Davis-Bacon Act

Process Changes Could Raise Confidence That Wage Rates Are Based on Accurate Data Gao ID: HEHS-96-130 May 31, 1996

The Davis-Bacon Act requires employers on federal construction projects to pay workers wages at or above the level determined to be prevailing in a geographic area. Critics say that the act artificially inflates federal construction costs--a charge with serious financial implications given that the federal government will contract about $42 billion in construction projects during fiscal year 1996, according to Congressional Budget Office estimates. Inaccurate wage determination could lead either to excessive government construction costs or to large numbers of workers receiving wages and fringe benefits that are lower than those required by law. This report (1) identifies the steps used by the Labor Department to collect data and determine and report the prevailing wages to be paid on federally funded construction projects, (2) discusses weaknesses in the determination process that could have resulted in the use of inaccurate or fraudulent data, and (3) assesses the extent to which Labor is addressing weaknesses in its determination process.

GAO found that: (1) Labor's wage determinations are based on voluntary submissions of wage and benefit data from employers and third parties; (2) such internal control weaknesses as inaccurate wage and fringe benefit data, limited computer capability, and an inaccessible appeals process often lead to increased government construction costs or lower wages and fringe benefits for construction workers; (3) Labor began requiring its regional staff to verify third-party wage survey data in August 1995, but the verification does not address erroneous employer-reported data; (4) Labor does not have sufficient computer resources to automate data collection and verification; and (5) Labor requested $4 million in its fiscal year 1997 budget to develop, evaluate, and implement alternative reliable methodologies that will provide accurate and timely wage determinations at a reasonable cost.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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