Fact Sheet #66D: Application of General Wage Determinations to Davis-Bacon and Related Act Projects

What are general wage determinations?

The Davis-Bacon and Related Acts (DBRA) require contractors to pay locally prevailing wages to laborers or mechanics working on federally funded or assisted construction projects. The Secretary of Labor determines the locally prevailing wage rates that contracting agencies must include in covered contracts. These prevailing wage rates must be based on the wage rates paid to the corresponding classes of laborers and mechanics employed on projects of a character similar to the proposed contract work in the local area where that work is to be performed.

The Wage and Hour Division (WHD) has issued general wage determinations listing the prevailing wage rates for the great majority of counties nationwide for each of the four general categories of construction discussed below, available on System for Award Management (SAM.gov), which federal agencies can incorporate into their covered contracts without getting prior approval from WHD. Any questions about how these general wage determinations apply to a particular project must be referred to WHD.

Under limited circumstances (where there is no general wage determination in effect for the relevant project area, the work will be performed in multiple counties, or virtually all of the work on a contract will be performed by a classification that is not on the applicable general wage determination), an agency may instead request a “project wage determination” for a specific project.

Incorporating general wage determinations into DBRA contracts

Contracting agencies must consider three basic factors in selecting the general wage determination(s) to incorporate into their contracts – selecting the correct location, the correct category (or categories) of construction, and the most current wage determination.

Location

Davis-Bacon general wage determinations are generally issued on a county-by-county basis. Contracting agencies generally must incorporate into the contract the applicable wage determination from the state and county in which the work is to be performed. If the project involves work in more than one county and/or state, contracting agencies must incorporate the applicable wage determination for each county in which work is to be performed, unless the contracting agency has requested a multi-county project wage determination.

Types of construction

Contracting agencies are required to select the wage determination that includes the correct type of construction for the project (and to select multiple wage determinations where the project involves substantial construction in two or more categories). This requirement stems from the language in the Davis-Bacon Act that requires prevailing wages to be based on projects of a “character similar” to the project at issue. For the purpose of identifying the correct construction type for a project, the project will generally be considered to consist of all construction necessary to complete the building or work regardless of the number of contracts involved, so long as all contracts awarded are closely related in purpose, time, and place. Identifying the correct construction type requires consideration of the nature of the project itself in a construction sense, rather than who is employed on the project or how much they are paid.

WHD has distinguished among four general types or categories of construction - building, residential, heavy, and highway – as set forth in All Agency Memorandum (AAM) 130 and described below. Contracting agencies should compare their project to these categories and incorporate the wage determination(s) from the category (or categories, as discussed below) most similar to their project.

Building Construction

Building construction is the construction of sheltered enclosures with walk-in access for the purpose of housing persons, machinery, equipment, or supplies. It includes all construction integral to the project, including the installation of utilities and the installation of equipment, both above and below grade level, as well as site preparation and incidental grading, utilities, and paving. Additionally, such structures need not be “habitable” to be building construction. The installation of heavy machinery and/or equipment does not generally change the project’s character as a building. Examples of building construction include, but are not limited to, hospitals, shopping centers, banks, schools, and apartment buildings over four stories in height.

Residential Construction

Residential construction involves the construction, alteration, or repair of single-family houses or apartment buildings of no more than four stories in height. It includes all construction integral to the project, including the installation of utilities and the installation of equipment, both above and below grade level, as well as site preparation and incidental grading, utilities, and paving.

To determine whether an apartment building is over four stories in height, it is sometimes necessary to determine whether the lowermost or uppermost floors should be considered stories. A lowermost floor is considered a story if it:

• is primarily above exterior grade on one or more sides, and contains at least 50% living accommodations or related non-residential uses (such as laundry space, recreation/hobby rooms, commercial use, and/or corridor space);
• is primarily above exterior grade on two or more sides, without regard to a percentage test;
• contains the main entrance to the building; or
• is used for apartment space in a way substantially similar to the upper floors.

Stories below grade used for storage, parking, mechanical systems or equipment, etc., are considered basement stories that are not used in determining a building’s height. A top floor, not finished for living accommodations, between the uppermost floor and the ceiling or the roof above, with floor space as large as the story below, is considered a story for purposes of determining a building’s height. A half-floor is considered a story if it is finished as living accommodations located wholly or partially within the roof frame with floor space at least half as large as the story below. (Space with less than 5 feet clear headroom will not be considered as floor area.) An attic is unfinished space located immediately below the roof. Such space is not used in determining a building’s height even if used for storage purposes.

Highway Construction

Highway projects include the construction, alteration or repair of roads, streets, highways, runways, taxiways, alleys, trails, paths, parking areas, and other similar projects. It includes all construction integral to the project, including site preparation and grading.

Heavy Construction

Heavy projects are those projects that are not properly classified as either “building,” “highway,” or “residential.” Because of this catch-all nature, projects within the heavy classification may sometimes be distinguished on the basis of their particular project characteristics, and separate wage determinations for different kinds of heavy projects issued. For example, separate wage determinations may be issued for dredging projects, water and sewer line projects, dams, major bridges, and flood control projects.

Determining when wage determinations from multiple categories of construction apply to a project

Multiple wage determinations may apply when a project includes construction, alteration, or repair items that in themselves would be different categories of construction. To decide whether wage determinations from multiple categories apply, the contracting agency must first determine whether the project includes construction that in and of itself would be in a different category of construction. For example, preparatory site work is included within the same category as the overall project itself, even if it is performed under a separate contract.

If the project does have work that is in a separate category of construction, the contracting agency must then determine whether the amount of work in the other category of construction is substantial. Generally, construction in another category is considered to be substantial if the total cost of all the work in that category exceeds either 20% of the total project cost or $2.5 million, although these numbers are only benchmarks. If the total work in the other category is substantial, then multiple wage determinations will generally apply. However, WHD may approve the use of a single wage determination in exceptional circumstances, where the cost of construction in the other category is not significantly greater than these benchmarks and the contracting agency can demonstrate that applying multiple wage determinations would not reflect local area practice or would otherwise be inappropriate. If the work is not substantial, then only one wage determination will generally be applicable.

AAMs 131 and 236 provide additional guidance as to when multiple categories of wage determinations may be applicable to a project. Because of the complexities in the application of multiple wage determinations, a contracting agency should consult with the WHD whenever there are questions as to whether multiple wage determinations are applicable to a project.

Most current wage determination

General wage determinations are published annually, in the first quarter of each calendar year. Each annual edition of a general wage determination will reflect the year in which it was issued in its wage determination number, and each year’s wage determination supersedes the wage determination from the previous year. WHD may also modify general wage determinations from time to time within the course of a calendar year. Modifications to a general wage determination are listed numerically on the wage determination modification record for that year’s edition, with the modification number and date that the modification was issued. Each modification to a general wage determination supersedes the previous modification. The following paragraphs discuss when an updated wage determination modification must be incorporated into a prime contract, as required by 29 CFR § 1.6(c)(2). Wage determinations incorporated into a prime contract must be incorporated into all subcontracts.

During the contract award process

If WHD issues a general wage determination revision (either a new annual edition of a general wage determination or a modification) before the award of the prime contract (or the start of construction when there is no award), it must be incorporated into the contract, with three exceptions.

1) 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. This wage determination will apply to the contract even if a more recent wage determination is issued prior to contract award, as long as the contract is awarded within 90 days of the bid opening date.

However, if the contract has not been awarded within that 90-day period, an updated wage determination must be incorporated when the contract is awarded, unless the contracting agency requests and obtains an extension of the 90-day period from the WHD Administrator. Such an extension will only be granted if 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.

2) For projects assisted under the National Housing Act, the most recent wage determination revision must be included up to the date that the mortgage is initially endorsed or the start of construction, whichever comes first.

3) For projects assisted under Section 8 of the U.S. Housing Act of 1937, the most recent wage determination revision must be included up to the date the agreement to enter into housing assistance payments is executed or the start of construction, whichever comes first.

After contract award

If WHD publishes a general wage determination revision after the award of the prime contract (or after the beginning of construction where there is no contract award), it does not apply to that project, except under the following circumstances.

1) 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 option to extend the term of a contract is exercised, the contracting agency must include the most recent revision of any applicable wage determination (s) at the time the contract is changed or the option is exercised.

2) Where a contract requires a general commitment to perform necessary construction as the need arises, over a period of time that is not tied to the completion of any particular project, the contracting agency must incorporate the most recent applicable wage determination modification(s) on each anniversary date of the contract’s award (or each anniversary date of the beginning of construction when there is no award). The 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 that construction work is completed.

Consulting with the Wage and Hour Division

If a contracting agency has any questions regarding the type(s) of construction involved or other application of these guidelines in a specific case, or if interested parties raise a question with the agency that the agency cannot readily answer, it is the contracting agency’s responsibility to refer the issue to WHD. To avoid incorporating an incorrect wage determination and its subsequent correction after contract award (including the potential application of the correct wage determination by operation of law), agencies should consult with WHD as early as possible, including while project design is underway. The contracting agency should submit the following information for WHD’s consideration:

• a complete and accurate description of the project, and where multiple wage determinations (i.e., multiple construction types) may apply, its major segments;
• where multiple wage determinations may apply, a cost break-down for the construction items involved;
• evidence of area practice regarding wages paid on similar projects (if available);
• comments or other information submitted to the agency by interested parties; and
• the agency’s recommendation based on the information provided in this Fact Sheet and the guidance set forth in AAMs 130, 131 and 236.