EFFECTIVE DATE: July 21, 2009
SUBJECT: GUIDANCE ON IMPLEMENTATION OF THE DAVIS-BACON ACT PREVAILING WAGE REQUIREMENTS IN THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

BACKGROUND: The Davis-Bacon Act

The DBA is applicable to contracts of the United States4 in excess of $2,0005 for the
construction, alteration, and/or repair (including painting and decorating)6 of public
buildings or public works. The DBA requires all contractors and subcontractors to pay
laborers and mechanics employed on a covered contract wages and fringe benefits determined by the Secretary of Labor to be prevailing for corresponding classes of employees engaged on similar projects in the locality. In numerous additional laws, Congress has specifically required adherence to DBA prevailing wage requirements where they might not otherwise be applicable.

DISCUSSION: The Department of Energy Weatherization Assistance Program

The Weatherization Assistance Program was established in 1976. The program has
historically not been subject to the DBA prevailing wage requirements. However, on
February 17, 2009, President Obama signed the Recovery Act to jumpstart the economy
by saving and creating jobs, and to foster weatherization and energy efficiency efforts
and achieve other goals.7 Section 1606 of the Recovery Act specifically requires that all
laborers and mechanics employed by contractors and subcontractors on any project
“funded directly by or assisted in whole or in part by” Recovery Act funds be paid
prevailing wages as determined by the Secretary of Labor.8 Thus, Weatherization
Assistance projects funded or assisted in whole or part by Recovery Act funds are now
subject to DBA prevailing wage requirements.9

Accordingly, contractors and subcontractors must ensure that any laborers and
mechanics10 employed on projects funded or assisted in whole or in part by Recovery Act
funds are paid prevailing wages as determined by the Secretary of Labor for construction,
alteration, and/or repair (including painting and decorating). Grantees and subgrantees
with the exception of state and local governments, that use their own employees to
perform this work, will also pay these employees the DBA prevailing wage rate. If the
entity receiving Recovery Act assistance for such projects contracts out the
weatherization work, it must ensure that the DBA requirements flow down to the entities
that employ laborers and mechanics that do the work.11

On projects where DBA prevailing wage requirements must be paid, the requirements set
out in the DOL regulations at 29 CFR Parts 1, 3, and 5 are applicable. In accordance
with 29 CFR Part 1, Federal agencies directly contracting for weatherization projects or
providing assistance under the Recovery Act to other entities for such projects must
include the standard DBA contract clauses found in 29 CFR 5.5(a) in their bid
solicitations, assistance agreements, and the resulting contracts and grants, and must
require that those requirements flow down to any contracts or subcontracts for the
performance of the work. The recipient of the Recovery Act funds is responsible for the compliance by its subgrantees, contractors and their subcontractors with all of these
contract clauses.12

DOE is responsible for ensuring that the applicable wage determinations are included in
bid solicitations, assistance agreements, and the resulting contracts and grants. DOE is
working with DOL to ensure that wage determinations for weatherization projects
accurately reflect the local prevailing wage rates and fringe benefits for this work. To
this end, the Wage and Hour Division (“WHD”) Administrator may issue a
weatherization wage determination after a contract has been awarded or after the
beginning of construction. Pursuant to 29 CFR § 1.6(f), if it is determined that an
inaccurate wage determination has been incorporated into a grant or contract, the proper
wage determination, as issued by the WHD Administrator, will be incorporated into that
contract or grant retroactively to the beginning of ARRA assisted or funded construction.
The contractor/subcontractor and grantee/subgrantee must be compensated for any
increases in wages resulting from such change. In the event of such a change you may
use Recovery Act funds to cover the cost of the adjustments. Until DOL issues
prevailing wage determinations for weatherization workers in your area, you may use
Recovery Act funds to begin weatherizing homes so long as you pay at least the wage
amounts currently listed at http://www.wdol.gov/Index.aspx for residential construction
or other specific category that you believe is most similar to the work performed by your
employees or those of the contractors you utilize. Please also note that the rates posted at
the DOL site are minimums.

Please note that weatherization work will be defined by DOL’s survey and may not apply
to the work performed by all of your employees. For example, replacement of HVAC
systems by licensed contractors most likely will not be considered weatherization work.
The wage determination for this work will be listed under another labor category. The
wage survey being conducted by DOL is collecting data on all HVAC work including
installing the HVAC unit, installing duct work, and installing the pipe. The survey is
asking for the classification(s) that perform HVAC work and for a description of the
scope of the HVAC work performed on the jobs. From this, the survey results will
determine the classification(s) and rates/fringe benefits that will be paid to the worker(s)
who perform HVAC work and will specify on the wage determination the scope of the
work performed. For instance, it may be a weatherization worker, HVAC mechanic,
plumber, pipefitter, or sheetmetal worker. The survey results will determine which
classification(s) do the work.

DOE and others have suggested that the classifications and wage rates/fringe benefits on
the current residential wage determinations are not applicable to weatherization work.
DOL is working to ensure that wage determinations for work on weatherization projects
accurately reflect the local prevailing practice for this work. To this end, the WHD
Administrator at DOL may issue a wage determination after contract award or after the
beginning of construction. If the agencies proceed without an applicable weatherization
wage determination in their projects, then they risk having a back wage liability after
12 See also 29 CFR Part 5.5(a)(6)(making prime contractor responsible for lower-tier contractor
compliance).

DOL completes its survey and issues applicable weatherization wage determinations.
There is no way to determine prior to the completion of the survey and prevailing wage
determination process whether the weatherization wage survey will collect sufficient
information for WHD to produce a separate rate for HVAC work or whether that work is
performed by a weatherization mechanic, plumber, pipefitter, sheet metal worker, etc.
There are no standard national classification definitions under the Davis-Bacon program.
The classification of work that performs the work in question is based on the prevailing
practice in the area.

It is imperative that Davis Bacon wage stipulations be inserted into all contracts in which
Davis Bacon applies and that the contractors working on these projects maintain accurate
and complete weekly certified payrolls from the start of construction. Pursuant to 29
CFR § 1.6(f), if an inaccurate wage determination or no wage determination has been
incorporated into the grant or the contract, the proper wage determination, as issued by
the WHD Administrator, will be incorporated into the contract or grant retroactively to
the beginning of construction. The certified payroll records submitted prior to the
inclusion of the proper wage determination must be reviewed and any employees paid
less than the determined wage rates must be compensated the difference for all hours
worked on the project. In addition, the contractor must be compensated for any increases
in wages resulting from such change.

For States, the costs associated with DBA compliance can be charged either as an
administrative cost or as a training and technical cost. For local agencies, these costs
must be charged either as an administrative cost or as part of program operations. States
should contact their respective DOE Project Management Center for specific guidance on
how to appropriately charge these costs.

Grantees/subgrantees and contractors/subcontractors must attach the applicable wage
determinations to the bid solicitation, assistance agreement, and resulting contract or
grant. A grantee or subgrantee and contractors/subcontractors contracting out work on a
covered weatherization project must provide the wage determination to the contractors or
subcontractors 10 calendar days prior to soliciting bids. Once a project becomes subject
to DBA requirements and the accurate (as stated in the above paragraph) wage
determinations are obtained and incorporated into a bid/contract, then those wages are
applicable for the entire project.

If an ongoing construction project which was awarded prior to the Recovery Act or which
was not assisted or funded in whole or part by Recovery Act funds does become subject
to Recovery Act funding, the agency will insert the appropriate wage determination(s) in
relevant contracts and federal assistance agreements effective as of the date the Recovery
Act assistance is approved for use on the project. The determinations will then need to be
included in any contracts or subcontracts for the covered work. Projects that are already
subject to Davis-Bacon labor standards would not require application of a new Davis-
Bacon wage determination upon receipt of Recovery Act assistance unless such
assistance is for work not contemplated under the existing contract for construction or in
the circumstances outlined above where the WHD Administrator issues a new wage
determination.13

In addition, grantees/subgrantees and contractors/subcontractors on weatherization
projects funded or assisted in whole or part by Recovery Act funds shall maintain
payrolls and basic records relating to payroll during the course of the work and preserve
them for a period of three years thereafter for all laborers and mechanics working on the
project, or as designated in the grant document. 14 They must also ensure that all
laborers and mechanics on a project funded or assisted in whole or part with
Recovery Act funds are paid on a weekly basis and must submit weekly certified
payroll records to the contracting and administering agency.15

Training

DOE has completed an initial round of national webinars training on Davis-Bacon
implementation for State and local agencies. Davis-Bacon training sessions also were
conducted at the DOE Weatherization Assistance Program National Conference to be
held July 20-23, 2009 in Indianapolis. This training is designed to provide all attendees
with a general overall knowledge on compliance with DBA. Additional training may be
scheduled on an as needed basis. Also, States are encouraged to conduct their own
training on DBA compliance for their local agencies and contractors.

CONCLUSION

DOE is committed to ensuring that the Recovery Act meets its dual objectives of creating
thousands of new jobs and of bringing about the weatherization of more than 525,000
low-income households over the next three years. DOE will provide any additional
assistance needed and will address any issues that may arise in order to ensure that those
goals are met. To this end, DOL, with assistance from the DOE, is developing project
wage determinations that accurately reflect the classifications used and wage rates paid
on residential weatherization projects. These new wage surveys are being conducted on
an expedited basis. Once completed, project wage determinations, specific to
weatherization work in residential buildings will be issued to DOE for incorporation into
the grant and contract documents.

Gilbert P. Sperling
Program Manager
Office of Weatherization and Intergovernmental Program
Energy Efficiency and Renewable Energy