of such deductions, states 
affirmatively that there is continued compliance with the standards set 
forth in the provisions of Sec.  3.6, and specifies any conditions 
which have changed in regard to the payroll deductions.
    (c) The application must state affirmatively that there is 
compliance with the standards set forth in the provisions of Sec.  3.6. 
The affirmation must be accompanied by a full statement of the facts 
indicating such compliance.
    (d) The application must include a description of the proposed 
deduction, the purpose of the deduction, and the classes of laborers or 
mechanics from whose wages the proposed deduction would be made.
    (e) The application must state the name and business of any third 
person

[[Page 15791]]

to whom any funds obtained from the proposed deductions are to be 
transmitted and the affiliation of such person, if any, with the 
applicant.
0
20. Revise Sec.  3.8 to read as follows:


Sec.  3.8  Action by the Secretary of Labor upon applications.

    The Secretary of Labor will decide whether or not the requested 
deduction is permissible under provisions of Sec.  3.6; and will notify 
the applicant in writing of the decision.
0
21. Revise Sec.  3.11 to read as follows:


Sec.  3.11  Regulations part of contract.

    All contracts made with respect to the construction, prosecution, 
completion, or repair of any public building or public work or building 
or work financed in whole or in part by loans or grants from the United 
States covered by the regulations in this part must expressly bind the 
contractor or subcontractor to comply with such of the regulations in 
this part as may be applicable. In this regard, see Sec.  5.5(a) of 
this subtitle. However, these requirements will be considered to be 
effective by operation of law, whether or not they are incorporated 
into such contracts, as set forth in Sec.  5.5(e) of this subtitle.

PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING 
FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS 
PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE 
CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)

0
22. The authority citation for part 5 is revised to read as follows:

    Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization 
Plan No. 14 of 1950, 5 U.S.C. appendix; 40 U.S.C. 3141 et seq.; 40 
U.S.C. 3145; 40 U.S.C. 3148; 40 U.S.C. 3701 et seq.; and the laws 
listed in 5.1(a) of this part; Secretary's Order No. 01-2014 (Dec. 
19, 2014), 79 FR 77527 (Dec. 24, 2014); 28 U.S.C. 2461 note (Federal 
Civil Penalties Inflation Adjustment Act of 1990); Pub. L. 114-74 at 
section 701, 129 Stat 584.

0
23. Revise Sec.  5.1 to read as follows:


Sec.  5.1  Purpose and scope.

    (a) The regulations contained in this part are promulgated under 
the authority conferred upon the Secretary of Labor by Reorganization 
Plan No. 14 of 1950 (64 Stat. 1267, as amended, 5 U.S.C. Appendix) and 
the Copeland Act (48 Stat. 948; 18 U.S.C. 874; 40 U.S.C. 3145) in order 
to coordinate the administration and enforcement of labor standards 
provisions contained in the Davis-Bacon Act (946 Stat. 1494, as 
amended; 40 U.S.C. 3141 et seq.) and its related statutes (``Related 
Acts'').
    (1) A listing of laws requiring Davis-Bacon labor standards 
provisions is currently found at www.dol.gov/agencies/whd/government-contracts.
    (b) Part 1 of this subtitle contains the Department's procedural 
rules governing requests for wage determinations and the issuance and 
use of such wage determinations under the Davis-Bacon Act and its 
Related Acts.
0
24. Revise Sec.  5.2 to read as follows:


Sec.  5.2  Definitions.

    Administrator. The term ``Administrator'' means the Administrator 
of the Wage and Hour Division, U.S. Department of Labor, or authorized 
representative.
    Agency. The term ``agency'' means any Federal, State, or local 
government agency or instrumentality, or other similar entity, that 
enters into a contract or provides assistance through loan, grant, loan 
guarantee or insurance, or otherwise, to a project subject to the 
Davis-Bacon labor standards, as defined in this section.
    (1) Federal agency. The term ``Federal agency'' means an agency or 
instrumentality of the United States or the District of Columbia, as 
defined in this section, that enters into a contract or provides 
assistance through loan, grant, loan guarantee or insurance, or 
otherwise, to a project subject to the Davis-Bacon labor standards.
    (2) [Reserved]
    Agency Head. The term ``Agency Head'' means the principal official 
of an agency and includes those persons duly authorized to act on 
behalf of the Agency Head.
    Apprentice and helper. The terms ``apprentice'' and ``helper'' are 
defined as follows:
    (1) ``Apprentice'' means:
    (i) A person employed and individually registered in a bona fide 
apprenticeship program registered with the U.S. Department of Labor, 
Employment and Training Administration, Office of Apprenticeship, or 
with a State Apprenticeship Agency recognized by the Office of 
Apprenticeship; or
    (ii) A person in the first 90 days of probationary employment as an 
apprentice in such an apprenticeship program, who is not individually 
registered in the program, but who has been certified by the Office of 
Apprenticeship or a State Apprenticeship Agency (where appropriate) to 
be eligible for probationary employment as an apprentice;
    (2) These provisions do not apply to apprentices and trainees 
employed on projects subject to 23 U.S.C. 113 who are enrolled in 
programs which have been certified by the Secretary of Transportation 
in accordance with 23 U.S.C. 113(c).
    (3) A distinct classification of helper will be issued in wage 
determinations applicable to work performed on construction projects 
covered by the labor standards provisions of the Davis-Bacon and 
Related Acts only where:
    (i) The duties of the helper are clearly defined and distinct from 
those of any other classification on the wage determination;
    (ii) The use of such helpers is an established prevailing practice 
in the area; and
    (iii) The helper is not employed as a trainee in an informal 
training program. A helper classification will be added to wage 
determinations pursuant to Sec.  5.5(a)(1)(iii)(A) only where, in 
addition, the work to be performed by the helper is not performed by a 
classification in the wage determination.
    Building or work. The term ``building or work'' generally includes 
construction activities of all types, as distinguished from 
manufacturing, furnishing of materials, or servicing and maintenance 
work. The term includes, without limitation, buildings, structures, and 
improvements of all types, such as bridges, dams, solar panels, wind 
turbines, broadband installation, installation of electric car 
chargers, plants, highways, parkways, streets, subways, tunnels, 
sewers, mains, power lines, pumping stations, heavy generators, 
railways, airports, terminals, docks, piers, wharves, ways, 
lighthouses, buoys, jetties, breakwaters, levees, canals, dredging, 
shoring, rehabilitation and reactivation of plants, scaffolding, 
drilling, blasting, excavating, clearing, and landscaping. The term 
building or work also includes a portion of a building or work, or the 
installation (where appropriate) of equipment or components into a 
building or work.
    Construction, prosecution, completion, or repair. The term 
``construction, prosecution, completion, or repair'' means the 
following:
    (1) These terms include all types of work done--
    (i) On a particular building or work at the site of the work, as 
defined in this section, by laborers and mechanics employed by a 
contractor or subcontractor, or

[[Page 15792]]

    (ii) In the construction or development of a project under a 
development statute.
    (2) These terms include, without limitation (except as specified in 
this definition):
    (i) Altering, remodeling, installation (where appropriate) on the 
site of the work of items fabricated off-site;
    (ii) Painting and decorating;
    (iii) Manufacturing or furnishing of materials, articles, supplies 
or equipment, but only if such work is done
    (A) On the site of the work, as defined in this section, or
    (B) In the construction or development of a project under a 
development statute;
    (iv) ``Covered transportation'' is defined as transportation under 
any of the following circumstances:
    (A) Transportation that takes place entirely within a location 
meeting the definition of ``site of the work'' in this section;
    (B) Transportation of portion(s) of the building or work between a 
``secondary construction site'' as defined in this section and a 
``primary construction site'' as defined in this section;
    (C) Transportation between a ``nearby dedicated support site'' as 
defined in this section and a ``primary construction site'' or 
``secondary construction site'' as defined in this section;
    (D) ``Onsite activities essential or incidental to offsite 
transportation''--defined as activities conducted by a truck driver or 
truck driver's assistant on the site of the work that are essential or 
incidental to the transportation of materials or supplies to or from 
the site of the work, such as loading, unloading, or waiting for 
materials to be loaded or unloaded--where the driver or driver's 
assistant's time spent on the site of the work is not so insubstantial 
or insignificant that it cannot as a practical administrative matter be 
precisely recorded; and
    (E) Any transportation and related activities, whether on or off 
the site of the work, by laborers and mechanics employed in the 
construction or development of the project under a development statute.
    (v) Demolition and/or removal, under any of the following 
circumstances:
    (A) Where the demolition and/or removal activities themselves 
constitute construction, alteration, and/or repair of an existing 
building or work. Examples of such activities include the removal of 
asbestos, paint, components, systems, or parts from a facility that 
will not be demolished; as well as contracts for hazardous waste 
removal, land recycling, or reclamation that involve substantial earth 
moving, removal of contaminated soil, re-contouring surfaces, and/or 
habitat restoration.
    (B) Where subsequent construction covered in whole or in part by 
the labor standards in this part is contemplated at the site of the 
demolition or removal, either as part of the same contract or as part 
of a future contract. In determining whether covered construction is 
contemplated within the meaning of this provision, relevant factors 
include, but are not limited to, the existence of engineering or 
architectural plans or surveys of the site; the allocation of, or an 
application for, Federal funds; contract negotiations or bid 
solicitations; the stated intent of the relevant government officials; 
and the disposition of the site after demolition.
    (C) Where otherwise required by statute.
    (3) Except for transportation that constitutes ``covered 
transportation'' as defined in this section, construction, prosecution, 
completion, or repair does not include the transportation of materials 
or supplies to or from the site of the work.
    Contract. The term ``contract'' means any prime contract which is 
subject wholly or in part to the labor standards provisions of any of 
the laws referenced by Sec.  5.1 and any subcontract of any tier 
thereunder, let under the prime contract.
    Contracting Officer. The term ``Contracting Officer'' means the 
individual, a duly appointed successor, or authorized representative 
who is designated and authorized to enter into contracts on behalf of 
an agency, sponsor, owner, applicant, or other similar entity.
    Contractor. The term ``contractor'' means any individual or other 
legal entity that enters into or is awarded a contract that is subject 
wholly or in part to the labor standards provisions of any of the laws 
referenced by Sec.  5.1, including any prime contract or subcontract of 
any tier under a covered prime contract. In addition, the term 
contractor includes any surety that is completing performance for a 
defaulted contractor pursuant to a performance bond. The U.S. 
Government, its agencies, and instrumentalities are not contractors, 
subcontractors, employers or joint employers for purposes of the labor 
standards provisions of any of the laws referenced by Sec.  5.1. A 
State or local government is not regarded as a contractor or 
subcontractor under statutes providing loans, grants, or other Federal 
assistance in situations where construction is performed by its own 
employees. However, under development statutes or other statutes 
requiring payment of prevailing wages to all laborers and mechanics 
employed on the assisted project, such as the U.S. Housing Act of 1937, 
State and local recipients of Federal-aid must pay these employees 
according to Davis-Bacon labor standards. The term ``contractor'' does 
not include an entity that is a material supplier, except if the entity 
is performing work under a development statute.
    Davis-Bacon labor standards. The term ``Davis-Bacon labor 
standards'' as used in this part means the requirements of the Davis-
Bacon Act, the Contract Work Hours and Safety Standards Act (other than 
those relating to safety and health), the Copeland Act, and the 
prevailing wage provisions of the other statutes referenced in Sec.  
5.1, and the regulations in parts 1 and 3 of this subtitle and this 
part.
    Development statute. The term ``development statute'' means a 
statute that requires payment of prevailing wages under the Davis-Bacon 
labor standards to all laborers and mechanics employed in the 
development of a project.
    Employed. Every person performing the duties of a laborer or 
mechanic in the construction, prosecution, completion, or repair of a 
public building or public work, or building or work financed in whole 
or in part by assistance from the United States through loan, grant, 
loan guarantee or insurance, or otherwise, is ``employed'' regardless 
of any contractual relationship alleged to exist between the contractor 
and such person.
    Laborer or mechanic. The term ``laborer or mechanic'' 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 
``laborer'' or ``mechanic'' includes apprentices, helpers, and, in the 
case of contracts subject to the Contract Work Hours and Safety 
Standards Act, watchmen or guards. The term does not apply to workers 
whose duties are primarily administrative, executive, or clerical, 
rather than manual. Persons employed in a bona fide executive, 
administrative, or professional capacity as defined in 29 CFR part 541 
are not deemed to be laborers or mechanics. Working supervisors who 
devote more than 20 percent of their time during a workweek to mechanic 
or laborer duties, and who do not meet the criteria of part 541, are 
laborers and mechanics for the time so spent.
    Material supplier. The term ``material supplier'' is defined as 
follows:

[[Page 15793]]

    (1) A material supplier is an entity meeting all of the following 
criteria:
    (i) Its only obligations for work on the contract or project are 
the delivery of materials, articles, supplies, or equipment, which may 
include pickup of the same in addition to, but not exclusive of, 
delivery;
    (ii) It also supplies materials, articles, supplies, or equipment 
to the general public; and
    (iii) Its facility manufacturing the materials, articles, supplies, 
or equipment, if any, is neither established specifically for the 
contract or project nor located at the site of the work.
    (2) If an entity, in addition to being engaged in the activities 
specified in paragraph (1)(i) of this definition, also engages in other 
construction, prosecution, completion, or repair work at the site of 
the work, it is not a material supplier.
    Prime contractor. The term ``prime contractor'' means any person or 
entity that enters into a contract with an agency. For the purposes of 
the labor standards provisions of any of the laws referenced by Sec.  
5.1, the term prime contractor also includes the controlling 
shareholders or members of any entity holding a prime contract, the 
joint venturers or partners in any joint venture or partnership holding 
a prime contract, any contractor (e.g., a general contractor) that has 
been delegated all or substantially all of the responsibilities for 
overseeing any construction anticipated by the prime contract, and any 
other person or entity that has been delegated all or substantially all 
of the responsibility for overseeing Davis-Bacon labor standards 
compliance on a prime contract. For the purposes of the cross-
withholding provisions in Sec.  5.5, any such related entities holding 
different prime contracts are considered to be the same prime 
contractor.
    Public building or public work. The term ``public building'' or 
``public work'' includes a building or work, the construction, 
prosecution, completion, or repair of which, as defined in this 
section, 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. The construction, 
prosecution, completion, or repair of a portion of a building or work 
may still be considered a public building or work, even where the 
entire building or work is not owned, leased by, or to be used by a 
Federal agency, as long as the construction, prosecution, completion, 
or repair of that portion of the building or work is carried on by 
authority of or with funds of a Federal agency to serve the interest of 
the general public.
    Secretary. The term ``Secretary'' includes the Secretary of Labor, 
or authorized representative.
    Site of the work. The term ``site of the work'' is defined as 
follows:
    (1) ``Site of the work'' includes all of the following:
    (i) The primary construction site(s), defined as the physical place 
or places where the building or work called for in the contract will 
remain.
    (ii) Any secondary construction site(s), defined as any other 
site(s) where a significant portion of the building or work is 
constructed, provided that such construction is for specific use in 
that building or work and does not simply reflect the manufacture or 
construction of a product made available to the general public. A 
``significant portion'' of a building or work means one or more entire 
portion(s) or module(s) of the building or work, as opposed to smaller 
prefabricated components, with minimal construction work remaining 
other than the installation and/or assembly of the portions or modules 
at the place where the building or work will remain.
    (iii) Any nearby dedicated support sites, defined as:
    (A) Job headquarters, tool yards, batch plants, borrow pits, and 
similar facilities that are dedicated exclusively, or nearly so, to 
performance of the contract or project, and adjacent or virtually 
adjacent to either a primary construction site or a secondary 
construction site, and
    (B) Locations adjacent or virtually adjacent to a primary 
construction site at which workers perform activities associated with 
directing vehicular or pedestrian traffic around or away from the 
primary construction site.
    (2) With the exception of locations that are secondary construction 
sites as defined in paragraph (1)(ii) of this definition, site of the 
work does not include:
    (i) Permanent home offices, branch plant establishments, 
fabrication plants, tool yards, etc., of a contractor or subcontractor 
whose location and continuance in operation are determined wholly 
without regard to a particular Federal or federally assisted contract 
or project; or
    (ii) Fabrication plants, batch plants, borrow pits, job 
headquarters, tool yards, etc., of a material supplier, which are 
established by a material supplier for the project before opening of 
bids and not on the physical place or places where the building or work 
called for in the contract will remain, even where the operations for a 
period of time may be dedicated exclusively, or nearly so, to the 
performance of a contract.
    Subcontractor. The term ``subcontractor'' means any contractor that 
agrees to perform or be responsible for the performance of any part of 
a contract that is subject wholly or in part to the labor standards 
provisions of any of the laws referenced in Sec.  5.1. The term 
subcontractor includes subcontractors of any tier, but does not include 
the ordinary laborers or mechanics to whom a prevailing wage must be 
paid regardless of any contractual relationship which may be alleged to 
exist between the contractor or subcontractor and the laborers and 
mechanics.
    United States or the District of Columbia. The term ``United States 
or the District of Columbia'' means the United States, the District of 
Columbia, and all executive departments, independent establishments, 
administrative agencies, and instrumentalities of the United States and 
of the District of Columbia, including non-appropriated fund 
instrumentalities and any corporation for which all or substantially 
all of its stock is beneficially owned by the United States or by the 
foregoing departments, establishments, agencies, or instrumentalities.
    Wages. The term ``wages'' means the basic hourly rate of pay; any 
contribution irrevocably made by a contractor or subcontractor to a 
trustee or to a third person pursuant to a bona fide fringe benefit 
fund, plan, or program; and the rate of costs to the contractor or 
subcontractor which may be reasonably anticipated in providing bona 
fide fringe benefits to laborers and mechanics pursuant to an 
enforceable commitment to carry out a financially responsible plan or 
program, which was communicated in writing to the laborers and 
mechanics affected. The fringe benefits enumerated in the Davis-Bacon 
Act include medical or hospital care, pensions on retirement or death, 
compensation for injuries or illness resulting from occupational 
activity, or insurance to provide any of the foregoing; unemployment 
benefits; life insurance, disability insurance, sickness insurance, or 
accident insurance; vacation or holiday pay; defraying costs of 
apprenticeship or other similar programs; or other bona fide fringe 
benefits. Fringe benefits do not include benefits required by other 
Federal, State, or local law.
    Wage determination. The term ``wage determination'' includes the 
original decision and any subsequent decisions revising, modifying, 
superseding,

[[Page 15794]]

correcting, or otherwise changing the provisions of the original 
decision. The application of the wage determination shall be in 
accordance with the provisions of Sec.  1.6 of this subtitle.
0
25. Amend Sec.  5.5 by:
0
a. Revising paragraphs (a) introductory text and (a)(1) through (4), 
(6), and (10);
0
b. Adding paragraph (a)(11);
0
c. Revising paragraphs (b)(2) through (4);
0
d. Adding paragraph (b)(5);
0
e. Revising paragraph (c); and
0
f. Adding paragraphs (d) and (e).
    The revisions and additions read as follows:


Sec.  5.5  Contract provisions and related matters.

    (a) Required contract clauses. The Agency head will cause or 
require the contracting officer to insert in full in any contract in 
excess of $2,000 which is entered into for the actual construction, 
alteration and/or repair, including painting and decorating, of a 
public building or public work, or building or work financed in whole 
or in part from Federal funds or in accordance with guarantees of a 
Federal agency or financed from funds obtained by pledge of any 
contract of a Federal agency to make a loan, grant or annual 
contribution (except where a different meaning is expressly indicated), 
and which is subject to the labor standards provisions of any of the 
laws referenced by Sec.  5.1, the following clauses (or any 
modifications thereof to meet the particular needs of the agency, 
Provided, That such modifications are first approved by the Department 
of Labor):
    (1) Minimum wages--(i) Wage rates and fringe benefits. All laborers 
and mechanics employed or working upon the site of the work (or 
otherwise working in construction or development of the project under a 
development statute), will be paid unconditionally and not less often 
than once a week, and without subsequent deduction or rebate on any 
account (except such payroll deductions as are permitted by regulations 
issued by the Secretary of Labor under the Copeland Act (part 3 of this 
subtitle)), the full amount of basic hourly wages and bona fide fringe 
benefits (or cash equivalents thereof) due at time of payment computed 
at rates not less than those contained in the wage determination of the 
Secretary of Labor which is attached hereto and made a part hereof, 
regardless of any contractual relationship which may be alleged to 
exist between the contractor and such laborers and mechanics. As 
provided in paragraphs (d) and (e) of this section, the appropriate 
wage determinations are effective by operation of law even if they have 
not been attached to the contract. Contributions made or costs 
reasonably anticipated for bona fide fringe benefits under the Davis-
Bacon Act (40 U.S.C. 3141(2)(B)) on behalf of laborers or mechanics are 
considered wages paid to such laborers or mechanics, subject to the 
provisions of paragraph (a)(1)(v) of this section; also, regular 
contributions made or costs incurred for more than a weekly period (but 
not less often than quarterly) under plans, funds, or programs which 
cover the particular weekly period, are deemed to be constructively 
made or incurred during such weekly period. Such laborers and mechanics 
must be paid the appropriate wage rate and fringe benefits on the wage 
determination for the classification(s) of work actually performed, 
without regard to skill, except as provided in paragraph (a)(4) of this 
section. Laborers or mechanics performing work in more than one 
classification may be compensated at the rate specified for each 
classification for the time actually worked therein: Provided, That the 
employer's payroll records accurately set forth the time spent in each 
classification in which work is performed. The wage determination 
(including any additional classifications and wage rates conformed 
under paragraph (a)(1)(iii) of this section) and the Davis-Bacon poster 
(WH-1321) must be posted at all times by the contractor and its 
subcontractors at the site of the work in a prominent and accessible 
place where it can be easily seen by the workers.
    (ii) Frequently recurring classifications. (A) In addition to wage 
and fringe benefit rates that have been determined to be prevailing 
under the procedures set forth in part 1 of this subtitle, a wage 
determination may contain, pursuant to Sec.  1.3(f), wage and fringe 
benefit rates for classifications of laborers and mechanics for which 
conformance requests are regularly submitted pursuant to paragraph 
(a)(1)(iii) of this section, provided that:
    (1) The work performed by the classification is not performed by a 
classification in the wage determination for which a prevailing wage 
rate has been determined;
    (2) The classification is used in the area by the construction 
industry; and
    (3) The wage rate for the classification bears a reasonable 
relationship to the prevailing wage rates contained in the wage 
determination.
    (B) The Administrator will establish wage rates for such 
classifications in accordance with paragraph (a)(1)(iii)(A)(3) of this 
section. Work performed in such a classification must be paid at no 
less than the wage and fringe benefit rate listed on the wage 
determination for such classification.
    (iii) Conformance. (A) The contracting officer must require that 
any class of laborers or mechanics, including helpers, which is not 
listed in the wage determination and which is to be employed under the 
contract be classified in conformance with the wage determination. 
Conformance of an additional classification and wage rate and fringe 
benefits is appropriate only when the following criteria have been met:
    (1) The work to be performed by the classification requested is not 
performed by a classification in the wage determination; and
    (2) The classification is used in the area by the construction 
industry; and
    (3) The proposed wage rate, including any bona fide fringe 
benefits, bears a reasonable relationship to the wage rates contained 
in the wage determination.
    (B) The conformance process may not be used to split, subdivide, or 
otherwise avoid application of classifications listed in the wage 
determination.
    (C) If the contractor and the laborers and mechanics to be employed 
in the classification (if known), or their representatives, and the 
contracting officer agree on the classification and wage rate 
(including the amount designated for fringe benefits where 
appropriate), a report of the action taken will be sent by the 
contracting officer by email to [email protected]. The 
Administrator, or an authorized representative, will approve, modify, 
or disapprove every additional classification action within 30 days of 
receipt and so advise the contracting officer or will notify the 
contracting officer within the 30-day period that additional time is 
necessary.
    (D) In the event the contractor, the laborers or mechanics to be 
employed in the classification or their representatives, and the 
contracting officer do not agree on the proposed classification and 
wage rate (including the amount designated for fringe benefits, where 
appropriate), the contracting officer will, by email to 
[email protected], refer the questions, including the views of all 
interested parties and the recommendation of the contracting officer, 
to the Administrator for determination. The Administrator, or an 
authorized representative, will issue a determination within 30 days of 
receipt and so advise the contracting officer or will notify the 
contracting officer within

[[Page 15795]]

the 30-day period that additional time is necessary.
    (E) The contracting officer must promptly notify the contractor of 
the action taken by the Wage and Hour Division under paragraphs 
(a)(1)(iii)(C) and (D) of this section. The contractor must furnish a 
written copy of such determination to each affected worker or it must 
be posted as a part of the wage determination. The wage rate (including 
fringe benefits where appropriate) determined pursuant to paragraph 
(a)(1)(iii)(C) or (D) must be paid to all workers performing work in 
the classification under this contract from the first day on which work 
is performed in the classification.
    (iv) Fringe benefits not expressed as an hourly rate. Whenever the 
minimum wage rate prescribed in the contract for a class of laborers or 
mechanics includes a fringe benefit which is not expressed as an hourly 
rate, the contractor may either pay the benefit as stated in the wage 
determination or may pay another bona fide fringe benefit or an hourly 
cash equivalent thereof.
    (v) Unfunded plans. If the contractor does not make payments to a 
trustee or other third person, the contractor may consider as part of 
the wages of any laborer or mechanic the amount of any costs reasonably 
anticipated in providing bona fide fringe benefits under a plan or 
program, Provided, That the Secretary of Labor has found, upon the 
written request of the contractor, in accordance with the criteria set 
forth in Sec.  5.28, that the applicable standards of the Davis-Bacon 
Act have been met. The Secretary of Labor may require the contractor to 
set aside in a separate account assets for the meeting of obligations 
under the plan or program.
    (vi) Interest. In the event of a failure to pay all or part of the 
wages required by the contract, the contractor will be required to pay 
interest on any underpayment of wages.
    (2) Withholding--(i) Withholding requirements. The (write in name 
of Federal agency or the loan or grant recipient) must, upon its own 
action or upon written request of an authorized representative of the 
Department of Labor, withhold or cause to be withheld from the 
contractor under this contract so much of the accrued payments or 
advances as may be considered necessary to satisfy the liabilities of 
the prime contractor or any subcontractor for the full amount of wages 
required by the clause set forth in paragraph (a)(1) of this section 
and monetary relief for violations of paragraph (a)(11) of this section 
of this contract, including interest, or to satisfy any such 
liabilities required by any other Federal contract, or federally 
assisted contract subject to Davis-Bacon labor standards, that is held 
by the same prime contractor (as defined in Sec.  5.2). The necessary 
funds may be withheld from the contractor under this contract or any 
other Federal contract with the same prime contractor, or any other 
federally assisted contract that is subject to Davis-Bacon prevailing 
wage requirements and is held by the same prime contractor, regardless 
of whether the other contract was awarded or assisted by the same 
agency. In the event of a contractor's failure to pay any laborer or 
mechanic, including any apprentice or helper working on the site of the 
work (or otherwise working in construction or development of the 
project under a development statute) all or part of the wages required 
by the contract, or upon the contractor's failure to submit the 
required records as discussed in paragraph (a)(3)(iv) of this section, 
the (Agency) may on its own initiative and after written notice to the 
contractor, sponsor, applicant, owner, or other entity, as the case may 
be, take such action as may be necessary to cause the suspension of any 
further payment, advance, or guarantee of funds until such violations 
have ceased.
    (ii) Priority to withheld funds. The Department has priority to 
funds withheld or to be withheld in accordance with paragraph (a)(2)(i) 
or (b)(3)(i) of this section, or both, over claims to those funds by:
    (A) A contractor's surety(ies), including without limitation 
performance bond sureties and payment bond sureties;
    (B) A contracting agency for its reprocurement costs;
    (C) A trustee(s) (either a court-appointed trustee or a U.S. 
trustee, or both) in bankruptcy of a contractor, or a contractor's 
bankruptcy estate;
    (D) A contractor's assignee(s);
    (E) A contractor's successor(s); or
    (F) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
3907.
    (3) Records and certified payrolls--(i) Basic record requirements--
(A) Length of record retention. All regular payrolls and other basic 
records must be maintained by the contractor and any subcontractor 
during the course of the work and preserved for all laborers and 
mechanics working at the site of the work (or otherwise working in 
construction or development of the project under a development statute) 
for a period of at least 3 years after all the work on the prime 
contract is completed.
    (B) Information required. Such records must contain the name; 
Social Security number; last known address, telephone number, and email 
address of each such worker; each worker's correct classification(s) of 
work actually performed; hourly rates of wages paid (including rates of 
contributions or costs anticipated for bona fide fringe benefits or 
cash equivalents thereof of the types described in 40 U.S.C. 3141(2)(B) 
of the Davis-Bacon Act); daily and weekly number of hours actually 
worked in total and on each covered contract; deductions made; and 
actual wages paid.
    (C) Additional records relating to fringe benefits. Whenever the 
Secretary of Labor has found under paragraph (a)(1)(v) of this section 
that the wages of any laborer or mechanic include the amount of any 
costs reasonably anticipated in providing benefits under a plan or 
program described in 40 U.S.C. 3141(2)(B) of the Davis-Bacon Act, the 
contractor must maintain records which show that the commitment to 
provide such benefits is enforceable, that the plan or program is 
financially responsible, and that the plan or program has been 
communicated in writing to the laborers or mechanics affected, and 
records which show the costs anticipated or the actual cost incurred in 
providing such benefits.
    (D) Additional records relating to apprenticeship. Contractors with 
apprentices working under approved programs must maintain written 
evidence of the registration of apprenticeship programs, the 
registration of the apprentices, and the ratios and wage rates 
prescribed in the applicable programs.
    (ii) Certified payroll requirements--(A) Frequency and method of 
submission. The contractor or subcontractor must submit weekly for each 
week in which any DBA- or Related Acts-covered work is performed 
certified payrolls to the (write in name of appropriate Federal agency) 
if the agency is a party to the contract, but if the agency is not such 
a party, the contractor will submit the certified payrolls to the 
applicant, sponsor, owner, or other entity, as the case may be, that 
maintains such records, for transmission to the (write in name of 
agency). The prime contractor is responsible for the submission of 
copies of certified payrolls by all subcontractors. A contracting 
agency or prime contractor may permit or require contractors to submit 
certified payrolls through an electronic system, as long as the 
electronic system requires a legally valid electronic signature and the 
contracting agency or prime contractor permits other methods of 
submission in situations where the contractor is unable or limited in 
its ability to use or access the electronic system.

[[Page 15796]]

    (B) Information required. The certified payrolls submitted must set 
out accurately and completely all of the information required to be 
maintained under paragraph (a)(3)(i) of this section, except that full 
Social Security numbers and last known addresses, telephone numbers, 
and email addresses must not be included on weekly transmittals. 
Instead the payrolls need only include an individually identifying 
number for each worker (e.g., the last four digits of the worker's 
Social Security number). The required weekly certified payroll 
information may be submitted using Optional Form WH-347, or in any 
other format desired. Optional Form WH-347 is available for this 
purpose from the Wage and Hour Division website at https://www.dol.gov/files/WHD/legacy/files/wh347.pdf or its successor site. It is not a 
violation of this section for a prime contractor to require a 
subcontractor to provide full Social Security numbers and last known 
addresses, telephone numbers, and email addresses to the prime 
contractor for its own records, without weekly submission by the 
subcontractor to the sponsoring government agency (or the applicant, 
sponsor, owner, or other entity, as the case may be, that maintains 
such records).
    (C) Statement of Compliance. Each certified payroll submitted must 
be accompanied by a ``Statement of Compliance,'' signed by the 
contractor or subcontractor, or the contractor's or subcontractor's 
agent who pays or supervises the payment of the persons working on the 
contract, and must certify the following:
    (1) That the certified payroll for the payroll period contains the 
information required to be provided under paragraph (a)(3)(ii) of this 
section, the appropriate information and basic records are being 
maintained under paragraph (a)(3)(i) of this section, and such 
information and records are correct and complete;
    (2) That each laborer or mechanic (including each helper and 
apprentice) working on the contract during the payroll period has been 
paid the full weekly wages earned, without rebate, either directly or 
indirectly, and that no deductions have been made either directly or 
indirectly from the full wages earned, other than permissible 
deductions as set forth in part 3 of this subtitle; and
    (3) That each laborer or mechanic has been paid not less than the 
applicable wage rates and fringe benefits or cash equivalents for the 
classification(s) of work actually performed, as specified in the 
applicable wage determination incorporated into the contract.
    (D) Use of Optional Form WH-347. The weekly submission of a 
properly executed certification set forth on the reverse side of 
Optional Form WH-347 will satisfy the requirement for submission of the 
``Statement of Compliance'' required by paragraph (a)(3)(ii)(C) of this 
section.
    (E) Signature. The signature by the contractor, subcontractor, or 
the contractor's or subcontractor's agent, must be an original 
handwritten signature or a legally valid electronic signature.
    (F) Falsification. The falsification of any of the above 
certifications may subject the contractor or subcontractor to civil or 
criminal prosecution under 18 U.S.C. 1001 and 31 U.S.C. 3729.
    (iii) Contracts, subcontracts, and related documents. The 
contractor or subcontractor must maintain this contract or subcontract, 
and related documents including, without limitation, bids, proposals, 
amendments, modifications, and extensions. The contractor or 
subcontractor must preserve these contracts, subcontracts, and related 
documents during the course of the work and for a period of 3 years 
after all the work on the prime contract is completed.
    (iv) Required disclosures and access--(A) Required record 
disclosures and access to workers. The contractor or subcontractor must 
make the records required under paragraphs (a)(3)(i) through (iii) of 
this section and any other documents that the (write the name of the 
agency) or the Department of Labor deems necessary to determine 
compliance with the labor standards provisions of any of the applicable 
statutes referenced by Sec.  5.1, available for inspection, copying, or 
transcription by authorized representatives of the (write the name of 
the agency) or the Department of Labor, and must permit such 
representatives to interview workers during working hours on the job.
    (B) Sanctions for non-compliance with records and worker access 
requirements. If the contractor or subcontractor fails to submit the 
required records or to make them available, or to permit worker 
interviews during working hours on the job, the Federal agency may, 
after written notice to the contractor, sponsor, applicant, owner, or 
other entity, as the case may be, that maintains such records or that 
employs such workers, take such action as may be necessary to cause the 
suspension of any further payment, advance, or guarantee of funds. 
Furthermore, failure to submit the required records upon request or to 
make such records available, or to permit worker interviews during 
worker hours on the job, may be grounds for debarment action pursuant 
to Sec.  5.12. In addition, any contractor or other person that fails 
to submit the required records or make those records available to WHD 
within the time WHD requests that the records be produced, will be 
precluded from introducing as evidence in an administrative proceeding 
under part 6 of this subtitle any of the required records that were not 
provided or made available to WHD. WHD will take into consideration a 
reasonable request from the contractor or person for an extension of 
the time for submission of records. WHD will determine the 
reasonableness of the request and may consider, among other things, the 
location of the records and the volume of production.
    (C) Required information disclosures. Contractors and 
subcontractors must maintain the full Social Security number and last 
known address, telephone number, and email address of each covered 
worker, and must provide them upon request to the (write in name of 
appropriate Federal agency) if the agency is a party to the contract, 
or to the Wage and Hour Division of the Department of Labor. If the 
Federal agency is not such a party to the contract, the contractor or 
subcontractor, or both, must upon request provide the full Social 
Security number and last known address, telephone number, and email 
address of each covered worker to the applicant, sponsor, owner, or 
other entity, as the case may be, that maintains such records, for 
transmission to the (write in name of agency), the contractor, or the 
Wage and Hour Division of the Department of Labor for purposes of an 
investigation or other compliance action.
    (4) Apprentices and equal employment opportunity --(i) 
Apprentices--(A) Rate of pay. Apprentices will be permitted to work at 
less than the predetermined rate for the work they perform when they 
are employed pursuant to and individually registered in a bona fide 
apprenticeship program registered with the U.S. Department of Labor, 
Employment and Training Administration, Office of Apprenticeship (OA), 
or with a State Apprenticeship Agency recognized by the OA. A person 
who is not individually registered in the program, but who has been 
certified by the OA or a State Apprenticeship Agency (where 
appropriate) to be eligible for probationary employment as an 
apprentice, will be permitted to work at less than the predetermined 
rate for the

[[Page 15797]]

work they perform in the first 90 days of probationary employment as an 
apprentice in such a program. In the event the OA or a State 
Apprenticeship Agency recognized by the OA withdraws approval of an 
apprenticeship program, the contractor will no longer be permitted to 
use apprentices at less than the applicable predetermined rate for the 
work performed until an acceptable program is approved.
    (B) Fringe benefits. Apprentices must be paid fringe benefits in 
accordance with the provisions of the apprenticeship program. If the 
apprenticeship program does not specify fringe benefits, apprentices 
must be paid the full amount of fringe benefits listed on the wage 
determination for the applicable classification. If the Administrator 
determines that a different practice prevails for the applicable 
apprentice classification, fringe benefits must be paid in accordance 
with that determination.
    (C) Apprenticeship ratio. The allowable ratio of apprentices to 
journeyworkers on the job site in any craft classification must not be 
greater than the ratio permitted to the contractor as to the entire 
work force under the registered program. Any worker listed on a payroll 
at an apprentice wage rate, who is not registered or otherwise employed 
as stated above, must be paid not less than the applicable wage rate on 
the wage determination for the classification of work actually 
performed. In addition, any apprentice performing work on the job site 
in excess of the ratio permitted under the registered program must be 
paid not less than the applicable wage rate on the wage determination 
for the work actually performed.
    (D) Reciprocity of ratios and wage rates. Where a contractor is 
performing construction on a project in a locality other than the 
locality in which its program is registered, the ratios and wage rates 
(expressed in percentages of the journeyworker's hourly rate) 
applicable within the locality in which the construction is being 
performed must be observed. Every apprentice must be paid at not less 
than the rate specified in the registered program for the apprentice's 
level of progress, expressed as a percentage of the journeyworker 
hourly rate specified in the applicable wage determination.
    (ii) Equal employment opportunity. The use of apprentices and 
journeyworkers under this part shall be in conformity with the equal 
employment opportunity requirements of Executive Order 11246, as 
amended, and 29 CFR part 30.
* * * * *
    (6) Subcontracts. The contractor or subcontractor must insert in 
any subcontracts the clauses contained in paragraphs (a)(1) through 
(11) of this section, along with the applicable wage determination(s) 
and such other clauses as the (write in the name of the Federal agency) 
may by appropriate instructions require, and also a clause requiring 
the subcontractors to include these clauses and wage determination(s) 
in any lower tier subcontracts. The prime contractor is responsible for 
the compliance by any subcontractor or lower tier subcontractor with 
all the contract clauses in this section. In the event of any 
violations of these clauses, the prime contractor and any 
subcontractor(s) responsible will be liable for any unpaid wages and 
monetary relief, including interest from the date of the underpayment 
or loss, due to any workers of lower-tier subcontractors, and may be 
subject to debarment, as appropriate.
* * * * *
    (10) Certification of eligibility. (i) By entering into this 
contract, the contractor certifies that neither it nor any person or 
firm who has an interest in the contractor's firm is a person or firm 
ineligible to be awarded Government contracts by virtue of 40 U.S.C. 
3144(b) or Sec.  5.12(a) or (b).
    (ii) No part of this contract shall be subcontracted to any person 
or firm ineligible for award of a Government contract by virtue of 40 
U.S.C. 3144(b) or Sec.  5.12(a) or (b).
    (iii) The penalty for making false statements is prescribed in the 
U.S. Code, Title 18 Crimes and Criminal Procedure, 18 U.S.C. 1001.
    (11) Anti-retaliation. It is unlawful for any person to discharge, 
demote, intimidate, threaten, restrain, coerce, blacklist, harass, or 
in any other manner discriminate against, or to cause any person to 
discharge, demote, intimidate, threaten, restrain, coerce, blacklist, 
harass, or in any other manner discriminate against, any worker or job 
applicant for:
    (i) Notifying any contractor of any conduct which the worker 
reasonably believes constitutes a violation of the DBA, Related Acts, 
this part, or part 1 or 3 this subtitle;
    (ii) Filing any complaint, initiating or causing to be initiated 
any proceeding, or otherwise asserting on behalf of themselves or 
others any right or protection under the DBA, Related Acts, this part, 
or part 1 or 3 of this subtitle;
    (iii) Cooperating in any investigation or other compliance action, 
or testifying in any proceeding under the DBA, Related Acts, this part, 
or part 1 or 3 of this subtitle; or
    (iv) Informing any other person about their rights under the DBA, 
Related Acts, this part, or part 1 or 3 of this subtitle.
    (b) * * *
    (2) Violation; liability for unpaid wages; liquidated damages. In 
the event of any violation of the clause set forth in paragraph (b)(1) 
of this section the contractor and any subcontractor responsible 
therefor shall be liable for the unpaid wages and interest from the 
date of the underpayment. In addition, such contractor and 
subcontractor shall be liable to the United States (in the case of work 
done under contract for the District of Columbia or a territory, to 
such District or to such territory), for liquidated damages. Such 
liquidated damages shall be computed with respect to each individual 
laborer or mechanic, including watchmen and guards, employed in 
violation of the clause set forth in paragraph (b)(1), in the sum of 
$29 for each calendar day on which such individual was required or 
permitted to work in excess of the standard workweek of forty hours 
without payment of the overtime wages required by the clause set forth 
in paragraph (b)(1).
    (3) Withholding for unpaid wages and liquidated damages--(i) 
Withholding process. The (write in the name of the Federal agency or 
the loan or grant recipient) must, upon its own action or upon written 
request of an authorized representative of the Department of Labor, 
withhold or cause to be withheld from the contractor under this 
contract so much of the accrued payments or advances as may be 
considered necessary to satisfy the liabilities of the prime contractor 
or any subcontractor for unpaid wages and monetary relief, including 
interest, required by the clauses set forth in paragraphs (b)(2) and 
(5) of this section and liquidated damages for violations of paragraph 
(b)(2) of this section or to satisfy any such liabilities required by 
any other Federal contract, or federally assisted contract subject to 
Davis-Bacon prevailing wage requirements, that is held by the same 
prime contractor (as defined in Sec.  5.2). The necessary funds may be 
withheld from the contractor under this contract or any other Federal 
contract with the same prime contractor, or any other federally 
assisted contract that is subject to Davis-Bacon prevailing wage 
requirements and is held by the same prime contractor, regardless of 
whether the other contract was awarded or assisted by the same agency.

[[Page 15798]]

    (ii) Priority to withheld funds. The Department has priority to 
funds withheld or to be withheld in accordance with paragraph (a)(2)(i) 
or (b)(3)(i) of this section, or both, over claims to those funds by:
    (A) A contractor's surety(ies), including without limitation 
performance bond sureties and payment bond sureties;
    (B) A contracting agency for its reprocurement costs;
    (C) A trustee(s) (either a court-appointed trustee or a U.S. 
trustee, or both) in bankruptcy of a contractor, or a contractor's 
bankruptcy estate;
    (D) A contractor's assignee(s);
    (E) A contractor's successor(s); or
    (F) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
3907.
    (4) Subcontracts. The contractor or subcontractor must insert in 
any subcontracts the clauses set forth in paragraphs (b)(1) through (5) 
of this section and also a clause requiring the subcontractors to 
include these clauses in any lower tier subcontracts. The prime 
contractor is responsible for compliance by any subcontractor or lower 
tier subcontractor with the clauses set forth in paragraphs (b)(1) 
through (5). In the event of any violations of these clauses, the prime 
contractor and any subcontractor(s) responsible will be liable for any 
unpaid wages and monetary relief, including interest from the date of 
the underpayment or loss, due to any workers of lower-tier 
subcontractors, and associated liquidated damages, and may be subject 
to debarment, as appropriate.
    (5) Anti-retaliation. It is unlawful for any person to discharge, 
demote, intimidate, threaten, restrain, coerce, blacklist, harass, or 
in any other manner discriminate against, or to cause any person to 
discharge, demote, intimidate, threaten, restrain, coerce, blacklist, 
harass, or in any other manner discriminate against, any worker or job 
applicant for:
    (i) Notifying any contractor of any conduct which the worker 
reasonably believes constitutes a violation of the Contract Work Hours 
and Safety Standards Act (CWHSSA) or its implementing regulations in 
this part;
    (ii) Filing any complaint, initiating or causing to be initiated 
any proceeding, or otherwise asserting on behalf of themselves or 
others any right or protection under CWHSSA or part 5 of this title;
    (iii) Cooperating in any investigation or other compliance action, 
or testifying in any proceeding under CWHSSA or this part; or
    (iv) Informing any other person about their rights under CWHSSA or 
this part.
    (c) CWHSSA payroll records clause. In addition to the clauses 
contained in paragraph (b) of this section, in any contract subject 
only to the Contract Work Hours and Safety Standards Act and not to any 
of the other laws referenced by Sec.  5.1, the Agency Head must cause 
or require the contracting officer to insert a clause requiring that 
the contractor or subcontractor must maintain payrolls and basic 
payroll records during the course of the work and must preserve them 
for a period of 3 years after all the work on the prime contract is 
completed for all laborers and mechanics, including guards and 
watchmen, working on the contract. Such records must contain the name; 
last known address, telephone number, and email address; and social 
security number of each such worker; each worker's correct 
classification(s) of work actually performed; hourly rates of wages 
paid; daily and weekly number of hours actually worked; deductions 
made; and actual wages paid. Further, the Agency Head must cause or 
require the contracting officer to insert in any such contract a clause 
providing that the records to be maintained under this paragraph must 
be made available by the contractor or subcontractor for inspection, 
copying, or transcription by authorized representatives of the (write 
the name of agency) and the Department of Labor, and the contractor or 
subcontractor will permit such representatives to interview workers 
during working hours on the job.
    (d) Incorporation of contract clauses and wage determinations by 
reference. Although agencies are required to insert the contract 
clauses set forth in this section, along with appropriate wage 
determinations, in full into covered contracts, and contractors and 
subcontractors are required to insert them in any lower-tier 
subcontracts, the incorporation by reference of the required contract 
clauses and appropriate wage determinations will be given the same 
force and effect as if they were inserted in full text.
    (e) Incorporation by operation of law. The contract clauses set 
forth in this section, along with the correct wage determinations, will 
be considered to be a part of every prime contract required by the 
applicable statutes referenced by Sec.  5.1 to include such clauses, 
and will be effective by operation of law, whether or not they are 
included or incorporated by reference into such contract, unless the 
Administrator grants a variance, tolerance, or exemption from the 
application of this paragraph. Where the clauses and applicable wage 
determinations are effective by operation of law under this paragraph, 
the prime contractor must be compensated for any resulting increase in 
wages in accordance with applicable law.
0
26. Revise Sec.  5.6 to read as follows:


Sec.  5.6  Enforcement.

    (a) Agency responsibilities. (1)(i) The Federal agency has the 
initial responsibility to ascertain whether the clauses required by 
Sec.  5.5 and the appropriate wage determination(s) have been 
incorporated into the contracts subject to the labor standards 
provisions of the laws referenced by Sec.  5.1. Additionally, a Federal 
agency that provides Federal financial assistance that is subject to 
the labor standards provisions of the Act must promulgate the necessary 
regulations or procedures to require the recipient or sub-recipient of 
the Federal assistance to insert in its contracts the provisions of 
Sec.  5.5. No payment, advance, grant, loan, or guarantee of funds will 
be approved by the Federal agency unless it ensures that the clauses 
required by Sec.  5.5 and the appropriate wage determination(s) are 
incorporated into such contracts. Furthermore, no payment, advance, 
grant, loan, or guarantee of funds will be approved by the Federal 
agency after the beginning of construction unless there is on file with 
the Federal agency a certification by the contractor that the 
contractor and its subcontractors have complied with the provisions of 
Sec.  5.5 or unless there is on file with the Federal agency a 
certification by the contractor that there is a substantial dispute 
with respect to the required provisions.
    (ii) If a contract subject to the labor standards provisions of the 
applicable statutes referenced by Sec.  5.1 is entered into without the 
incorporation of the clauses required by Sec.  5.5, the agency must, 
upon the request of the Administrator or upon its own initiative, 
either terminate and resolicit the contract with the required contract 
clauses, or incorporate the required clauses into the contract (or 
ensure they are so incorporated) through supplemental agreement, change 
order, or any and all authority that may be needed. Where an agency has 
not entered directly into such a contract but instead has provided 
Federal financial assistance, the agency must ensure that the recipient 
or sub-recipient of the Federal assistance similarly incorporates the 
clauses required into its contracts. The method of incorporation of the 
correct wage determination, and adjustment in contract price, where 
appropriate, should be in accordance with applicable

[[Page 15799]]

law. Additionally, the following requirements apply:
    (A) Unless the Administrator directs otherwise, the incorporation 
of the clauses required by Sec.  5.5 must be retroactive to the date of 
contract award or start of construction if there is no award.
    (B) If this incorporation occurs as the result of a request from 
the Administrator, the incorporation must take place within 30 days of 
the date of that request, unless the agency has obtained an extension 
from the Administrator.
    (C) The contractor must be compensated for any increases in wages 
resulting from incorporation of a missing contract clauses.
    (D) If the recipient refuses to incorporate the clauses as 
required, the agency must make no further payment, advance, grant, 
loan, or guarantee of funds in connection with the contract until the 
recipient incorporates the required clauses into its contract, and must 
promptly refer the dispute to the Administrator for further proceedings 
under Sec.  5.13.
    (E) Before terminating a contract pursuant to this section, the 
agency must withhold or cross-withhold sufficient funds to remedy any 
back wage liability resulting from the failure to incorporate the 
correct wage determination or otherwise identify and obligate 
sufficient funds through a termination settlement agreement, bond, or 
other satisfactory mechanism.
    (F) Notwithstanding the requirement to incorporate the contract 
clauses and correct wage determination within 30 days, the contract 
clauses and correct wage determination will be effective by operation 
of law, retroactive to the beginning of construction, in accordance 
with Sec.  5.5(e).
    (2)(i) Certified payrolls submitted pursuant to Sec.  5.5(a)(3)(ii) 
must be preserved by the Federal agency for a period of 3 years after 
all the work on the prime contract is completed, and must be produced 
at the request of the Department of Labor at any time during the 3-year 
period, regardless of whether the Department of Labor has initiated an 
investigation or other compliance action.
    (ii) In situations where the Federal agency does not itself 
maintain certified payrolls required to be submitted pursuant to Sec.  
5.5(a)(3)(ii), upon the request of the Department of Labor the Federal 
agency must ensure that such certified payrolls are provided to the 
Department of Labor. Such certified payrolls may be provided by the 
applicant, sponsor, owner, or other entity, as the case may be, 
directly to the Department of Labor, or to the Federal agency which, in 
turn, must provide those records to the Department of Labor.
    (3) The Federal agency will cause such investigations to be made as 
may be necessary to assure compliance with the labor standards clauses 
required by Sec.  5.5 and the applicable statutes referenced in Sec.  
5.1. Investigations will be made of all contracts with such frequency 
as may be necessary to assure compliance. Such investigations will 
include interviews with workers, which must be taken in confidence, and 
examinations of certified payrolls, regular payrolls, and other basic 
records required to be maintained under Sec.  5.5(a)(3). In making such 
examinations, particular care must be taken to determine the 
correctness of classification(s) of work actually performed, and to 
determine whether there is a disproportionate amount of work by 
laborers and of apprentices registered in approved programs. Such 
investigations must also include evidence of fringe benefit plans and 
payments thereunder. Federal agencies must give priority to complaints 
of alleged violations.
    (4) In accordance with normal operating procedures, the contracting 
agency may be furnished various investigatory material from the 
investigation files of the Department of Labor. None of the material, 
other than computations of back wages, liquidated damages, and monetary 
relief for violations of Sec.  5.5(a)(11) or (b)(5), and the summary of 
back wages due, may be disclosed in any manner to anyone other than 
Federal officials charged with administering the contract or program 
providing Federal assistance to the contract, without requesting the 
permission and views of the Department of Labor.
    (b) Department of Labor investigations and other compliance 
actions. (1) The Administrator will investigate and conduct other 
compliance actions as deemed necessary in order to obtain compliance 
with the labor standards provisions of the applicable statutes 
referenced by Sec.  5.1, or to affirm or reject the recommendations by 
the Agency Head with respect to labor standards matters arising under 
the statutes referenced by Sec.  5.1.
    (2) Federal agencies, contractors, subcontractors, sponsors, 
applicants, owners, or other entities, as the case may be, must 
cooperate with any authorized representative of the Department of Labor 
in the inspection of records, in interviews with workers, and in all 
other aspects of the investigations or other compliance actions.
    (3) The findings of such an investigation or other compliance 
action, including amounts found due, may not be altered or reduced 
without the approval of the Department of Labor.
    (4) Where the underpayments disclosed by such an investigation or 
other compliance action total $1,000 or more, where there is reason to 
believe that the contractor or subcontractor has disregarded its 
obligations to workers or subcontractors, or where liquidated damages 
may be assessed under CWHSSA, the Department of Labor will furnish the 
Federal agency an enforcement report detailing the labor standards 
violations disclosed by the investigation or other compliance action 
and any action taken by the contractor or subcontractor to correct the 
violations, including any payment of back wages or any other relief 
provided workers or remedial actions taken for violations of Sec.  
5.5(a)(11) or (b)(5). In other circumstances, the Federal agency will 
be furnished a notification summarizing the findings of the 
investigation or other compliance action.
    (c) Confidentiality requirements. It is the policy of the 
Department of Labor to protect the identity of its confidential sources 
and to prevent an unwarranted invasion of personal privacy. 
Accordingly, the identity of a worker or other informant who makes a 
written or oral statement as a complaint or in the course of an 
investigation or other compliance action, as well as portions of the 
statement which would tend to reveal the identity of the informant, 
will not be disclosed in any manner to anyone other than Federal 
officials without the prior consent of the informant. Disclosure of 
such statements will be governed by the provisions of the ``Freedom of 
Information Act'' (5 U.S.C. 552, see part 70 of this subtitle) and the 
``Privacy Act of 1974'' (5 U.S.C. 552a, see part 71 of this subtitle).
0
27. Amend Sec.  5.7 by revising paragraph (a) to read as follows:


Sec.  5.7  Reports to the Secretary of Labor.

    (a) Enforcement reports. (1) Where underpayments by a contractor or 
subcontractor total less than $1,000, where there is no reason to 
believe that the contractor or subcontractor has disregarded its 
obligations to workers or subcontractors, and where restitution has 
been effected and future compliance assured, the Federal agency need 
not submit its investigative findings and recommendations to the 
Administrator, unless the investigation or other compliance action was 
made at the request of the Department of Labor. In

[[Page 15800]]

the latter case, the Federal agency will submit a factual summary 
report detailing any violations including any data on the amount of 
restitution paid, the number of workers who received restitution, 
liquidated damages assessed under the Contract Work Hours and Safety 
Standards Act, corrective measures taken (such as ``letters of notice'' 
or remedial action taken for violations of Sec.  5.5(a)(11) or (b)(5)), 
and any information that may be necessary to review any recommendations 
for an appropriate adjustment in liquidated damages under Sec.  5.8.
    (2) Where underpayments by a contractor or subcontractor total 
$1,000 or more, or where there is reason to believe that the contractor 
or subcontractor has disregarded its obligations to workers or 
subcontractors, the Federal agency will furnish within 60 days after 
completion of its investigation, a detailed enforcement report to the 
Administrator.
* * * * *
0
28. Revise Sec.  5.9 to read as follows:


Sec.  5.9  Suspension of funds.

    (a) Suspension and withholding. In the event of failure or refusal 
of the contractor or any subcontractor to comply with the applicable 
statutes referenced by Sec.  5.1 and the labor standards clauses 
contained in Sec.  5.5, whether incorporated into the contract 
physically, by reference, or by operation of law, the Federal agency, 
upon its own action or upon written request of an authorized 
representative of the Department of Labor, must take such action as may 
be necessary to cause the suspension of the payment, advance, or 
guarantee of funds until such time as the violations are discontinued 
or until sufficient funds are withheld to compensate workers for the 
wages to which they are entitled, any monetary relief due for 
violations of Sec.  5.5(a)(11) or (b)(5), and to cover any liquidated 
damages and pre-judgment or post-judgment interest which may be due.
    (b) Cross-withholding. In addition to the suspension and 
withholding of funds from the contract under which the violation(s) 
occurred, the necessary funds also may be withheld under any other 
Federal contract with the same prime contractor, or any other federally 
assisted contract that is subject to Davis-Bacon prevailing wage 
requirements and is held by the same prime contractor, regardless of 
whether the other contract was awarded or assisted by the same agency.
    (c) Cross-withholding from different legal entities. Cross-
withholding of funds may be requested from contracts held by other 
entities that may be considered to be the same prime contractor as that 
term is defined in Sec.  5.2. Such cross-withholding is appropriate 
where the separate legal entities have independently consented to it by 
entering into contracts containing the withholding provisions at Sec.  
5.5(a)(2) and (b)(3). Cross-withholding from a contract held by a 
different legal entity is not appropriate unless the withholding 
provisions were incorporated in full or by reference in that entity's 
contract. Absent exceptional circumstances, cross-withholding is not 
permitted from a contract held by a different legal entity where the 
labor standards were incorporated only by operation of law into that 
contract.
0
29. Revise Sec.  5.10 to read as follows:


Sec.  5.10  Restitution, criminal action.

    (a) In cases other than those forwarded to the Attorney General of 
the United States under paragraph (b) of this section where violations 
of the labor standards clauses contained in Sec.  5.5 and the 
applicable statutes referenced by Sec.  5.1 result in underpayment of 
wages to workers or monetary damages caused by violations of Sec.  
5.5(a)(11) or (b)(5), the Federal agency or an authorized 
representative of the Department of Labor will request that restitution 
be made to such workers or on their behalf to plans, funds, or programs 
for any type of bona fide fringe benefits within the meaning of 40 
U.S.C. 3141(2)(B), including interest from the date of the underpayment 
or loss. Interest on any back wages or monetary relief provided for in 
this part will be calculated using the percentage established for the 
underpayment of taxes under 26 U.S.C. 6621 and will be compounded 
daily.
    (b) In cases where the Agency Head or the Administrator finds 
substantial evidence that such violations are willful and in violation 
of a criminal statute, the matter will be forwarded to the Attorney 
General of the United States for prosecution if the facts warrant. In 
all such cases the Administrator will be informed simultaneously of the 
action taken.
0
30. Revise Sec.  5.11 to read as follows:


Sec.  5.11  Disputes concerning payment of wages.

    (a) This section sets forth the procedure for resolution of 
disputes of fact or law concerning payment of prevailing wage rates, 
overtime pay, proper classification, or monetary relief for violations 
of Sec.  5.5(a)(11) or (b)(5). The procedures in this section may be 
initiated upon the Administrator's own motion, upon referral of the 
dispute by a Federal agency pursuant to Sec.  5.5(a)(9), or upon 
request of the contractor or subcontractor.
    (b)(1) In the event of a dispute described in paragraph (a) of this 
section in which it appears that relevant facts are at issue, the 
Administrator will notify the affected contractor and subcontractor, if 
any, by registered or certified mail to the last known address or by 
any other means normally assuring delivery, of the investigation 
findings. If the Administrator determines that there is reasonable 
cause to believe that either the contractor, the subcontractor, or 
both, should also be subject to debarment under the Davis-Bacon Act or 
any of the other applicable statutes referenced by Sec.  5.1, the 
notification will so indicate.
    (2) A contractor or subcontractor desiring a hearing concerning the 
Administrator's investigation findings must request such a hearing by 
letter or by any other means normally assuring delivery, sent within 30 
days of the date of the Administrator's notification. The request must 
set forth those findings which are in dispute and the reasons therefor, 
including any affirmative defenses.
    (3) Upon receipt of a timely request for a hearing, the 
Administrator will refer the case to the Chief Administrative Law Judge 
by Order of Reference, with an attached copy of the notification from 
the Administrator and the response of the contractor or subcontractor, 
for designation of an Administrative Law Judge to conduct such hearings 
as may be necessary to resolve the disputed matters. The hearings will 
be conducted in accordance with the procedures set forth in part 6 of 
this subtitle.
    (c)(1) In the event of a dispute described in paragraph (a) of this 
section in which it appears that there are no relevant facts at issue, 
and where there is not at that time reasonable cause to institute 
debarment proceedings under Sec.  5.12, the Administrator will notify 
the contractor and subcontractor, if any, by registered or certified 
mail to the last known address or by any other means normally assuring 
delivery, of the investigation findings, and will issue a ruling on any 
issues of law known to be in dispute.
    (2)(i) If the contractor or subcontractor disagrees with the 
factual findings of the Administrator or believes that there are 
relevant facts in dispute, the contractor or subcontractor must advise 
the Administrator by letter or by any other means normally assuring 
delivery, sent within 30 days of the date of the Administrator's 
notification. In the response, the contractor or

[[Page 15801]]

subcontractor must explain in detail the facts alleged to be in dispute 
and attach any supporting documentation.
    (ii) Upon receipt of a response under paragraph (c)(2)(i) of this 
section alleging the existence of a factual dispute, the Administrator 
will examine the information submitted. If the Administrator determines 
that there is a relevant issue of fact, the Administrator will refer 
the case to the Chief Administrative Law Judge in accordance with 
paragraph (b)(3) of this section. If the Administrator determines that 
there is no relevant issue of fact, the Administrator will so rule and 
advise the contractor and subcontractor, if any, accordingly.
    (3) If the contractor or subcontractor desires review of the ruling 
issued by the Administrator under paragraph (c)(1) or (2) of this 
section, the contractor or subcontractor must file a petition for 
review thereof with the Administrative Review Board within 30 days of 
the date of the ruling, with a copy thereof the Administrator. The 
petition for review must be filed in accordance with part 7 of this 
subtitle.
    (d) If a timely response to the Administrator's findings or ruling 
is not made or a timely petition for review is not filed, the 
Administrator's findings or ruling will be final, except that with 
respect to debarment under the Davis-Bacon Act, the Administrator will 
advise the Comptroller General of the Administrator's recommendation in 
accordance with Sec.  5.12(a)(2). If a timely response or petition for 
review is filed, the findings or ruling of the Administrator will be 
inoperative unless and until the decision is upheld by the 
Administrative Law Judge or the Administrative Review Board.
0
31. Revise Sec.  5.12 to read as follows:


Sec.  5.12  Debarment proceedings.

    (a) Debarment standard and ineligible list. (1) Whenever any 
contractor or subcontractor is found by the Secretary of Labor to have 
disregarded their obligations to workers or subcontractors under the 
Davis-Bacon Act, any of the other applicable statutes referenced by 
Sec.  5.1, this part, or part 3 of this subtitle, such contractor or 
subcontractor and their responsible officers, if any, and any firm, 
corporation, partnership, or association in which such contractor, 
subcontractor, or responsible officer has an interest will be 
ineligible for a period of 3 years to be awarded any contract or 
subcontract of the United States or the District of Columbia and any 
contract or subcontract subject to the labor standards provisions of 
any of the statutes referenced by Sec.  5.1.
    (2) In cases arising under contracts covered by the Davis-Bacon 
Act, the Administrator will transmit to the Comptroller General the 
name(s) of the contractors or subcontractors and their responsible 
officers, if any, and any firms, corporations, partnerships, or 
associations in which the contractors, subcontractors, or responsible 
officers are known to have an interest, who have been found to have 
disregarded their obligations to workers or subcontractors, and the 
recommendation of the Secretary of Labor or authorized representative 
regarding debarment. In cases arising under contracts covered by any of 
the applicable statutes referenced by Sec.  5.1 other than the Davis-
Bacon Act, the Administrator determines the name(s) of the contractors 
or subcontractors and their responsible officers, if any, and any 
firms, corporations, partnerships, or associations in which the 
contractors, subcontractors, or responsible officers are known to have 
an interest, to be debarred. The Comptroller General will distribute a 
list to all Federal agencies giving the names of such ineligible person 
or firms, who will be ineligible for a period of 3 years (from the date 
of publication by the Comptroller General of the name(s) of any such 
person or firm on the ineligible list) to be awarded any contract or 
subcontract of the United States or the District of Columbia and any 
contract or subcontract subject to the labor standards provisions of 
any of the statutes referenced by Sec.  5.1.
    (b) Procedure. (1) In addition to cases under which debarment 
action is initiated pursuant to Sec.  5.11, whenever as a result of an 
investigation conducted by the Federal agency or the Department of 
Labor, and where the Administrator finds reasonable cause to believe 
that a contractor or subcontractor has committed violations which 
constitute a disregard of its obligations to workers or subcontractors 
under the Davis-Bacon Act, the labor standards provisions of any of the 
other applicable statutes referenced by Sec.  5.1, this part, or part 3 
of this subtitle, the Administrator will notify by registered or 
certified mail to the last known address or by any other means normally 
assuring delivery, the contractor or subcontractor and responsible 
officers, if any, and any firms, corporations, partnerships, or 
associations in which the contractors, subcontractors, or responsible 
officers are known to have an interest of the finding.
    (i) The Administrator will afford such contractor, subcontractor, 
responsible officer, and any other parties notified an opportunity for 
a hearing as to whether debarment action should be taken under 
paragraph (a) of this section. The Administrator will furnish to those 
notified a summary of the investigative findings.
    (ii) If the contractor, subcontractor, responsible officer, or any 
other parties notified wish to request a hearing as to whether 
debarment action should be taken, such a request must be made by letter 
or by any other means normally assuring delivery, sent within 30 days 
of the date of the notification from the Administrator, and must set 
forth any findings which are in dispute and the basis for such disputed 
findings, including any affirmative defenses to be raised.
    (iii) Upon timely receipt of such request for a hearing, the 
Administrator will refer the case to the Chief Administrative Law Judge 
by Order of Reference, with an attached copy of the notification from 
the Administrator and the responses of the contractor, subcontractor, 
responsible officers, or any other parties notified, for designation of 
an Administrative Law Judge to conduct such hearings as may be 
necessary to determine the matters in dispute.
    (iv) In considering debarment under any of the statutes referenced 
by Sec.  5.1 other than the Davis-Bacon Act, the Administrative Law 
Judge will issue an order concerning whether the contractor, 
subcontractor, responsible officer, or any other party notified is to 
be debarred in accordance with paragraph (a) of this section. In 
considering debarment under the Davis-Bacon Act, the Administrative Law 
Judge will issue a recommendation as to whether the contractor, 
subcontractor, responsible officers, or any other party notified should 
be debarred under 40 U.S.C. 3144(b).
    (2) Hearings under this section will be conducted in accordance 
with part 6 of this subtitle. If no hearing is requested within 30 days 
of the date of the notification from the Administrator, the 
Administrator's findings will be final, except with respect to 
recommendations regarding debarment under the Davis-Bacon Act, as set 
forth in paragraph (a)(2) of this section.
    (c) Interests of debarred parties. (1) A finding as to whether 
persons or firms whose names appear on the ineligible list have an 
interest under 40 U.S.C. 3144(b) or paragraph (a) of this section in 
any other firm, corporation, partnership, or association, may be made 
through investigation, hearing, or otherwise.
    (2)(i) The Administrator, on their own motion or after receipt of a 
request for a determination pursuant to paragraph

[[Page 15802]]

(c)(3) of this section may make a finding on the issue of interest.
    (ii) If the Administrator determines that there may be an interest, 
but finds that there is insufficient evidence to render a final ruling 
thereon, the Administrator may refer the issue to the Chief 
Administrative Law Judge in accordance with paragraph (c)(4) of this 
section.
    (iii) If the Administrator finds that no interest exists, or that 
there is not sufficient information to warrant the initiation of an 
investigation, the requesting party, if any, will be so notified and no 
further action taken.
    (iv)(A) If the Administrator finds that an interest exists, the 
person or firm affected will be notified of the Administrator's finding 
(by certified mail to the last known address or by any other means 
normally assuring delivery), which will include the reasons therefore, 
and such person or firm will be afforded an opportunity to request that 
a hearing be held to decide the issue.
    (B) Such person or firm will have 20 days from the date of the 
Administrator's ruling to request a hearing. A person or firm desiring 
a hearing must request it by letter or by any other means normally 
assuring delivery, sent within 20 days of the date of the 
Administrator's notification. A detailed statement of the reasons why 
the Administrator's ruling is in error, including facts alleged to be 
in dispute, if any, must be submitted with the request for a hearing.
    (C) If no hearing is requested within the time mentioned in 
paragraph (c)(2)(iv)(B) of this section, the Administrator's finding 
will be final and the Administrator will notify the Comptroller General 
in cases arising under the DBA. If a hearing is requested, the ruling 
of the Administrator will be inoperative unless and until the 
administrative law judge or the Administrative Review Board issues an 
order that there is an interest.
    (3)(i) A request for a determination of interest may be made by any 
interested party, including contractors or prospective contractors and 
associations of contractors, representatives of workers, and interested 
agencies. Such a request must be submitted in writing to the 
Administrator, Wage and Hour Division, U.S. Department of Labor, 200 
Constitution Avenue NW, Washington, DC 20210.
    (ii) The request must include a statement setting forth in detail 
why the petitioner believes that a person or firm whose name appears on 
the ineligible list has an interest in any firm, corporation, 
partnership, or association which is seeking or has been awarded a 
contract or subcontract of the United States or the District of 
Columbia, or a contract or subcontract that is subject to the labor 
standards provisions of any of the statutes referenced by Sec.  5.1. No 
particular form is prescribed for the submission of a request under 
this section.
    (4) The Administrator, on their own motion under paragraph 
(c)(2)(ii) of this section or upon a request for hearing where the 
Administrator determines that relevant facts are in dispute, will by 
order refer the issue to the Chief Administrative Law Judge, for 
designation of an Administrative Law Judge who will conduct such 
hearings as may be necessary to render a decision solely on the issue 
of interest. Such proceedings must be conducted in accordance with the 
procedures set forth in part 6 of this subtitle.
    (5) If the person or firm affected requests a hearing and the 
Administrator determines that relevant facts are not in dispute, the 
Administrator will refer the issue and the record compiled thereon to 
the Administrative Review Board to render a decision solely on the 
issue of interest. Such proceeding must be conducted in accordance with 
the procedures set forth in part 7 of this subtitle.
0
32. Revise Sec.  5.13 to read as follows:


Sec.  5.13  Rulings and interpretations.

    (a) All questions relating to the application and interpretation of 
wage determinations (including the classifications therein) issued 
pursuant to part 1 of this subtitle, of the rules contained in this 
part and in parts 1 and 3 of this subtitle, and of the labor standards 
provisions of any of the statutes listed in Sec.  5.1 must be referred 
to the Administrator for appropriate ruling or interpretation. These 
rulings and interpretations are authoritative and those under the 
Davis-Bacon Act may be relied upon as provided for in section 10 of the 
Portal-to-Portal Act of 1947 (29 U.S.C. 259). Requests for such rulings 
and interpretations should be submitted via email to 
[email protected]; by mail to Administrator, Wage and Hour 
Division, U.S. Department of Labor, 200 Constitution Ave. NW, 
Washington, DC 20210; or through other means directed by the 
Administrator.
    (b) If any such ruling or interpretation is made by an authorized 
representative of the Administrator of the Wage and Hour Division, any 
interested party may seek reconsideration of the ruling or 
interpretation by the Administrator of the Wage and Hour Division. The 
procedures and time limits set out in Sec.  1.8 of this subtitle apply 
to any such request for reconsideration.
0
33. Amend Sec.  5.15 by revising paragraphs (c)(4) and (d)(1) to read 
as follows:


Sec.  5.15  Limitations, variations, tolerances, and exemptions under 
the Contract Work Hours and Safety Standards Act.

* * * * *
    (c) * * *
    (4)(i) Time spent in an organized program of related, supplemental 
instruction by laborers or mechanics employed under bona fide 
apprenticeship programs may be excluded from working time if the 
criteria prescribed in paragraphs (c)(4)(ii) and (iii) of this section 
are met.
    (ii) The apprentice comes within the definition contained in Sec.  
5.2.
    (iii) The time in question does not involve productive work or 
performance of the apprentice's regular duties.
    (d) * * *
    (1) In the event of failure or refusal of the contractor or any 
subcontractor to comply with overtime pay requirements of the Contract 
Work Hours and Safety Standards Act, if the funds withheld by Federal 
agencies for the violations are not sufficient to pay fully the unpaid 
wages and any back pay or other monetary relief due laborers and 
mechanics, with interest, and the liquidated damages due the United 
States, the available funds will be used first to compensate the 
laborers and mechanics for the wages to which they are entitled (or an 
equitable portion thereof when the funds are not adequate for this 
purpose); and the balance, if any, will be used for the payment of 
liquidated damages.
* * * * *


Sec.  5.16  [Removed and Reserved]

0
34. Remove and reserve Sec.  5.16.


Sec.  5.17  [Removed and Reserved]

0
35. Remove and reserve Sec.  5.17.
0
36. Add Sec.  5.18 to subpart A to read as follows:


Sec.  5.18  Remedies for retaliation.

    (a) Administrator request to remedy violation. When the 
Administrator finds that any person has discriminated in any way 
against any worker or job applicant in violation of Sec.  5.5(a)(11) or 
(b)(5), or caused any person to discriminate in any way against any 
worker or job applicant in violation of Sec.  5.5(a)(11) or (b)(5), the 
Administrator will notify the person, any contractors for whom the 
person worked or on whose behalf the person acted, and any upper tier 
contractors, as well as the relevant contracting agency(ies) of the

[[Page 15803]]

discrimination and request that the person and any contractors for whom 
the person worked or on whose behalf the person acted remedy the 
violation.
    (b) Administrator directive to remedy violation and provide make 
whole relief. If the person and any contractors for whom the person 
worked or on whose behalf the person acted do not remedy the violation, 
the Administrator in the notification of violation findings issued 
under Sec.  5.11 or Sec.  5.12 will direct the person and any 
contractors for whom the person worked or on whose behalf the person 
acted to provide appropriate make whole relief to affected worker(s) 
and job applicant(s) or take appropriate remedial action, or both, to 
correct the violation, and will specify the particular relief and 
remedial actions to be taken.
    (c) Examples of available make whole relief and remedial actions. 
Such relief and remedial actions may include, but are not limited to, 
employment, reinstatement, and promotion, together with back pay and 
interest; restoration of the terms, conditions, and privileges of the 
worker's employment or former employment; the expungement of warnings, 
reprimands, or derogatory references; the provision of a neutral 
employment reference; and the posting of a notice to workers that the 
contractor or subcontractor agrees to comply with the Davis-Bacon Act 
and Related Acts anti-retaliation requirements.
0
37. Revise Sec.  5.20 to read as follows:


Sec.  5.20  Scope and significance of this subpart.

    The 1964 amendments (Pub. L. 88-349) to the Davis-Bacon Act 
require, among other things, that the prevailing wage determined for 
Federal and federally assisted construction include the basic hourly 
rate of pay and the amount contributed by the contractor or 
subcontractor for certain fringe benefits (or the cost to them of such 
benefits). The purpose of this subpart is to explain the provisions of 
these amendments. This subpart makes available in one place official 
interpretations of the fringe benefits provisions of the Davis-Bacon 
Act. These interpretations will guide the Department of Labor in 
carrying out its responsibilities under these provisions. These 
interpretations are intended also for the guidance of contractors, 
their associations, laborers and mechanics and their organizations, and 
local, State and Federal agencies, who may be concerned with these 
provisions of the law. The interpretations contained in this subpart 
are authoritative and may be relied upon as provided for in section 10 
of the Portal-to-Portal Act of 1947 (29 U.S.C. 259). The omission to 
discuss a particular problem in this subpart or in interpretations 
supplementing it should not be taken to indicate the adoption of any 
position by the Secretary of Labor with respect to such problem or to 
constitute an administrative interpretation, practice, or enforcement 
policy. Questions on matters not fully covered by this subpart may be 
referred to the Secretary for interpretation as provided in Sec.  5.13.
0
38. Revise Sec.  5.22 to read as follows:


Sec.  5.22  Effect of the Davis-Bacon fringe benefits provisions.

    The Davis-Bacon Act and the prevailing wage provisions of the 
statutes referenced in Sec.  1.1 of this subtitle confer upon the 
Secretary of Labor the authority to predetermine, as minimum wages, 
those wage rates found to be prevailing for corresponding classes of 
laborers and mechanics employed on projects of a character similar to 
the contract work in the area in which the work is to be performed. See 
the definitions of the terms ``prevailing wage'' and ``area'' in Sec.  
1.2 of this subtitle. The fringe benefits amendments enlarge the scope 
of this authority by including certain bona fide fringe benefits within 
the meaning of the terms ``wages'', ``scale of wages'', ``wage rates'', 
``minimum wages'', and ``prevailing wages'', as used in the Davis-Bacon 
Act.
0
39. Revise Sec.  5.23 to read as follows:


Sec.  5.23  The statutory provisions.

    Pursuant to the Davis-Bacon Act, as amended and codified at 40 
U.S.C. 3141(2), the term ``prevailing wages'' and similar terms include 
the basic hourly rate of pay and, for the listed fringe benefits and 
other bona fide fringe benefits not required by other law, the 
contributions irrevocably made by a contractor or subcontractor to a 
trustee or third party pursuant to a bona fide fringe benefit fund, 
plan, or program, and the costs to the contractor or subcontractor that 
may be reasonably anticipated in providing bona fide fringe benefits 
pursuant to an enforceable commitment to carry out a financially 
responsible plan or program, which was communicated in writing to the 
affected laborers and mechanics. Section 5.29 discusses specific fringe 
benefits that may be considered to be bona fide.
0
40. Amend Sec.  5.25 by adding paragraph (c) to read as follows:


Sec.  5.25  Rate of contribution or cost for fringe benefits.

* * * * *
    (c) Contractors must annualize all fringe benefit contributions to 
determine the hourly equivalent for which they may take credit against 
their fringe benefit obligation.
    (1) Method of computation. To annualize the cost of providing a 
fringe benefit, a contractor must divide the cost of the fringe benefit 
by the total number of hours worked on Davis-Bacon and non-Davis-Bacon 
work during the time period to which the cost is attributable to 
determine the rate of contribution per hour. If the amount of 
contribution varies per worker, credit must be determined separately 
for the amount contributed on behalf of each worker.
    (2) Exceptions requests. Contractors and other interested parties 
may request an exception from the annualization requirement by 
submitting a request to the WHD Administrator. Requests must be 
submitted in writing to the Division of Government Contracts 
Enforcement via email at [email protected] or by mail to 
Director, Division of Government Contracts Enforcement, Wage and Hour 
Division, U.S. Department of Labor, 200 Constitution Ave., NW, Room S-
3502, Washington, DC 20210. A request for exception must demonstrate 
the fringe benefit plan in question meets the following three factors:
    (i) The benefit provided is not continuous in nature; and
    (ii) The benefit does not compensate both private and public work; 
and
    (iii) The plan provides for immediate participation and essentially 
immediate vesting.
    (3) Previous exceptions. In the event that a fringe benefit plan 
(including a defined contribution pension plan with immediate 
participation and immediate vesting) was excepted from the 
annualization requirement prior to the effective date of these 
regulations, the plan's exception will expire 18 months from the 
effective date of these regulations, unless an exception for the plan 
has been requested and received by that date under paragraph (c)(2) of 
this section.
0
41. Revise Sec.  5.26 to read as follows:


Sec.  5.26  ``* * * contribution irrevocably made * * * to a trustee or 
to a third person''.

    (a) Requirements. The following requirements apply to any fringe 
benefit contributions made to a trustee or to a third person pursuant 
to a fund, plan, or program:
    (1) Such contributions must be made irrevocably;
    (2) The trustee or third person may not be affiliated with the 
contractor or subcontractor;
    (3) The trustee or third person must adhere to any fiduciary 
responsibilities applicable under law; and

[[Page 15804]]

    (4) The trust or fund must not permit the contractor or 
subcontractor to recapture any of the contributions paid in or any way 
divert the funds to its own use or benefit.
    (b) Excess payments. Notwithstanding the above, a contractor or 
subcontractor may recover sums which it had paid to a trustee or third 
person in excess of the contributions actually called for by the plan, 
such as excess payments made in error or in order to cover the 
estimated cost of contributions at a time when the exact amount of the 
necessary contributions is not yet known. For example, a benefit plan 
may provide for definite insurance benefits for employees in the event 
of contingencies such as death, sickness, or accident, with the cost of 
such definite benefits borne by the contractor or subcontractor. In 
such a case, if the insurance company returns the amount that the 
contractor or subcontractor paid in excess of the amount required to 
provide the benefits, this will not be deemed a recapture or diversion 
by the employer of contributions made pursuant to the plan. (See Report 
of the Senate Committee on Labor and Public Welfare, S. Rep. No. 963, 
88th Cong., 2d Sess., p. 5.)
0
42. Revise Sec.  5.28 to read as follows:


Sec.  5.28  Unfunded plans.

    (a) The costs to a contractor or subcontractor which may be 
reasonably anticipated in providing benefits of the types described in 
the Act, pursuant to an enforceable commitment to carry out a 
financially responsible plan or program, are considered fringe benefits 
within the meaning of the Act (see 40 U.S.C. 3141(2)(B)(ii)). The 
legislative history suggests that these provisions were intended to 
permit the consideration of fringe benefits meeting these requirements, 
among others, and which are provided from the general assets of a 
contractor or subcontractor. (Report of the House Committee on 
Education and Labor, H. Rep. No. 308, 88th Cong., 1st Sess., p. 4.; see 
also S. Rep. No. 963, p. 6.)
    (b) Such a benefit plan or program, commonly referred to as an 
unfunded plan, may not constitute a fringe benefit within the meaning 
of the Act unless:
    (1) It could be reasonably anticipated to provide the benefits 
described in the Act;
    (2) It represents a commitment that can be legally enforced;
    (3) It is carried out under a financially responsible plan or 
program;
    (4) The plan or program providing the benefits has been 
communicated in writing to the laborers and mechanics affected; and
    (5) The contractor or subcontractor requests and receives approval 
of the plan or program from the Secretary, as described in paragraph 
(c) of this section.
    (c) To receive approval of an unfunded plan or program, a 
contractor or subcontractor must demonstrate in its request to the 
Secretary that the unfunded plan or program, and the benefits provided 
under such plan or program, are ``bona fide,'' meet the requirements 
set forth in paragraphs (b)(1) through (4) of this section, and are 
otherwise consistent with the Act. The request must include sufficient 
documentation to enable the Secretary to evaluate these criteria. 
Contractors and subcontractors may request approval of an unfunded plan 
or program by submitting a written request in one of the following 
manners:
    (1) By mail to the United States Department of Labor, Wage and Hour 
Division, Director, Division of Government Contracts Enforcement, 200 
Constitution Ave., NW, Room S-3502, Washington, DC 20210;
    (2) By email to [email protected] (or its successor email address); 
or
    (3) By any other means directed by the Administrator.
    (d) Unfunded plans or programs may not be used as a means of 
avoiding the Act's requirements. The words ``reasonably anticipated'' 
require that any unfunded plan or program be able to withstand a test 
of actuarial soundness. Moreover, as in the case of other fringe 
benefits payable under the Act, an unfunded plan or program must be 
``bona fide'' and not a mere simulation or sham for avoiding compliance 
with the Act. To prevent these provisions from being used to avoid 
compliance with the Act, the Secretary may direct a contractor or 
subcontractor to set aside in an account assets which, under sound 
actuarial principles, will be sufficient to meet future obligations 
under the plan. Such an account must be preserved for the purpose 
intended. (S. Rep. No. 963, p. 6.)
0
43. Amend Sec.  5.29 by revising paragraph (e) and adding paragraph (g) 
to read as follows:


Sec.  5.29  Specific fringe benefits.

* * * * *
    (e) Where the plan is not of the conventional type described in the 
preceding paragraph (d) of this section, the Secretary must examine the 
facts and circumstances to determine whether fringe benefits under the 
plan are ``bona fide'' in accordance with requirements of the Act. This 
is particularly true with respect to unfunded plans discussed in Sec.  
5.28. Contractors or subcontractors seeking credit under the Act for 
costs incurred for such plans must request specific approval from the 
Secretary under Sec.  5.5(a)(1)(iv).
* * * * *
    (g) For a contractor or subcontractor to take credit for the costs 
of an apprenticeship program, it must meet the following requirements:
    (1) The program, in addition to meeting all other relevant 
requirements for fringe benefits in this subpart, must be registered 
with the Department of Labor's Employment and Training Administration, 
Office of Apprenticeship (``OA''), or with a State Apprenticeship 
Agency recognized by the OA.
    (2) The contractor or subcontractor may only take credit for the 
actual costs incurred for the apprenticeship program, such as 
instruction, books, and tools or materials; it may not take credit for 
voluntary contributions beyond the costs actually incurred for the 
apprenticeship program.
    (3) Costs incurred for the apprenticeship for one classification of 
laborer or mechanic may not be used to offset costs incurred for 
another classification.
    (4) In applying the annualization principle to compute the 
allowable fringe benefit credit pursuant to Sec.  5.25, the total 
number of working hours of employees to which the cost of an 
apprenticeship program is attributable is limited to the total number 
of hours worked by laborers and mechanics in the apprentice's 
classification. For example, if a contractor enrolls an employee in an 
apprenticeship program for carpenters, the permissible hourly Davis-
Bacon credit is determined by dividing the cost of the program by the 
total number of hours worked by the contractor's carpenters and 
carpenters' apprentices on covered and non-covered projects during the 
time period to which the cost is attributable, and such credit may only 
be applied against the contractor's prevailing wage obligations for all 
carpenters and carpenters' apprentices for each hour worked on the 
covered project.
0
44. Revise Sec.  5.30 to read as follows:


Sec.  5.30  Types of wage determinations.

    (a) When fringe benefits are prevailing for various classes of 
laborers and mechanics in the area of proposed construction, such 
benefits are includable in any Davis-Bacon wage determination. The 
illustrations contained in paragraph (c) of this section demonstrate 
how fringe benefits

[[Page 15805]]

may be listed on wage determinations in such cases.
    (b) Wage determinations do not include fringe benefits for various 
classes of laborers and mechanics whenever such benefits do not prevail 
in the area of proposed construction. When this occurs, the wage 
determination will contain only the basic hourly rates of pay which are 
prevailing for the various classes of laborers and mechanics. An 
illustration of this situation is contained in paragraph (c) of this 
section.
    (c) Illustrations:

------------------------------------------------------------------------
         Classification               Rate               Fringes
------------------------------------------------------------------------
Bricklayer.....................          $21.96  $0.00.
Electrician....................           47.65  3%+$14.88.
Elevator mechanic..............           48.60  $35.825+a+b.
                                                 a. Paid Holidays: New
                                                  Year's Day, Memorial
                                                  Day, Independence Day,
                                                  Labor Day, Veterans'
                                                  Day, Thanksgiving Day,
                                                  Christmas Day and the
                                                  Friday after
                                                  Thanksgiving.
                                                 b. Vacations: Employer
                                                  contributes 8% of
                                                  basic hourly rate for
                                                  5 years or more of
                                                  service; 6% of basic
                                                  hourly rate for 6
                                                  months to 5 years of
                                                  service as vacation
                                                  pay credit.
Ironworker, structural.........           32.00  12.01.
Laborer: Common or general.....           15.21  4.54.
Operator: Bulldozer............           15.40  1.90.
Plumber (excludes HVAC duct,              38.38  16.67.
 pipe and unit installation).
------------------------------------------------------------------------
Note 1 to paragraph (c): (This format is not necessarily in the exact
  form in which determinations will issue; it is for illustration only.)

0
45. Revise Sec.  5.31 to read as follows:


Sec.  5.31  Meeting wage determination obligations.

    (a) A contractor or subcontractor performing work subject to a 
Davis-Bacon wage determination may discharge their minimum wage 
obligations for the payment of both straight time wages and fringe 
benefits by paying in cash, making payments or incurring costs for 
``bona fide'' fringe benefits of the types listed in the applicable 
wage determination or otherwise found prevailing by the Secretary of 
Labor, or by a combination thereof.
    (b) A contractor or subcontractor may discharge their obligations 
for the payment of the basic hourly rates and the fringe benefits where 
both are contained in a wage determination applicable to their laborers 
or mechanics in the following ways:
    (1) By paying not less than the basic hourly rate to the laborers 
or mechanics and by making contributions for ``bona fide'' fringe 
benefits in a total amount not less than the total of the fringe 
benefits required by the wage determination. For example, the 
obligations for ``Laborer: common or general'' in the illustration in 
Sec.  5.30(c) will be met by the payment of a straight time hourly rate 
of not less than $15.21 and by contributions of not less than a total 
of $4.54 an hour for ``bona fide'' fringe benefits; or
    (2) By paying in cash directly to laborers or mechanics for the 
basic hourly rate and by making an additional cash payment in lieu of 
the required benefits. For example, where an employer does not make 
payments or incur costs for fringe benefits, they would meet their 
obligations for ``Laborer: common or general'' in the illustration in 
Sec.  5.30(c), by paying directly to the laborers a straight time 
hourly rate of not less than $19.75 ($15.21 basic hourly rate plus 
$4.54 for fringe benefits); or
    (3) As stated in paragraph (a) of this section, the contractor or 
subcontractor may discharge their minimum wage obligations for the 
payment of straight time wages and fringe benefits by a combination of 
the methods illustrated in paragraphs (b)(1) through (2) of this 
section. Thus, for example, their obligations for ``Laborer: common or 
general'' may be met by an hourly rate, partly in cash and partly in 
payments or costs for fringe benefits which total not less than $19.75 
($15.21 basic hourly rate plus $4.54 for fringe benefits).
0
46. Add Sec.  5.33 to read as follows:


Sec.  5.33  Administrative expenses of a contractor or subcontractor.

    Administrative expenses incurred by a contractor or subcontractor 
in connection with the administration of a fringe benefit plan are not 
creditable as fringe benefits. For example, a contractor or 
subcontractor may not take credit for the cost of an office employee 
who fills out medical insurance claim forms for submission to an 
insurance carrier.
0
47. Add subpart C, consisting of Sec.  5.40, to read as follows:

Subpart C--Severability


Sec.  5.40  Severability.

    The provisions of this part are separate and severable and operate 
independently from one another. If any provision of this part is held 
to be invalid or unenforceable by its terms, or as applied to any 
person or circumstance, or stayed pending further agency action, the 
provision is to be construed so as to continue to give the maximum 
effect to the provision permitted by law, unless such holding is one of 
utter invalidity or unenforceability, in which event the provision is 
severable from this part and will not affect the remaining provisions.

    Signed this 9th day of March, 2022.
Jessica Looman,
Acting Administrator, Wage and Hour Division.
[FR Doc. 2022-05346 Filed 3-17-22; 8:45 am]
BILLING CODE 4510-27-P