Davis-Bacon Act

The Davis-Bacon Act requires employers to pay locally prevailing wage rates, including fringe benefits, to laborers and mechanics on federal construction projects--which total more than $40 billion each year. The Department of Labor determines these wage rates by surveying wages and fringe benefits paid to workers in similar construction jobs in the same area. GAO and others have raised concerns that Labor's wage determinations may not accurately reflect wages paid in the local area. Inaccurate wage determinations could lead to the underpayment of workers or to inflated construction costs for federal projects. This report discusses (1) the status of Labor's efforts to improve the Davis-Bacon wage determination process and (2) whether the changes that Labor is making are likely to address the timeliness and accuracy of wage determinations.

GAO noted that: (1) in response to the conference report directive, Labor is testing a number of efforts that are aimed at improving the process for determining prevailing wage rates; (2) the alternatives being tested fall under two tracks: (a) redesigning Labor's Wage and Hour Division's (WHD) existing survey process, including revising survey forms to obtain data more efficiently and using technology to more quickly and accurately analyze the survey data obtained; and (b) using data from surveys conducted by the Bureau of Labor Statistics (BLS) to determine prevailing wage rates; (3) the earliest efforts began in 1996 and most efforts under both tracks are scheduled for completion by fiscal year (FY) 2000; (4) given these timeframes and the need to analyze the results, Labor officials said they will decide in FY 2001 which track best promotes a wage determination process that will result in accurate, timely wage determinations; (5) efforts under either track, if successfully implemented, have the potential to improve the timeliness and accuracy of wage determinations; (6) redesigning the survey form and making it more accessible and understandable to survey participants could increase survey participation and improve the timeliness of data submitted, potentially leading to more accurate and timely wage determinations; (7) however, Labor officials identified several key issues that they will need to address for efforts under either track to achieve the intended results; (8) these issues include concerns about: (a) WHD's ability to deal with potentially significant increases in the volume of survey data collected under a revised process; and (b) limitations of BLS data as a tool in setting prevailing wage rates; (9) Labor officials also acknowledged that they need to develop a clear plan to make an informed decision about which track, or combination of efforts under both tracks, to implement; (10) Labor has established general performance measures that officials say will guide Labor's efforts; (11) additionally, it has started to collect limited baseline data to assess progress made under both tracks but such data may be of limited use; and (12) Labor has also recognized that other factors, such as cost, will need to be considered when officials decide which efforts would most improve the accuracy and timeliness of wage determinations, but officials have not yet specified how these other factors will be analyzed.