## Prevailing Wages

Final Rule Reg CiteTopicExistingRegulation/PolicyFinal Rule

1.2

Prevailing Wage Rate

The existing process for determining a prevailing wage requires two steps:

1) identify if there was a single wage rate paid to more than 50% of workers in a classification, and then,

2) if not, rely on a weighted average of all the wage rates paid in the classification.

The final rule reverts to the pre-1982 “3-step process” for determining a prevailing wage:

1) if a majority (over 50%) of wage rates in a classification are the same, that is the prevailing wage,

2) if there is no majority, then the wage rate earned by the greatest number of workers, provided that at least 30% earn that rate, is the prevailing wage and

3) if no wage rate is earned by at least 30% of workers in the classification, use a weighted average.

§ 1.2

Fringe Benefits Rate

The existing regulation at § 1.2(a) does not expressly discuss fringe benefits calculations in wage determinations. Section 5.30 discusses fringe benefit calculations.

To determine the prevailing amount of fringe benefits, WHD examines whether the payment of fringe benefits prevails over the payment of no fringe benefits as follows:

1) If more than 50% of workers in a classification are not paid any fringe benefits, then the rate on the WD is zero.

2) If more than 50% of workers are paid fringe benefits, then WHD looks at the workers who are paid fringe benefits and determines if any one rate among them prevails under the 50% rule in § 1.2(a). If there is such a rate, that is the rate to be paid on the WD.

3) If fringe benefits overall prevail, but no single rate is paid to more than 50% of the workers in a classification who receive fringe benefits, then to calculate the fringe benefit rate for the WD, WHD averages the fringe benefits of those workers who are paid fringe benefits.

The changes to the fringe benefits determination process mirrors the changes in § 1.2 for determining the prevailing wage rate using the 3-step process. No changes were made to the relevant language in § 5.30.

Thus, WHD will continue to use the existing method of first asking whether the payment of fringe benefits prevails over the payment of no fringe benefits. This is a 50% majority question, even under the 30% rule.

1) If more than 50% of workers are not paid any fringe benefits, then the rate on the WD will be zero.

2) If more than 50% of the workers are paid fringe benefits, then WHD will look only at the workers who are paid fringe benefits and determine if any one rate among them prevails under § 1.2. If there is such a rate, that is the rate to be paid on the WD.

3) If fringe benefits overall prevail, but no single rate is paid to more than 30% of the workers who receive fringe benefits, then to calculate the fringe benefit rate for the WD, WHD will average the fringe benefits of those workers who are paid fringe benefits.

§ 1.7(a), § 1.2 § 1.5(b)(i)

Area

“Area” is defined in § 1.2(b) as the city, town, village, county or other civil subdivision of the state in which the work is to be performed.

§ 1.7(a) explains that the county will normally be the area that is used as the basic geographical unit for calculating prevailing wages.

The final rule adds alternatives for specific circumstances to the existing definition of “area”:

1) multi-county project wage determinations for projects in multiple counties where all included counties’ data will be combined and a single wage rate per classification issued for the project, and

2) for the highway category of construction, WHD may use state highway districts or similar state geographic subdivisions in lieu of counties as the initial area unit of a wage determination.

Section 1.5(b)(i) integrates the multi-county option into the section of the regulations addressing procedures for project wage determinations.

§ 1.7(b)

§ 1.7(c)

Scope of ConsiderationUnder the current regulations, data from surrounding counties is considered in determining the wage rate for a county without sufficient data. However, data from metropolitan counties cannot be used to determine a rural counties’ rates, and vice versa.

The final rule eliminates the strict ban on mixing rural and metropolitan data so that:

(1) surrounding counties can be used when data is not sufficient at the county level, regardless of those surrounding counties’ specific designation as rural or metropolitan, and

(2) rural and metropolitan data can be combined at the supergroup level, or at the statewide level as a last resort, before concluding that no sufficient data exists for a classification.

§ 1.3(e)

Functionally Equivalent RatesUntil a 2006 decision of the ARB in Mistick Construction (ARB No. 04-051), the Department generally allowed for variable rates that are functionally equivalent to be counted together for the purpose of determining whether a wage rate prevails. The ARB’s 2006 decision strictly interpreted the regulatory language in § 1.2(a) in a way that limited some of these practices.The final rule creates a new paragraph at § 1.3(e) to explain that the Administrator can count variable rates that are “functionally equivalent” (as explained by one more CBAs or written policies of a contractor or contractors) to be counted together as the same wage for the purpose of determining whether a single wage rate prevails.

§ 1.3(f)

§ 5.5(a)(1)

Supplemental Wage RatesIf a wage determination does not include a rate for certain classification, the contractor must seek a conformance using the procedure outlined in the contract clause at § 5.5(a)(1).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 may list the classification and conformed wage and fringe benefit rates for the classifications (i.e., supplemental wage rates) on the wage determination. Supplemental wage rates may be listed on wage determinations only if they meet the basic criteria for conformed rates.

§ 1.3(g)–(j)

State or local ratesAlthough the DBA regulations state that WHD may consider State or local prevailing wage rates when making wage determinations, and must give due regard to information obtained from State highway departments for highway wage determinations, the regulations do not explicitly authorize WHD to adopt state or local rates.The final rule amends the regulations to explicitly permit WHD to adopt State or local prevailing wage rates for both highway and nonhighway construction under certain circumstances where doing so would be consistent with the purpose of the DBA.  In general, in order to adopt State or local rates, the Administrator must determine that that the State or local government’s method and criteria for setting prevailing wage rates are substantially similar to those the WHD uses in making wage determinations.

## Wage Determinations

Final Rule Reg CiteTopicExisting Regulation/PolicyFinal Rule

§ 1.4

Agency Construction ReportsTo the extent practicable, agencies that use wage determinations under DBRA must submit an annual report to the Department outlining proposed construction programs for the coming year.The final rule amends the regulations to make the submission of agency construction reports mandatory and to better reflect All Agency Memorandum 224, which extends the reporting period from 1 to 3 years. The final rule also clarifies when and how the report is to be submitted to the Department and that a federal agency’s report may be based on information in the federal agency’s possession at the time it furnishes its report.

§ 1.5

General versus Project Wage DeterminationsCurrent regulations could be read as suggesting that project wage determinations, not general wage determinations, more common. Current Regulations also do not explain when project wage determinations, rather than general wage determinations, should be used.The final rule clarifies that general wage determinations are the default and project wage determinations are the exception. The final rule also sets out criteria for when project wage determinations are appropriate.

§ 1.6(b)

Multiple Wage DeterminationsAlthough the existing regulations do not address when wage determinations from multiple types of construction apply to a project, current guidance in AAMs 130, 131 and 236 state that multiple wage determinations are required when work in the other category is substantial, a threshold that will generally be met when the cost of work in the other category of construction exceeds either \$2.5 million or 20% of total project costs. The \$2.5 million threshold is to be adjusted based on inflation.The final rule adds language that the solicitation and contract must incorporate the applicable wage determination for each type of construction involved that is anticipated to be substantial.  The final rule notes that the Department will continue to define the thresholds for “substantial” in subregulatory guidance.

§ 1.6(c)(1)

Periodic AdjustmentsN/AThe final rule adds a provision authorizing periodic adjustments of certain out-of-date non-collectively bargained prevailing wage rates 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.

§ 1.6(c)(2) and (c)(3)

Updates After Contract AwardA wage determination modification issued after contract award or the start of construction will generally not apply to the contract. However, in certain circumstances, such as substantial contract modifications or the exercise of options, an updated wage determination modification must be included in the contract after contract award.

The final rule adds language explaining wage determinations must be updated after contract award when:

• the contract or order is changed to include additional, substantial construction not within the scope of work, or
• the contract or order is changed to require the contractor to perform work for an additional time period not originally obligated, including when an option is exercised on a contract or order.

The final rule also provides that wage determinations in contracts requiring construction over a period of time that are not tied to the completion of any particular project (such as IDIQ contracts, schedule contracts, or long-term operations and maintenance contracts) must be updated annually.

Task orders issued under such IDIQ-type contracts must incorporate the most recent wage determination modification in the master contract at the time the task order is awarded.

§ 1.8

§ 5.13

ReconsiderationThe existing regulation states that the Administrator will issue rulings and interpretations, but it is a long-standing practice for the initial determination to be issued by a representative of the Administrator, which may then be appealed to the Administrator.The final rule explicitly provides for the issuance of determination letters by authorized representatives of the Administrator, along with procedures for reconsideration of those staff-level decisions by the Administrator.

## Definitions

Final Rule Reg CiteTopicExisting Regulation/PolicyFinal Rule

§ 5.2

§ 1.2

Agency and Federal AgencyExisting regulations contain a definition of Federal Agency, but no definition that encompasses state and local agencies.

The final rule creates a definition of agency to include any federal, state, or local agency, or other similar entity, that enters into a contract or provides assistance for Davis-Bacon projects.

The final rule makes federal agency into a subdefinition to clarify when the regulations are referring specifically to a federal agency and defines federal agency to include DC.

§ 5.2

Building or WorkThe term building or work generally includes construction activity as distinguished from manufacturing, furnishing of materials, or servicing and maintenance work, and applies to buildings, structures, and improvements of all types. The regulation provides a non-exclusive list of examples of such activities.The final rule clarifies that the term building or work includes modern construction activities such as solar panels, wind turbines, broadband installation, and installation of electric car chargers to the non-exclusive list of examples of construction activities. The final rule also clarifies that the term includes a portion of a building or work, or the installation (where appropriate) of equipment or components into a building or work.

§ 5.2

Construction, prosecution, completion, or repair—DemolitionWhile not addressed in the existing regulations, the Department’s long-standing policy is that standalone demolition work is generally not covered by the Davis-Bacon labor standards. However, the Department has understood the Davis-Bacon labor standards to cover demolition and removal when such activities themselves constitute construction, alteration, or repair of a public building or work, such as the removal of hazardous materials, or when future construction that will be subject to the Davis-Bacon labor standards is contemplated on the demolition site.The final rule adds a new subdefinition to the term construction, prosecution, completion, or repair in § 5.2, to codify the Department’s long-standing guidance that demolition work is covered under DBRA when the demolition itself constitutes construction, alteration, or repair, or when future construction that will be subject to the DBRA is contemplated on a demolition site.

§ 5.2

Contracting OfficerThe existing regulation limits the definition of contracting officer to individuals authorized to enter into contracts on behalf of a federal agency.The final rule reflects that a contracting officer may also mean someone involved in the contract award process for a state or local agency, or other entity awarded federal funding and issuing contracts, not just someone who awards contracts for a federal agency.

§ 5.2

Contractor and SubcontractorThere is no definition for contractor or subcontractor under the existing regulations. The existing regulations contain a definition of contract, which includes any prime contract and any subcontract of any tier thereunder.

The final rule creates new definitions for contractor and subcontractor.

The definition of contractor includes within it any surety that is completing performance for a defaulted contractor pursuant to a performance bond. It does not include any entity that is a material supplier, except if that entity is performing work under a development statute.

The definition of subcontractor means any contractor that agrees to perform or be responsible for the performance of any part of a contract.

§ 5.2

§ 5.5

§ 5.9

Prime Contractor / Cross-Withholding against different legal entitiesThe existing regulations do not contain a definition for prime contractor.

In § 5.2, the final rule creates a new definition for prime contractor, which means any person or entity that enters into a contract with an agency, and 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, and any contractor (e.g., a general contractor) that has been delegated responsibility for overseeing all or substantially all of the construction anticipated by the prime contract.

For the purposes of the cross-withholding provisions in § 5.5, which limit cross-withholding to other contracts held by the same prime contractor, any such related entities falling within the definition of prime contractor but holding different prime contracts are considered to be the same prime contractor. This procedure is discussed in a new paragraph at § 5.9(c).

§ 5.2

Public Building or WorkThe existing regulations do not expressly state that a public building or public work may include the construction of a portion of a building or work.The final rule clarifies that public building or public work includes construction activity involving just a portion of a building or work, including the installation (where appropriate) of equipment or components into a building or work, even where the entire building or work is not owned, leased by, or to be used by a federal agency, so long as the other requirements of the definition are met.

§ 5.2

Site of the WorkThe current regulatory definition of site of the work includes a site away from the location where the building or work will remain where a significant portion of a building or work is constructed at the site, provided that the site is established specifically for the performance of the contract or project.Under the final rule, the revised definition also includes any site where a significant portion of a building or work is constructed if the site is dedicated exclusively or nearly so to the performance of a single DBRA-covered project or contract for a specific period of time. The final rule also provides clarification on the meaning of “significant portion,” explaining that term encompasses one or more entire portion(s) or module(s) of the building or work, such as a completed room or structure, but does not include materials or prefabricated component parts such as prefabricated housing components.

§ 5.2

Site of the Work—FlaggersThe Department has understood flaggers working adjacent or virtually adjacent to the construction site as being on the site of the work and subject to DBA, but this principle is not specifically addressed in the existing regulations.The final rule clarifies that flaggers—even if they are not working precisely on the site where the building or work will 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.

§ 5.2

Site of the Work—Material SuppliersThe DBA and Related Acts have long been understood to exclude material suppliers, who are not considered contractors or subcontractors.  While current regulations incorporate this exception to some degree, they do not define material suppliers and do not explicitly except them from the definition of contractor.

The final rule defines the term material supplier and excludes material suppliers from the definition of contractor. The definition explains that material suppliers are entities whose only contractual responsibilities are the delivery of materials/supplies and activities incidental to those tasks. It specifies that although a material supplier may both deliver and pick up materials, an entity that is solely engaged in picking up and hauling away materials is not a material supplier.

The definition of material supplier eliminates the subregulatory 20% threshold under which entities could perform a certain amount of non-delivery onsite construction work but still be classified as material suppliers. Rather, under the definition, an entity that engages in other construction work at the site of the work is not a material supplier (i.e., the entity is a contractor or subcontractor under the DBA).

§ 5.2

Site of the Work—Truck DriversWhile current regulations state that truck drivers are not covered for delivery time spent driving to or from the site of the work, the Department’s position regarding DBRA coverage of truck drivers is primarily set forth in FOH 15e.The final rule codifies the Department’s current guidance that truck drivers employed by contractors or subcontractors must be paid applicable prevailing wage rates for all onsite driving time unrelated to offsite delivery (e.g., hauling materials from one location on the site of the work to another), for any time spent transporting “significant portions” of public works from secondary construction sites, for any time spent transporting materials to or from adjacent or virtually adjacent dedicated support sites, as well as for any onsite time related to offsite delivery if such time is not de minimis. The final rule clarifies that where workers spend a significant portion of their day or week onsite, short periods of time that in isolation might be considered de minimis may be added together. The total amount of time a driver spends on the site of the work during a typical day or workweek—not just the amount of time that each delivery takes—is relevant to a determination of whether the onsite time is de minimis.

§ 5.2

Laborer or MechanicAlthough not addressed in the regulations, 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.The final rule clarifies that 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 29 CFR 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, and where the survey crew members are employed by contractors or subcontractors), it is covered by the Davis-Bacon labor standards.

## Compliance Principles

Final Rule Reg CiteTopicExisting Regulation/PolicyFinal Rule

§ 5.5(a)(3)

Recordkeeping— Workers’ contact information and copies of contracts, contract modifications, and subcontractsCurrent recordkeeping requirements include that contractors are required to maintain basic records, which include, but are not limited to, payroll (sometimes referred to as “in-house” payroll), certified payrolls, and additional records relating to fringe benefits and apprenticeship and training.

The final rule clarifies the distinction between “regular payrolls” and “other basic records” that contractors and subcontractors must make and maintain, and the “certified payroll” documents and statements of compliance that contractors must submit weekly.

The final rule adds requirements that contractors and subcontractors maintain DBRA contracts, subcontracts, and related documents, as well as worker telephone numbers and email addresses.

The final rule clarifies that the required records must be retained for at least 3 years after all the work on the prime contract is completed.

The final rule also codifies WHD’s longstanding policy that certified payrolls may be signed and submitted electronically.

§ 5.6(a)(2)

Recordkeeping—Certified payrollsFederal agencies must provide certified payrolls at the request of the Department but the existing regulations do not specifically state that federal agencies must provide certified payrolls regardless of whether the Department has initiated a compliance action. The existing regulation also does not address the procedure when the federal agency has delegated responsibility for maintaining certified payrolls to their funding recipients.The final rule codifies WHD’s longstanding position that certified payrolls may be requested—and federal agencies must produce, or ensure production of, such certified payrolls—regardless of whether DOL has initiated an investigation or other compliance action.

§ 5.5(a)(4)

Apprenticeships

The existing regulation provides that where a contractor performs construction on a project in a different locality from where the apprenticeship program is registered, the apprentice rates and ratios reflected in the registered program apply.

In addition, the existing regulation allows the payment of less than the predetermined rate for trainees working under ETA approved training programs.

The final rule requires contractors working outside of the locality in which their apprenticeship program was registered to follow the ratio and wage rate standards of the locality where the project is taking place.

The final rule also clarifies that where there is no registered program in the locality of the project establishing applicable apprentice wage rates and ratios, the rates and ratios under the contractor’s registered program apply.

The final rule removes the references to trainees and training programs throughout parts 1 and 5, except that the final rule retains the text currently found in § 5.2(n)(3), which states that the regulatory provisions do not apply to trainees employed on projects subject to 23 U.S.C. sec. 113 who are enrolled in programs which have been certified by the Secretary of Transportation in accordance with 23 U.S.C. sec. 113(c).

§ 5.5(a)(6)

§ 5.5(b)(4)

Flow-down requirementsThe existing DBRA and CWHSSA contract clause provisions at § 5.5(a)(6) and (b)(4), respectively, 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.” The Department has interpreted this to mean that prime contractors are jointly and severally liable for any back wages owed by subcontractors, but this is not expressly explained in the regulation. The regulation also does not discuss what responsibility upper-tier subcontractors have other than to flow-down the contract clauses and WDs.The final rule clarifies that upper-tier subcontractors (in addition to prime contractors) may be liable for lower-tier subcontractors’ violations. Both prime contractors and any responsible upper-tier subcontractors are required to pay back wages on behalf of their lower-tier subcontractors. The final rule also clarifies that lower-tier subcontractors’ violations may subject prime and upper-tier contractors to debarment in appropriate circumstances. The final rule explains that prime contractors are responsible for back wages of subcontractors regardless of intent, but upper-tier subcontractors must have some degree of intent (recklessness, knowledge) in order to be held liable for back wages of their lower-tier subcontractors.

§ 5.5(a)

§ 5.5(d)

Incorporation by ReferenceCurrently, § 5.5(a) requires contract clauses to be "insert[ed] in full" into contracts and requires wage determinations to be attached. This language does not bar enforcement when the contract clauses or wage determinations have only been incorporated by reference, but that has been periodically challenged based on the wording in the regulations.The final rule amends § 5.5(a) to acknowledge that, while contracting agencies are still generally required to insert contract clauses in full, it is permissible for contracts under the FAR to be incorporated by reference. A new provision at § 5.5(d) clarifies that contract clauses and applicable wage determinations are effective when they are incorporated by reference, even though contracting agencies are still required to insert them in full.

§ 5.25(c)

Fringe Benefits

Existing guidance generally requires contractors to “annualize” contributions to fringe benefit plans to compute an hourly equivalent of fringe benefits when the contractor’s workers perform work on both DBRA-covered projects and private projects.

One exception to this general rule is that annualization is not required for defined contribution pension plans (DCPPs) that provide for immediate participation and essentially immediate vesting. Annualization is not currently addressed in the regulations.

The final rule adds new paragraph (c) to § 5.25 to codify the principle of annualization that is used to calculate the amount of Davis-Bacon credit that a contractor may receive for contributions to a bona fide fringe benefit plan (or the reasonably anticipated costs of an unfunded benefit plan) when the contractor’s workers work on both DBRA-covered and private (non-DBRA) work.

Contractors, plans, and other interested parties may request an exception from the annualization requirement by submitting a request to WHD, but such exceptions may be granted only if the benefit provided by the plan is not continuous in nature and does not compensate both DBRA-covered and non-DBRA work.

Consistent with existing guidance, the annualization requirement will not apply to contributions to defined contribution pension plans (DCPPs) as long as the DCPP contributions meet the exception requirements and the DCPP provides for immediate participation and essentially immediate vesting.

§ 5.26

§ 5.33

Fringe Benefits—Administrative ExpensesThe current DBRA regulations do not address the extent to which administrative costs associated with the provision of fringe benefits are creditable. Under existing WHD policy and under regulations issued under the Service Contract Act, a contractor or subcontractor may not take credit for its own administrative expenses incurred in connection with fringe benefit plans.The final rule codifies existing policy that a contractor's own administrative costs are not creditable as fringe benefits, even when the contractor pays a third party to perform such tasks. However, costs incurred by third parties directly related to the administration and delivery of bona fide fringe benefits to the contractor’s laborers and mechanics are creditable. The new regulatory provision provides examples of creditable and noncreditable expenses, and provides that questions as to whether an expense is creditable should be submitted to WHD for review.

§ 5.29

Fringe Benefits—Apprenticeship ProgramsWhile the existing regulations reflect the statutory language recognizing the costs of apprenticeship programs as a permissible fringe benefit, the regulations do not address when a contractor may take credit for such contributions or how to properly credit such contributions against a contractor’s prevailing wage obligations.

The final rule states that the following requirements must be met for a contractor to claim a fringe benefit credit for the costs of an apprenticeship program:

• The program must be registered with Employment and Training Agency’s (ETA) Office of Apprenticeship (OA), or with a State Apprenticeship Agency recognized by the OA.
• The contractor’s apprenticeship contributions bear a “reasonable relationship” to the cost of apprenticeship benefits provided to the contractor’s workers.
• Costs incurred for the apprenticeship for one classification of laborer or mechanic may not be used to offset costs incurred for another classification.
• When computing the allowable hourly fringe benefit credit, the contractor must divide the cost of the program by the total number of hours worked by laborers and mechanics in the apprentice’s classification and may only apply the credit to those laborers in mechanics in that classification.

§ 5.5(a)(11)

§ 5.5(b)(5)

§ 5.18

Anti-RetaliationThere are no anti-retaliation provisions in the existing regulations.The final rule adds anti-retaliation provisions in the contract clauses in § 5.5(a) and (b), as well as corresponding remedies (make-whole relief and remedial actions) in new § 5.18.

## Enforcement

Final Rule Reg CiteTopicExisting Regulation/PolicyFinal Rule

§ 5.10(a)

§ 5.5(a)(1)(vi)

§ 5.5(a)(2)(i)

§ 5.5(a)(6)

§ 5.5(b)(3)(i)

§ 5.5(b)­(4)

Restitution

Existing regulations and contract clauses do not discuss whether or how interest should be assessed on back wages.

The ARB and the Department’s ALJs have held that interest calculated from the date of the underpayment or loss is generally appropriate.

The final rule adds language in § 5.10(a) that requires interest to be calculated on back wages or monetary relief at the rate established in the Internal Revenue Code (26 U.S.C. § 6621). The final rule also clarifies that interest will be compounded daily.

§ 5.11(b)

§ 5.11(c)

§ 5.12(b)

Notification about Disputed Findings and DebarmentExisting regulations state that notifications regarding disputed findings and debarment are to be sent by registered or certified mail to the last known address of the contractor/subcontractor.The final rule clarifies that notifications relating to disputed findings and debarment may be sent by means other than registered/certified mail, including email and express delivery.

§ 5.6(b)

§ 5.12

Debarment Standard

Under the DBA, contractors are debarred for disregard of obligations to workers or subcontractors. Responsible officers and entities in which they have an interest are debarred for a mandatory 3-year period.

For Related Acts debarment, violations must be willful or aggravated.

The final rule harmonizes the DBA and the Related Act debarment-related regulations by applying the same debarment standard (the longstanding DBA disregard of obligations standard) and related provisions to the Related Acts; thus, eliminating the heightened Related Act regulatory “aggravated or willful” debarment standard.

§ 5.12

Debarment—mandatory 3-year periodCurrently, debarment under the DBA is for three years, but Related Act debarment regulations say that debarment may be “for a period not to exceed 3 years.”The final rule applies the DBA mandatory 3-year debarment period to Related Acts.

§ 5.12(c)

Debarment—Early Removal from Debarment ListUnder current regulations, parties debarred under a Related Act may request removal from the debarment list after 6 months if they meet certain criteria regarding existing responsibility to comply based on a WHD investigation.The final rule eliminates the regulatory provision about possible early removal from debarment list for Related Acts debarments.

§ 5.12

Debarment—InterestCurrently, entities in which DBA debarred entities or individuals have an “interest” may also be debarred, while under the Related Acts regulations, entities in which debarred parties have a “substantial interest” may be debarred.The final rule applies the DBA provision (entities in which debarred parties have an “interest” may also be debarred) to the Related Acts.

§ 5.12

Debarment of Responsible OfficersCurrently, regulations about debarment for Related Acts make no express reference to debarment of responsible officers of contractors and subcontractors.The final rule codifies current law by expressly stating that responsible officers may be debarred under both the DBA and Related Acts.

§ 5.5(a)(2)

§ 5.5(b)(3)

§ 5.9(b)

§ 5.9(c)

WithholdingExisting regulations authorize cross-withholding from any federal or federally-assisted contracts with the same prime contractor through a contract clause, but do not specifically state that any other contract with the same prime contractor includes contracts entered into or assisted by other federal agencies.

The final rule adds language clarifying that cross-withholding can be from any contract held by the same prime contractor, even if awarded or assisted by a different agency from the contract where the violations occurred. The final rule also adds a provision explaining that withholding for workers’ back wages has priority over most other competing claims.

(Note: Under the new definition of prime contractor in § 5.2, the cross-withholding provisions will also allow cross-withholding on contracts held by certain affiliates of the nominal prime contract (e.g., controlling shareholders or members of an entity, or the joint venturers or partners in any joint venture or partnership, holding a prime contract), or by a contractor (e.g., general contractor) that has been delegated the responsibility for overseeing all or substantially all the construction anticipated by the prime contract, as explained also in § 5.9(c)).

§ 5.6(a)(1)

§ 1.6(f)

Omissions of Wage Determinations and Contracts Clauses

Currently § 1.6(f) discusses post-award modification of contracts, but only when wage determinations (not contract clauses) are omitted. It states that WHD can instruct agencies to take necessary steps to incorporate missing wage determinations and may instruct that they be in effect retroactively, provided that the contractor is compensated for any increase in wages. The Department has interpreted this provision to authorize the incorporation of missing contract clauses as well as missing wage determinations.

Existing regulations do not state that agencies can take action on their own initiative to incorporate the correct WD, and some agencies have questioned whether they have the authority to do so.

The regulation also does not expressly state that the provision applies to Related Act contracts as well as direct DBA contracts.

The existing version of § 1.6(f) does not contain any deadlines for contracting agencies to take the required actions.

The final rule revises the treatment of omitted wage determinations in § 1.6(f) and adds new language at § 5.6(a)(1) to expressly require the incorporation of any omitted contract clauses.

§ 1.6(f) and § 5.6(a)(1) contain parallel provisions that clarify that contracting agencies also have the authority to retroactively modify contracts to include missing correct WDs (but if they do, they must notify the Administrator) and contract clauses, and that the provisions extend to Related Act contracts as well as direct DBA contracts.

The final rule includes a deadline of 30 days from the Administrator’s request for contracting agencies to take the required actions. The final rule continues to require compensation to the contractor when the clauses and/or WDs are retroactively incorporated.

Finally, the final rule contains new language instructing agencies that before they terminate a contract with missing contract clauses or wage determinations, they must withhold, cross-withhold, or otherwise identify and obligate sufficient funds through a termination settlement agreement to pay any necessary back wages.

§ 5.5(a)(1)

§ 5.5(e)

§ 3.11(e)

Omissions of Wage Determinations and Contracts ClausesCurrently, § 1.6(f) contains language requiring agencies to modify contracts retroactively if the applicable wage determination has been omitted, but the current procedure has led to lengthy delays in the payment of workers, and there is no express mechanism for recovering backwages if an agency terminates a contract instead of modifying it.

The final rule includes a provision at § 5.5(e) that makes contract clauses and wage determinations effective by operation of law even where they have been mistakenly omitted from a contract.

The final rule also revises the contract clause at § 5.5(a)(1) to state that wage determinations are effective by operation of law pursuant to the new operation-of-law provision at § 5.5(e) even if they have not been attached to the contract.

This document summarizes certain significant provisions of the final rule updating the Davis-Bacon and Related Acts regulations. It is intended as general information only and is not an exhaustive list of all regulatory revisions in the final rule. The Federal Register and the Code of Federal Regulations remain the official sources for regulatory information published by the Department.