Updating the Davis-Bacon and Related Acts Regulations

CourtLabor Department
Citation87 FR 15698
Record Number2022-05346
SectionProposed rules
Published date18 March 2022
Federal Register, Volume 87 Issue 53 (Friday, March 18, 2022)
[Federal Register Volume 87, Number 53 (Friday, March 18, 2022)]
                [Proposed Rules]
                [Pages 15698-15805]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2022-05346]
                [[Page 15697]]
                Vol. 87
                Friday,
                No. 53
                March 18, 2022
                Part III Department of Labor-----------------------------------------------------------------------Office of the Secretary-----------------------------------------------------------------------29 CFR Parts 1, 3, and 5Updating the Davis-Bacon and Related Acts Regulations; Proposed Rule
                Federal Register / Vol. 87 , No. 53 / Friday, March 18, 2022 /
                Proposed Rules
                [[Page 15698]]
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                DEPARTMENT OF LABOR
                Office of the Secretary
                29 CFR Parts 1, 3, and 5
                RIN 1235-AA40
                Updating the Davis-Bacon and Related Acts Regulations
                AGENCY: Wage and Hour Division, Department of Labor.
                ACTION: Notice of proposed rulemaking.
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                SUMMARY: The Department of Labor (Department) proposes to amend
                regulations issued under the Davis-Bacon and Related Acts that set
                forth rules for the administration and enforcement of the Davis-Bacon
                labor standards that apply to Federal and federally assisted
                construction projects. As the first comprehensive regulatory review in
                nearly 40 years, the Department believes that revisions to these
                regulations are needed to provide greater clarity and enhance their
                usefulness in the modern economy.
                DATES: Interested persons are invited to submit written comments on
                this notice of proposed rulemaking (NPRM) on or before May 17, 2022.
                ADDRESSES: You may submit comments, identified by Regulatory
                Information Number (RIN) 1235-AA40, by either of the following methods:
                 Electronic Comments: Submit comments through the Federal
                eRulemaking Portal at https://www.regulations.gov. Follow the
                instructions for submitting comments.
                 Mail: Address written submissions to: Division of
                Regulations, Legislation, and Interpretation, Wage and Hour Division,
                U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW,
                Washington, DC 20210.
                 Instructions: Response to this NPRM is voluntary. The Department
                requests that no business proprietary information, copyrighted
                information, or personally identifiable information be submitted in
                response to this NPRM. Commenters submitting file attachments on
                https://www.regulations.gov are advised that uploading text-recognized
                documents--i.e., documents in a native file format or documents which
                have undergone optical character recognition (OCR)--enable staff at the
                Department to more easily search and retrieve specific content included
                in your comment for consideration.
                 Anyone who submits a comment (including duplicate comments) should
                understand and expect that the comment will become a matter of public
                record and will be posted without change to https://www.regulations.gov, including any personal information provided. The
                Wage and Hour Division (WHD) posts comments gathered and submitted by a
                third-party organization as a group under a single document ID number
                on https://www.regulations.gov. All comments must be received by 11:59
                p.m. on May 17, 2022, for consideration in this rulemaking; comments
                received after the comment period closes will not be considered.
                 The Department strongly recommends that commenters submit their
                comments electronically via https://www.regulations.gov to ensure
                timely receipt prior to the close of the comment period, as the
                Department continues to experience delays in the receipt of mail.
                Please submit only one copy of your comments by only one method.
                 Docket: For access to the docket to read background documents or
                comments, go to the Federal eRulemaking Portal at https://www.regulations.gov.
                FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Director, Division of
                Regulations, Legislation, and Interpretation, Wage and Hour Division,
                U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW,
                Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
                free number). Copies of this proposal may be obtained in alternative
                formats (Rich Text Format (RTF) or text format (txt), a thumb drive, an
                MP3 file, large print, braille, audiotape, compact disc, or other
                accessible format), upon request, by calling (202) 693-0675 (this is
                not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-
                5627 to obtain information or request materials in alternative formats.
                 Questions of interpretation or enforcement of the agency's existing
                regulations may be directed to the nearest WHD district office. Locate
                the nearest office by calling the WHD's toll-free help line at (866)
                4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time
                zone, or log onto WHD's website at https://www.dol.gov/agencies/whd/contact/local-offices for a nationwide listing of WHD district and area
                offices.
                SUPPLEMENTARY INFORMATION:
                I. Executive Summary
                 In order to provide greater clarity and enhance their usefulness in
                the modern economy, the Department proposes to update and modernize the
                regulations at 29 CFR parts 1, 3, and 5, which implement the Davis-
                Bacon Act and the Davis-Bacon Related Acts (collectively, the DBRA).
                The Davis-Bacon Act (DBA or Act), enacted in 1931, requires the payment
                of locally prevailing wages and fringe benefits on Federal contracts
                for construction. See 40 U.S.C. 3142. The DBA applies to workers on
                contracts entered into by Federal agencies and the District of Columbia
                that are in excess of $2,000 and for the construction, alteration, or
                repair of public buildings or public works. Congress subsequently
                incorporated DBA prevailing wage requirements into numerous statutes
                (referred to as ``Related Acts'') under which Federal agencies assist
                construction projects through grants, loans, loan guarantees,
                insurance, and other methods.
                 The Supreme Court has described the DBA as ``a minimum wage law
                designed for the benefit of construction workers.'' United States v.
                Binghamton Constr. Co., 347 U.S. 171, 178 (1954). The Act's purpose is
                ``to protect local wage standards by preventing contractors from basing
                their bids on wages lower than those prevailing in the area.''
                Universities Research Ass'n, Inc. v. Coutu, 450 U.S. 754, 773 (1981)
                (quoting H. Comm. on Educ. and Lab., Legislative History of the Davis-
                Bacon Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)). By requiring
                the payment of minimum prevailing wages, Congress sought to ``ensure
                that Government construction and federally assisted construction would
                not be conducted at the expense of depressing local wage standards.''
                Determination of Wage Rates Under the Davis-Bacon & Serv. Cont. Acts, 5
                Op. O.L.C. 174, 176 (1981) (citation and internal quotation marks
                omitted).\1\
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                 \1\ Available at: https://www.justice.gov/sites/default/files/olc/opinions/1981/06/31/op-olc-v005-p0174_0.pdf.
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                 Congress has delegated authority to the Department to issue
                prevailing wage determinations and prescribe rules and regulations for
                contractors and subcontractors on DBA-covered construction projects.\2\
                See 40 U.S.C. 3142, 3145. It has also directed the Department, through
                Reorganization Plan No. 14 of 1950, to ``prescribe appropriate
                standards, regulations and procedures'' to be observed by Federal
                agencies responsible for the administration of the Davis-Bacon and
                Related Acts. 5 U.S.C. app. 1, effective May 24, 1950, 15 FR 3176, 64
                Stat. 1267. These regulations, which have been updated and revised
                periodically over time, are primarily located in parts 1, 3,
                [[Page 15699]]
                and 5 of title 29 of the Code of Federal Regulations.
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                 \2\ The DBA and the Related Acts apply to both prime contracts
                and subcontracts of any tier thereunder. In this NPRM, as in the
                regulations themselves, where the terms ``contracts'' or
                ``contractors'' are used, they are intended to include reference to
                subcontracts and subcontractors of any tier.
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                 The Department last engaged in a comprehensive revision of the
                regulations governing the DBA and the Related Acts in a 1981-1982
                rulemaking.\3\ Since that time, Congress has expanded the reach of the
                Davis-Bacon labor standards significantly, adding numerous new Related
                Act statutes to which these regulations apply. The Davis-Bacon Act and
                now 71 active Related Acts \4\ collectively apply to an estimated $217
                billion in Federal and federally assisted construction spending per
                year and provide minimum wage rates for an estimated 1.2 million U.S.
                construction workers.\5\ The Department expects these numbers to
                continue to grow as Federal and State governments seek to address the
                significant infrastructure needs of the country, including, in
                particular, the energy and transportation infrastructure necessary to
                mitigate climate change.\6\
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                 \3\ See 46 FR 41444 (NPRM); 47 FR 23644 (final rule); 48 FR
                19532 (revised final rule).
                 \4\ The Department maintains a list of the Related Acts at [cite
                website address].
                 \5\ These estimates are discussed below in section V (Executive
                Order 12866, Regulatory Planning and Review et al.).
                 \6\ See Executive Order 14008, Tackling the Climate Crisis at
                Home and Abroad, Sec. 206 (Jan. 27, 2021), available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/.
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                 In addition to the expansion of the prevailing wage rate
                requirements of the DBA and the Related Acts, the Federal contracting
                system itself has undergone significant changes since the 1981-1982
                rulemaking. Federal agencies have dramatically increased spending
                through interagency Federal schedules such as the Multiple Award
                Schedule (MAS). Contractors have increased their use of single-purpose
                entities, such as joint ventures and teaming agreements, in
                construction contracts with Federal, State and local governments.
                Federal procurement regulations have been overhauled and consolidated
                in the Federal Acquisition Regulation (FAR), which contains a
                subsection on the Davis-Bacon Act and related contract clauses. See 48
                CFR 22.400 et seq. Court and agency administrative decisions have
                developed and clarified myriad aspects of the laws governing Federal
                procurement.
                 During the past 40 years, the Department's DBRA program also has
                continued to evolve. Where the program initially was focused on
                individual project-specific wage determinations, contracting agencies
                now incorporate the Department's general wage determinations for the
                construction type in the locality in which the construction project is
                to occur. The program also now uniformly uses wage surveys to develop
                general wage determinations, eliminating an earlier practice of
                developing wage determinations based solely on other evidence about the
                general level of unionization in the targeted area. In a 2006 decision,
                the Department's Administrative Review Board (ARB) identified several
                survey-related wage determination procedures then in effect as
                inconsistent with the regulatory language that had resulted from the
                1981-1982 rulemaking. See Mistick Construction, ARB No. 04-051, 2006 WL
                861357, at *5-7 (Mar. 31, 2006).\7\ As a consequence of these
                developments, the use of averages of wage rates from survey responses
                has increasingly become the methodology used to issue new wage
                determinations--notwithstanding the Department's long-held
                interpretation that the DBA allows the use of such averages only as a
                methodology of last resort.
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                 \7\ Decisions of the ARB from 1996 to the present are available
                on the Department's website at https://www.dol.gov/agencies/arb/decisions.
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                 The Department has also received significant feedback from
                stakeholders and others since the last comprehensive rulemaking. In a
                2011 report, the Government Accountability Office (GAO) reviewed the
                Department's wage survey and wage determination process and found that
                the Department was often behind schedule in completing wage surveys,
                leading to a backlog of wage determinations and the use of out-of-date
                wage determinations in some areas.\8\ The report also identified
                dissatisfaction among regulated parties regarding the rigidity of the
                Department's county-based system for identifying prevailing rates,\9\
                and missing wage rates requiring an overuse of ``conformances'' for
                wage rates for specific job classifications.\10\ A 2019 report from the
                Department's Office of the Inspector General (OIG) made similar
                findings regarding out-of-date wage determinations.\11\
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                 \8\ See Gov't Accountability Office, GAO-11-152, Davis-Bacon
                Act: Methodological Changes Needed to Improve Wage Survey (2011)
                (2011 GAO Report), at 12-19, available at: https://www.gao.gov/products/gao-11-152.
                 \9\ Id. at 23-24.
                 \10\ Id. at 32-33.
                 \11\ See Department of Labor, Office of the Inspector General,
                Better Strategies Are Needed to Improve the Timeliness and Accuracy
                of Davis-Bacon Act Prevailing Wage Rates (2019) (OIG Report), at 10,
                available at: https://www.oversight.gov/sites/default/files/oig-reports/04-19-001-Davis%20Bacon.pdf.
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                 Ensuring that construction workers are paid the wages required
                under the DBRA also requires effective enforcement in addition to an
                efficient wage determination process. In the last decade, enforcement
                efforts at the Department have resulted in the recovery of more than
                $213 million in back wages for over 84,000 workers.\12\ But the
                Department has also encountered significant enforcement challenges.
                Among the most critical of these is the omission of DBRA contract
                clauses from contracts that are clearly covered by the DBRA. In one
                recent case, a contracting agency agreed with the Department that a
                blanket purchase agreement (BPA) it had entered into with a contractor
                had mistakenly omitted the Davis-Bacon clauses and wage determination--
                but the contracting agency's struggle to rectify the situation led to a
                delay of 8 years before the workers were paid the wages they were owed.
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                 \12\ Gov't Accountability Office, GAO-21-13, Fair Labor
                Standards Act: Tracking Additional Complaint Data Could Improve
                DOL's Enforcement (2020) (2020 GAO Report), at 39, available at:
                https://www.gao.gov/assets/gao-21-13.pdf.
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                 The Department now seeks to address a number of these outstanding
                challenges in the program while also providing greater clarity in the
                DBRA regulations and enhancing their usefulness in the modern economy.
                In this rulemaking, the Department proposes to update and modernize the
                regulations implementing the DBRA at 29 CFR parts 1, 3, and 5. In some
                of these revisions, the Department has determined that changes it made
                in the 1981-1982 rulemaking were mistaken or ultimately resulted in
                outcomes that are increasingly in tension with the DBA statute itself.
                In others, the Department seeks to expand further on procedures that
                were introduced in that last major revision, or to propose new
                procedures that will increase efficiency of administration of the DBRA
                and enhance protections for covered construction workers. On all the
                proposed changes, the Department seeks comment and participation from
                the many stakeholders in the program.
                 The proposed rule includes several elements targeted at increasing
                the amount of information available for wage determinations and
                speeding up the determination process. In a proposal to amend Sec. 1.3
                of the regulations, the Department outlines a new methodology to
                expressly give the WHD Administrator authority and discretion to adopt
                State or local wage determinations as the Davis-Bacon prevailing wage
                where certain specified criteria are satisfied. Such a change would
                help improve the currentness and accuracy of wage determinations, as
                many states and localities conduct
                [[Page 15700]]
                surveys more frequently than the Department and have relationships with
                stakeholders that may facilitate the process and foster more widespread
                participation. This proposal would also increase efficiency and reduce
                confusion for the regulated community where projects are covered by
                both DBRA and local or State prevailing wage laws and contractors are
                already familiar with complying with the local or State prevailing wage
                requirement.
                 The Department also proposes changes, in Sec. 1.2, to the
                definition of ``prevailing wage,'' and, in Sec. 1.7, to the scope of
                data considered to identify the prevailing wage in a given area. To
                address the overuse of weighted average rates, the Department proposes
                to return to the definition of ``prevailing wage'' in Sec. 1.2 that it
                used from 1935 to 1983.\13\ Currently, a single wage rate may be
                identified as prevailing in the area only if it is paid to a majority
                of workers in a classification on the wage survey; otherwise a weighted
                average is used. The Department proposes to return instead to the
                ``three-step'' method that was in effect before 1983. Under that method
                (also known as the 30-percent rule), in the absence of a wage rate paid
                to a majority of workers in a particular classification, a wage rate
                will be considered prevailing if it is paid to at least 30 percent of
                such workers. The Department also proposes to return to a prior policy
                on another change made during the 1981-1982 rulemaking related to the
                delineation of wage survey data submitted for ``metropolitan'' or
                ``rural'' counties in Sec. 1.7(b). Through this change, the Department
                seeks to more accurately reflect modern labor force realities, to allow
                more wage rates to be determined at smaller levels of geographical
                aggregation, and to increase the sufficiency of data at the statewide
                level.
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                 \13\ The 1981-1982 rulemaking went into effect on April 29,
                1983. 48 FR 19532.
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                 Proposed revisions to Sec. Sec. 1.3 and 5.5 are aimed at reducing
                the need for the use of ``conformances'' where the Department has
                received insufficient data to publish a prevailing wage for a
                classification of worker--a process that currently is burdensome on
                contracting agencies, contractors, and the Department. The proposed
                revisions would create a new procedure through which the Department may
                identify (and list on the wage determination) wage and fringe benefit
                rates for certain classifications for which WHD received insufficient
                data through its wage survey program. The procedure should reduce the
                need for conformances for classifications for which conformances are
                often required.
                 The Department also proposes to revise Sec. 1.6(c)(1) to provide a
                mechanism to regularly update certain non-collectively bargained
                prevailing wage rates based on the Bureau of Labor Statistics
                Employment Cost Index.\14\ The mechanism is intended to keep such rates
                more current between surveys so that they do not become out-of-date and
                fall behind prevailing rates in the area.
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                 \14\ Available at: https://www.bls.gov/news.release/eci.toc.htm.
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                 The Department also seeks to strengthen enforcement in several
                critical ways. The proposed rule seeks to address the challenges caused
                by the omission of contract clauses. In a manner similar to its rule
                under Executive Order 11246 (Equal Employment Opportunity), the
                Department proposes to designate the DBRA contract clauses in Sec.
                5.5(a) and (b), and applicable wage determinations, as effective by
                ``operation of law'' notwithstanding their mistaken omission from a
                contract. This proposal is an extension of the retroactive modification
                procedures that were put into effect in Sec. 1.6 by the 1981-1982
                rulemaking, and it promises to expedite enforcement efforts to ensure
                the timely payment of prevailing wages to all workers who are owed such
                wages under the relevant statutes.
                 In addition, the Department proposes to include new anti-
                retaliation provisions in the Davis-Bacon contract clauses in new
                paragraphs at Sec. Sec. 5.5(a)(11) (DBRA) and 5.5(b)(5) (Contract Work
                Hours and Safety Standards Act), and in a new section of part 5 at
                Sec. 5.18. The new language is intended to ensure that workers who
                raise concerns about payment practices or assist agencies or the
                Department in investigations are protected from termination or other
                adverse employment actions.
                 Finally, to reinforce the remedies available when violations are
                discovered, the Department proposes to clarify and strengthen the
                cross-withholding procedure for recovering back wages. The proposal
                does so by including new language in the withholding contract clauses
                at Sec. Sec. 5.5(a)(2) (DBRA) and 5.5(b)(3) (Contract Work Hours and
                Safety Standards Act) to clarify that cross-withholding may be
                accomplished on contracts held by agencies other than the agency that
                awarded the contract. The proposal also seeks to create a mechanism
                through which contractors will be required to consent to cross-
                withholding for back wages owed on contracts held by different but
                related legal entities in appropriate circumstances--if, for example,
                those entities are controlled by the same controlling shareholder or
                are joint venturers or partners on a Federal contract. The proposed
                revisions include, as well, a harmonization of the DBA and Related Act
                debarment standards.
                II. Background
                A. Statutory and Regulatory History
                 The Davis-Bacon Act, as enacted in 1931 and subsequently amended,
                requires the payment of minimum prevailing wages determined by the
                Department of Labor to laborers and mechanics working on Federal
                contracts in excess of $2,000 for the construction, alteration, or
                repair, including painting and decorating, of public buildings and
                public works. See 40 U.S.C. 3141 et seq. Congress has also included the
                Davis-Bacon requirements in numerous other laws, known as the Davis-
                Bacon Related Acts (the Related Acts and, collectively with the Davis-
                Bacon Act, the DBRA), which provide Federal assistance for construction
                projects through grants, loans, loan guarantees, insurance, and other
                methods. Congress intended the Davis-Bacon Act to ``protect local wage
                standards by preventing contractors from basing their bids on wages
                lower than those prevailing in the area.'' Coutu, 450 U.S. at 773
                (quoting H. Comm. on Educ. and Lab., Legis. History of the Davis-Bacon
                Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)).
                 The Copeland Act, enacted in 1934, added the requirement that
                contractors working on Davis-Bacon projects must submit weekly
                certified payrolls for work performed on the contract. See 40 U.S.C.
                3145. The Copeland Act also prohibited contractors from inducing any
                worker to give up any portion of the wages due to them on such
                projects. See 18 U.S.C. 874. In 1962, Congress passed the Contract Work
                Hours and Safety Standards Act, which, as amended, requires an overtime
                payment of additional half-time for hours worked over forty in the
                workweek by laborers and mechanics, including watchmen and guards, on
                Federal contracts or federally assisted contracts containing Federal
                prevailing wage standards. See U.S.C. 3701 et seq.
                 As initially enacted, the DBA did not take into consideration the
                provision of fringe benefits to workers. In 1964, Congress expanded the
                Act to require the Department to include an analysis of fringe benefits
                as part of the wage determination process. The amendment
                [[Page 15701]]
                requires contractors and subcontractors to provide fringe benefits
                (such as vacation pay, sick leave, health insurance, and retirement
                benefits), or the cash equivalent thereof, to their workers at the
                level prevailing for the labor classification on projects of a similar
                character in the locality. See Act of July 2, 1964, Public Law 88-349,
                78 Stat 238.
                 Congress has delegated broad rulemaking authority under the DBRA to
                the Department of Labor. The DBA, as amended, contemplates regulatory
                and administrative action by the Department to determine the prevailing
                wages that must be paid and to ``prescribe reasonable regulations'' for
                contractors and subcontractors. 40 U.S.C. 3142(b); 40 U.S.C. 3145.
                Congress also, through Reorganization Plan No. 14 of 1950, directed the
                Department to ``prescribe appropriate standards, regulations and
                procedures'' to be observed by Federal agencies responsible for the
                administration of the Davis-Bacon and Related Acts. 5 U.S.C. app. 1.
                 The Department promulgated its initial regulations implementing the
                Act in 1935 and has since periodically revised them. See U.S.
                Department of Labor, Regulations No. 503 (Sept. 30, 1935). In 1938,
                these initial regulations, which set forth the procedures for the
                Department to follow in determining prevailing wages, were included in
                part 1 of Title 29 of the new Code of Federal Regulations. See 29 CFR
                1.1 et seq. (1938). The Department later added regulations to implement
                the payroll submission and anti-kickback provisions of the Copeland
                Act--first in part 2 and then relocated to part 3 of Title 29. See 6 FR
                1210 (Mar. 1, 1941); 7 FR 687 (Feb. 4, 1942); 29 CFR part 2 (1942); 29
                CFR part 3 (1943). After Reorganization Plan No. 14 of 1950, the
                Department issued regulations setting forth procedures for the
                administration and enforcement of the Davis-Bacon and Related Acts in a
                new part 5. 16 FR 4430 (May 12, 1951); 29 CFR part 5. The Department
                made significant revisions to the regulations in 1964, and again in the
                1981-1982 rulemaking.\15\
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                 \15\ See 29 FR 13462 (Sept. 30, 1964); 46 FR 41444-70 (NPRM
                parts 1 and 5) (Aug. 14, 1981); 47 FR 23644-79 (final rule parts 1,
                3, and 5) (May 28, 1982). The Department also proposed a significant
                revision of parts 1 and 5 of the regulations in 1979 and issued a
                final rule in 1981. See 44 FR 77026 (NPRM Part 1); 44 FR 77080 (NPRM
                part 5); 46 FR 4306 (final rule part 1); 46 FR 4380 (final rule part
                5). That 1981 final rule, however, was delayed and subsequently
                replaced by the 1981-1982 rulemaking. The 1982 final rule was
                delayed by litigation and re-published with amendments in 1983. 48
                FR 19532 (Apr. 29, 1983).
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                 While the Department has made periodic revisions to the regulations
                in recent years, such as to better protect the personal privacy of
                workers, 73 FR 77511 (Dec. 19, 2008); to remove references to the
                ``Employment Standards Administration,'' 82 FR 2225 (Jan. 9, 2017); and
                to adjust Federal civil money penalties, 81 FR 43450 (July 1, 2016), 83
                FR 12 (Jan. 2, 2018), 84 FR 218 (Jan. 23, 2019), the Department has not
                engaged in a comprehensive review and revision since the 1981-1982
                rulemaking.
                B. Overview of the Davis-Bacon Program
                 The Wage and Hour Division (WHD), an agency within the U.S.
                Department of Labor, administers the Davis-Bacon program for the
                Department. WHD carries out its responsibilities in partnership with
                the Federal agencies that enter into direct DBA-covered contracts for
                construction and/or administer Federal assistance that is covered by
                the Related Acts to State and local governments and other funding
                recipients. The State and local governmental agencies and authorities
                also have important responsibilities in administering Related Act
                program rules, as they manage programs through which covered funding
                flows or the agencies themselves directly enter into covered contracts
                for construction.
                 The DBRA program includes three basic components in which these
                government entities have responsibilities: (1) Wage surveys and wage
                determinations; (2) contract formation and administration; and (3)
                enforcement and remedies.
                1. Wage Surveys and Determinations
                 The DBA delegates to the Secretary of Labor the responsibility to
                determine the wage rates that are ``prevailing'' for each
                classification of covered laborers and mechanics on similar projects
                ``in the civil subdivision of the State in which the work is to be
                performed.'' 40 U.S.C. 3142(b). WHD carries out this responsibility for
                the Department through its wage survey program, and derives the
                prevailing wage rates from survey information that responding
                contractors and other interested parties voluntarily provide. The
                program is carried out in accordance with the program regulations in
                part 1 of Title 29, see 29 CFR 1.1 through 1.7, and its procedures are
                described in guidance documents such as the ``Davis-Bacon Construction
                Wage Determinations Manual of Operations'' (1986) (Manual of
                Operations) and ``Prevailing Wage Resource Book'' (2015) (PWRB).\16\
                Although part 1 of the regulations provides the authority for WHD to
                create project-specific wage determinations, such project wage
                determinations, once more common, now are rarely employed. Instead,
                nearly all wage determinations are general wage determinations issued
                for general types of construction (building, residential, highway, and
                heavy) and applicable to a specific geographic area. General wage
                determinations can be incorporated into the vast majority of contracts
                and create uniform application of the DBRA for that area.
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                 \16\ The Manual of Operations is a 1986 guidance document that
                is still used internally for reference within WHD. The Prevailing
                Wage Resource Book is a 2015 document that is intended to provide
                practical information to contracting agencies and other interested
                parties, and is available at https://www.dol.gov/agencies/whd/government-contracts/prevailing-wage-resource-book.
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                2. Contract Formation and Administration
                 The Federal agencies that enter into DBA-covered contracts or
                administer Related Act programs have the initial responsibility to
                determine whether a contract is covered by the DBA or one of the
                Related Acts and identify the contract clauses and the applicable wage
                determinations that must be included in the contract. See 29 CFR
                1.6(b). In addition to the Department's regulations, this process is
                also guided by parallel regulations in part 22 of the Federal
                Acquisition Regulation (FAR) for those contracts that are subject to
                the FAR. See 48 CFR part 22. Federal agencies also maintain their own
                regulations and guidance governing agency-specific aspects of the
                process. See, e.g., 48 CFR subpart 222.4 (Defense); 48 CFR subpart
                622.4 (State); U.S. Department of Housing and Urban Development, HUD
                Handbook 1344.1, Federal Labor Standards Requirements in Housing and
                Urban Development Programs (2013).\17\
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                 \17\ Available at: https://www.hud.gov/sites/dfiles/OCHCO/documents/Work-Schedule-Request.pdf.
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                 Where contracting agencies or interested parties have questions
                about such matters as coverage under the DBRA or the applicability of
                the appropriate wage determination to a specific contract, they are
                directed to submit those questions to the Administrator of WHD (the
                Administrator) for resolution. See 29 CFR 5.13. The Administrator
                provides periodic guidance on this process, as well as other aspects of
                the DBRA program, to contracting agencies and other interested parties,
                particularly through All Agency Memoranda (AAMs) and ruling letters. In
                addition,
                [[Page 15702]]
                the Department maintains a guidance document, the Field Operations
                Handbook (FOH), to provide external and internal guidance for the
                regulated community and for WHD investigators and staff on contract
                administration and enforcement policies.\18\
                ---------------------------------------------------------------------------
                 \18\ The Field Operations Handbook reflects policies established
                through changes in legislation, regulations, significant court
                decisions, and the decisions and opinions of the WHD Administrator.
                It is not used as a device for establishing interpretive policy.
                Chapter 15 of the FOH covers the DBRA, including CWHSSA, and is
                available at https://www.dol.gov/agencies/whd/field-operations-handbook/Chapter-15.
                ---------------------------------------------------------------------------
                 During the administration of a DBRA-covered contract, contractors
                and subcontractors are required to provide certified payrolls to the
                contracting agency to demonstrate their compliance with the
                incorporated wage determinations on a weekly basis. See generally 29
                CFR part 3. Contracting agencies have the duty to ensure compliance by
                engaging in periodic audits or investigations of contracts, including
                examinations of payroll data and confidential interviews with workers.
                See 29 CFR 5.6. Prime contractors have the responsibility for the
                compliance of all the subcontractors on a covered prime contract. 29
                CFR 5.5(a)(6). WHD conducts investigations of covered contracts, which
                include determining if the DBRA contract clauses or appropriate wage
                determinations were mistakenly omitted from the contract. See 29 CFR
                1.6(f). If WHD determines that there was such an omission, it will
                request that the contracting agency either terminate and resolicit the
                contract or modify it to incorporate the required clauses or wage
                determinations retroactively. Id.
                3. Enforcement and Remedies
                 In addition to WHD, contracting agencies have enforcement authority
                under the DBRA. When a contracting agency's investigation reveals
                underpayments of wages of the DBA or one of the Related Acts, the
                Federal agency generally is required to provide a report of its
                investigation to WHD, and to seek to recover the underpayments from the
                contractor responsible. See 29 CFR 5.6(a)(1), 5.7. If violations
                identified by the contracting agency or by WHD through its own
                investigation are not promptly remedied, contracting agencies are
                required to suspend payment on the contract until sufficient funds are
                withheld to compensate the workers for the underpayments. 29 CFR 5.9.
                The DBRA contract clauses also provide for ``cross-withholding'' if
                sufficient funds are no longer available on the contract under which
                the violations took place. Under this procedure, funds may be withheld
                from any other covered Federal contract held by the same prime
                contractor in order to remedy the underpayments on the contract at
                issue. See 29 CFR 5.5(a)(2), (b)(3). Contractors that violate the DBRA
                may also be subject to debarment from future Federal contracts. See 29
                CFR 5.12.
                 Where WHD conducts an investigation and finds that violations have
                occurred, it will notify the affected prime contractor and
                subcontractors of the findings of the investigation--including any
                determination that workers are owed wages and whether there is
                reasonable cause to believe the contractor may be subject to debarment.
                See 29 CFR 5.11(b). Contractors can request a hearing regarding these
                findings through the Department's Office of Administrative Law Judges
                (OALJ) and may appeal any ruling by the OALJ to the Department's
                Administrative Review Board (ARB). Id.; see also 29 CFR parts 6 and 7
                (OALJ and ARB rules of practice for Davis-Bacon proceedings). Decisions
                of the ARB are final agency actions that may be reviewable under the
                Administrative Procedure Act in Federal district court. See 5 U.S.C.
                702, 704.\19\
                ---------------------------------------------------------------------------
                 \19\ In addition to reviewing liability determinations and
                debarment, the ARB and the courts also have jurisdiction to review
                general wage determinations. Judicial review, however, is strictly
                limited to any procedural irregularities, as there is no
                jurisdiction to review the substantive correctness of a wage
                determination under the DBA. See Binghamton Constr. Co., 347 U.S. at
                177.
                ---------------------------------------------------------------------------
                III. Discussion of Proposed Rule
                A. Legal Authority
                 The Davis-Bacon Act, as enacted in 1931 and subsequently amended,
                requires the payment of certain minimum ``prevailing'' wages determined
                by the Department of Labor to laborers and mechanics working on Federal
                contracts in excess of $2,000 for the construction, alteration, or
                repair, including painting and decorating, of public buildings and
                public works. See 40 U.S.C. 3141 et seq. The DBA authorizes the
                Secretary of Labor to develop a definition for the term ``prevailing''
                wage and a methodology for setting it based on similar projects in the
                civil subdivision of the State in which a covered project will occur.
                See 40 U.S.C. 3142(b); Bldg. & Constr. Trades' Dep't, AFL-CIO v.
                Donovan, 712 F.2d 611, 616 (D.C. Cir. 1983).
                 The Secretary of Labor has the responsibility to ``prescribe
                reasonable regulations'' for contractors and subcontractors on covered
                projects. 40 U.S.C. 3145. The Secretary, through Reorganization Plan
                No. 14 of 1950, also has the responsibility to ``prescribe appropriate
                standards, regulations and procedures'' to be observed by Federal
                agencies responsible for the administration of the Davis-Bacon and
                Related Acts ``[i]n order to assure coordination of administration and
                consistency of enforcement of the labor standards provisions'' of the
                DBRA. 5 U.S.C. app. 1.
                 The Secretary has delegated authority to promulgate these
                regulations to the Administrator of the WHD and to the Deputy
                Administrator of the WHD if the Administrator position is vacant. See
                Secretary's Order No. 01-2014, 79 FR 77527 (Dec. 24, 2014); Secretary's
                Order No. 01-2017, 82 FR 6653 (Jan. 19, 2017).
                B. Overview of the Proposed Rule
                1. 29 CFR Part 1
                 The procedural rules providing for the payment of minimum wages,
                including fringe benefits, to laborers and mechanics engaged in
                construction activity covered by the Davis-Bacon and Related Acts are
                set forth in 29 CFR part 1. The regulations in this part also set forth
                the procedures for making and applying such determinations of
                prevailing wage rates and fringe benefits.
                i. Section 1.1 Purpose and Scope
                 The Department proposes technical revisions to Sec. 1.1 to update
                the statutory reference to the Davis-Bacon Act, now recodified at 40
                U.S.C. 3141 et seq. The Department also proposes to eliminate outdated
                references to the Deputy Under Secretary of Labor for Employment
                Standards at the Employment Standards Administration. The Employment
                Standards Administration was eliminated as part of an agency
                reorganization in 2009 and its authorities and responsibilities were
                devolved into its constituent components, including the WHD. See
                Secretary's Order No. 09-2009 (Nov. 6, 2009), 74 FR 58836 (Nov. 13,
                2009), 82 FR 2221 (Jan. 9, 2017). The Department further proposes to
                revise Sec. 1.1 to reflect the removal of Appendix A of part 1, as
                discussed further below. The Department also proposes to add new
                paragraph (a)(1) to reference the WHD website (https://www.dol.gov/agencies/whd/government-contracts) on which a listing of laws requiring
                the payment of wages at rates predetermined by the Secretary of Labor
                under the Davis-Bacon Act is currently found.
                [[Page 15703]]
                ii. Section 1.2 Definitions
                (A) Prevailing Wage
                 The Department proposes to redefine the term ``prevailing wage'' in
                Sec. 1.2 to return to the original methodology for determining whether
                a wage rate is prevailing. This original methodology has been referred
                to as the ``three-step process.''
                 Since 1935, the Secretary has interpreted the word ``prevailing''
                in the Davis-Bacon Act to be consistent with the common understanding
                of the term as meaning ``predominant'' or ``most frequent.'' From 1935
                until the 1981-1982 rulemaking, the Department employed a three-step
                process to identify the most frequently used wage rate for each
                classification of workers in a locality. See Regulation 503 section 2
                (1935); 47 FR 23644.\20\ This three-step process identified as
                prevailing: (1) Any wage rate paid to a majority of workers; and, if
                there was none, then (2) the wage rate paid to the greatest number of
                workers, provided it was paid to at least 30 percent of workers, and,
                if there was none, then (3) the weighted average rate. The second step
                is referred to as the ``30-percent rule.''
                ---------------------------------------------------------------------------
                 \20\ Implemented Apr. 29, 1983. See 48 FR 19532.
                ---------------------------------------------------------------------------
                 The three-step process relegated the average rate to a final,
                fallback method of determining the prevailing wage. In 1962
                congressional testimony, Solicitor of Labor Charles Donahue explained
                the reasoning for this sequence in the determination: An average rate
                ``does not reflect a true rate which is actually being paid by any
                group of contractors in the community being surveyed.'' Instead, ``it
                represents an artificial rate which we create ourselves, and which does
                not reflect that which a predominant amount of workers are paid.'' \21\
                ---------------------------------------------------------------------------
                 \21\ Administration of the Davis Bacon Act: Hearings before the
                Spec. Subcomm. of Lab. of the H. Comm. on Educ. and Lab., 87th Cong.
                811-12 (1962) (testimony of Charles Donahue, Solicitor of Labor).
                ---------------------------------------------------------------------------
                 In 1982, the Department published a final rule that amended the
                definition of ``prevailing wage'' by eliminating the second step in the
                three-step process--the 30-percent rule. See 47 FR 23644. The new
                process required only two steps: First identifying if there was a
                single wage rate paid to more than 50 percent of workers, and then, if
                not, relying on a weighted average of all the wage rates paid. Id. at
                23644-45.
                 In eliminating the 30-percent rule, however, the Department did not
                change its underlying interpretation of the word ``prevailing''--that
                it means ``the most widely paid rate'' must be the ``definition of
                first choice'' for the prevailing wage. 47 FR 23645. While the 1982
                rule continued to allow the Department to use an average rate as a
                fallback, the Department rejected commenters' suggestions that the
                weighted average could be used in all cases. See 47 FR 23644-45. As the
                Department explained, this was because the term ``prevailing''
                contemplates that wage determinations mirror, to the extent possible,
                those rates ``actually paid'' to workers. 47 FR 23645.
                 This interpretation--that the definition of first choice for the
                term ``prevailing wage'' should be an actual wage rate that is most
                widely paid--has now been shared across administrations for over 85
                years. In the intervening decades, Congress has amended and expanded
                the reach of the Act's prevailing wage requirements dozens of times
                without altering the term ``prevailing'' or the grant of broad
                authority to the Secretary of Labor to define it.\22\ In addition, the
                question was also reviewed by the Office of Legal Counsel (OLC) at the
                Department of Justice, which independently reached the same
                conclusions: ``prevailing wage'' means the current and predominant
                actual rate paid, and an average rate should only be used as a last
                resort. See 5 Op. O.L.C. at 176-77.\23\
                ---------------------------------------------------------------------------
                 \22\ See, e.g., Act of Mar. 23, 1941, ch. 26, 55 Stat. 53 (1941)
                (applying the Act to alternative contract types); Contract Work
                Hours and Safety Standards Act of 1962, Public Law 87-581, 76 Stat.
                357 (1962) (requiring payment of overtime on contracts covered by
                the Act); Act of July 2, 1964, Public Law 88-349, 78 Stat. 238
                (1964) (extending the Act to cover fringe benefits); 29 CFR 5.1
                (referencing 57 Related Acts into which Congress incorporated Davis-
                Bacon Act requirements between 1935 and 1978).
                 \23\ See note 1, supra.
                ---------------------------------------------------------------------------
                 In the 1982 final rule, when the Department eliminated the 30-
                percent rule, it anticipated that this change would increase the use of
                artificial average rates. 47 FR 23648-49. Nonetheless, the Department
                believed a change was preferable because the 30-percent threshold could
                in some cases not account for up to 70 percent of the remaining
                workers. See 46 FR 41444. The Department also stated that it agreed
                with the concerns expressed by certain commenters that the 30-percent
                rule was ``inflationary'' and gave ``undue weight to collectively
                bargained rates.'' 47 FR 23644-45.
                 Now, however, after reviewing the development of the Davis-Bacon
                Act program since the 1981-1982 rulemaking, the Department concludes
                that eliminating the 30-percent rule ultimately resulted in an overuse
                of average rates. On paper, the weighted average remains the fallback
                method to be used only when there is no majority rate. In practice,
                though, it has become a central mechanism to set the prevailing wage
                rates included in Davis-Bacon wage determinations and covered
                contracts.
                 Prior to the 1982 rule change, the use of averages was relatively
                rare. In a Ford Administration study of Davis-Bacon Act prevailing wage
                rates in commercial-type construction in 19 cities, none of the rates
                were based on averages because all of the wage rates were
                ``negotiated'' rates, i.e., based on CBAs that represented a
                predominant wage rate in the locality.\24\ The Department estimates
                that prior to the 1982 final rule, as low as 15 percent of
                classification rates across all wage determinations were based on
                averages. After the 1982 rule was implemented, the use of averages may
                have initially increased to approximately 26 percent of all wage
                determinations.\25\
                ---------------------------------------------------------------------------
                 \24\ See Robert S. Goldfarb & John F. Morrall, ``An Analysis of
                Certain Aspects of the Administration of the Davis-Bacon Act,''
                Council on Wage and Price Stability (May 1976), reprinted in Bureau
                of Nat'l Affs., Construction Labor Report, No. 1079, D-1, D-2
                (1976).
                 \25\ See Oversight Hearing on the Davis-Bacon Act, Before the
                Subcomm. on Lab. Standards of the H. Comm. on Educ. and Lab., 96th
                Cong. 58 (1979) (statement of Ray Marshall, Secretary of Labor)
                (discussing study of 1978 determinations showing only 24 percent of
                classification rates were based on the 30-percent rule); Jerome
                Staller, ``Communications to the Editor,'' Policy Analysis, Vol. 5,
                No. 3 (Summer 1979), pp. 397-98 (noting that 60 percent of
                determinations in the internal Department 1976 and 1978 studies were
                based on the 30-percent rule or the average-rate rule). The authors
                of the Council on Wage and Price Stability study, however, pointed
                out that the Department's figures were for rates that had been based
                on survey data, while 57 percent of rates in the mid-1970's were
                based solely on CBAs without the use of surveys (a practice that the
                Department no longer uses to determine new rates). See Robert S.
                Goldfarb & John F. Morrall II., ``The Davis-Bacon Act: An Appraisal
                of Recent Studies,'' 34 Indus. & Lab. Rel. Rev. 191, 199-200 & n.35
                (1981). Thus, the actual percentage of annual classification
                determinations that were based on average rule before 1982 may have
                been as low as 15 percent, and the percent based on the average rule
                after 1982 would have been expected to be around 26 percent.
                ---------------------------------------------------------------------------
                 The Department's current use of weighted averages is now
                significantly higher than this 26 percent figure. To analyze the
                current use of weighted averages and the potential impacts of this
                rulemaking, the Department compiled data for select classifications for
                17 recent wage surveys--nearly all of the completed surveys that WHD
                began in 2015 or later. The data show that the Department's reliance on
                average rates has increased significantly, and now accounts for 64
                percent of the observed classification determinations in this recent
                time period.\26\
                ---------------------------------------------------------------------------
                 \26\ See below section V (Executive Order 12866, Regulatory
                Planning and Review et al.).
                ---------------------------------------------------------------------------
                 The Department believes that such an overuse of weighted averages
                is
                [[Page 15704]]
                inconsistent with both the text and the purpose of the Act. It is
                inconsistent with the Department's longstanding interpretation of
                Congress's use of the word ``prevailing'' in the text of the Act--
                including the Department's statements in the preamble to the 1982 rule
                itself that the definition of first choice for the ``prevailing'' wage
                should be the most widely paid rate that is actually paid to workers in
                the relevant locality. If nearly two-thirds of rates that are now being
                published based on recent surveys are based on a weighted average, it
                is no longer fair to say that it is a fallback method of determining
                the prevailing wage.
                 The use of averages as the dominant methodology for issuing wage
                determinations is also inconsistent with the recognized purpose of the
                Act ``to protect local wage standards by preventing contractors from
                basing their bids on wages lower than those prevailing in the area.''
                Coutu, 450 U.S. at 773 (internal quotation marks and citation omitted).
                Using an average to determine the minimum wage rate on contracts allows
                a single low-wage contractor in the area to depress wage rates on
                Federal contracts below the higher rate that may be generally more
                prevalent in the community--by factoring into (and lowering) the
                calculation of the average that is used to set the minimum wage rates
                on local Federal contracts.\27\
                ---------------------------------------------------------------------------
                 \27\ For example, the 2001 wage determination for electricians
                in Eddy County, New Mexico was an average rate based on responses
                that included lower-paid workers that had been brought in from Texas
                by a Texas electrical contractor to work on a single job. As the ARB
                noted in reviewing a challenge to the wage determination, the result
                was that ``contract labor from Texas, where wages reportedly are
                lower, effectively has determined the prevailing wage for
                electricians in this New Mexico county.'' New Mexico Nat. Elec.
                Contractors Ass'n, ARB No. 03-020, 2004 WL 1261216, at * 8 (May 28,
                2004).
                ---------------------------------------------------------------------------
                 To address the increasing tension between the current methodology
                and the purpose and definition of ``prevailing,'' the Department
                proposes to return to the original three-step process. The Department
                expects that re-introducing the 30-percent rule will reduce the use of
                average rates roughly by half--from 63 percent to 31 percent. The data
                from the regulatory impact analysis included with this NPRM below in
                section V suggests that returning to the three-step process will
                continue to result in 36 percent of prevailing wage rates based on the
                majority rule, with the balance of 33 percent based on the 30-percent
                rule, and 31 percent based on the weighted average.
                 This estimated distribution illustrates why the Department is no
                longer persuaded, as it stated in the 1981 NPRM, that the majority rule
                is more appropriate than the three-step process (including the 30-
                percent rule) because the 30-percent rule ``ignores the rate paid to up
                to 70 percent of the workers.'' See 46 FR 41444.\28\ That
                characterization ignores that the first step in the three-step process
                is still to adopt the majority rate if there is one. Under both the
                three-step process and the current majority rule, any wage rate that is
                paid to a majority of workers would be identified as prevailing. Under
                either method, the weighted average will be used whenever there is no
                wage rate that is paid to more than 30 percent of employees in the
                survey response.
                ---------------------------------------------------------------------------
                 \28\ The 30-percent rule can only be characterized as
                ``ignoring'' rates because it is a rule that applies a mathematical
                ``mode,'' in which the only relevant value is the value of the
                number that appears most frequently--instead of a mean (average), in
                which the values of all the numbers are averaged together. Both the
                30-percent rule and the majority rule are modal rules in which the
                values of the non-prevailing wage rates do not factor into the final
                analysis.
                ---------------------------------------------------------------------------
                 The difference between the majority and the three-step
                methodologies is solely in how a wage rate is determined when there is
                no majority, but there is a significant plurality wage rate paid to
                between 30 and 50 percent of workers. In that circumstance, the current
                ``majority'' rule uses averages instead of the rate that is actually
                paid to that significant plurality of the survey population. This is
                true, for example, even where the same wage rate is paid to 45 percent
                of workers and no other rate is paid to as high a percentage of
                workers. In such circumstances, the Department believes that a wage
                rate paid to between 30 and 50 percent of workers is clearly more of a
                ``prevailing'' wage rate than an average.
                 The Department has also considered the other explanations it
                provided in 1982 for eliminating the 30-percent rule, including any
                possible upward pressure on wages or prices and a perceived ``undue
                weight'' given to collectively bargained rates. These explanations are
                no longer persuasive for two fundamental reasons. First, the concerns
                appear to be unrelated to the text of the statute, and, if anything,
                contrary to its legislative purpose. Second, the Department's estimates
                of the effects of a return to the 30-percent rule suggest that the
                concerns are misplaced.
                 The concerns about inflation at the time of the 1982 rule were
                based in part on a criticism of the Act itself.\29\ A fundamental
                purpose of the Davis-Bacon Act was to limit low-bid contractors from
                depressing local wage rates. See 5 U.S. O.L.C. at 176.\30\ This purpose
                necessarily contemplates an increase in wage rates over what could
                otherwise be paid without the enactment of the statute. Moreover, the
                effect of maintaining such a prevailing rate can just as easily be seen
                as guarding against deflationary effects of the use of low-wage
                contractors--instead of resulting in inflation. Staff of the H.
                Subcomm. on Lab., 88th Cong., Administration of the Davis-Bacon Act,
                Rep. of the Subcomm. on Lab. of the Comm. on Educ. and Lab. (Comm.
                Print 1963) (1963 House Committee Report), at 2-3.
                ---------------------------------------------------------------------------
                 \29\ The GAO issued a report in 1979 urging Congress to repeal
                the Act because of ``inflationary'' concerns. See Gov't
                Accountability Office, HRD-79-18, The Davis Bacon Act Should be
                Repealed, (1979) (1979 GAO Report). Available at: https://www.gao.gov/assets/hrd-79-18.pdf. The report argued that even using
                only weighted averages for prevailing rates would be inflationary
                because they could increase the minimum wage paid on contracts and
                therefore result in wages that were higher than they otherwise would
                be. The House Subcommittee on Labor Standards reviewed the report
                during oversight hearings in 1979, but Congress did not amend or
                repeal the Act, and instead continued to expand its reach. See,
                e.g., Cranston-Gonzalez National Affordable Housing Act, Public Law
                101-625, Sec. 811(j)(6), 104 Stat. 4329 (1990); Energy Independence
                and Security Act of 2007, Public Law. No, 110-140, Sec. 491(d), 121
                Stat. 1651 (2007); American Recovery and Reinvestment Act, Public
                Law 111-5, Sec. 1606, 123 Stat. 303 (2009); Consolidated
                Appropriations Act of 2021, Public Law 116-260, Sec. 9006(b), 134
                Stat. 1182 (2021).
                 \30\ See note 1, supra.
                ---------------------------------------------------------------------------
                 The 1982 final rule contained an economic analysis that suggested
                that the elimination of the 30-percent rule could save $120 million (in
                1982 dollars) in construction costs per year through reduced contract
                costs. However, the Department does not believe that this 40-year old
                analysis is reliable or accurate.\31\ For example, the analysis did not
                consider labor market forces that could prevent contractors from
                lowering wage rates in the short run. The analysis also did not attempt
                to address productivity losses or other costs of setting a lower
                minimum wage. For these reasons, the Department does not believe that
                the analysis in the 1982 final rule implies that the current proposed
                reversion to the 30-percent rule would have a significant impact on
                [[Page 15705]]
                contract costs. Even if the Department were to rely on this analysis as
                an accurate measure of impact, such savings (adjusted to 2019 dollars)
                would only amount to approximately two-tenths of a percent of total
                estimated covered contract costs.
                ---------------------------------------------------------------------------
                 \31\ The Department has not attempted to assess the relative
                accuracy of this estimate over the decades, which would be
                challenging given the dynamic nature of the construction industry
                and the relatively small impact of even $120 million in savings. The
                Department at the time acknowledged that its estimate had been
                heavily criticized by commenters and was only a ``best guess''--in
                part because it could not foresee how close a correlation there
                would be between the wage rates that are actually paid on covered
                contracts and the wage determinations that set the Davis-Bacon
                minimum wages. 47 FR 23648.
                ---------------------------------------------------------------------------
                 The Department also does not believe that the proposed reversion to
                the 30-percent rule would have any noticeable impact on overall
                national inflation numbers.\32\ An illustrative analysis in section
                V.D. shows returning to the 30-percent rule will significantly reduce
                the reliance on the weighted average method to produce prevailing wage
                rates. Under the 30-percent rule, some prevailing wage determinations
                may increase and others decrease, but the magnitude of these changes
                will, overall, be negligible. Additionally, recent research shows that
                wage increases, particularly at the lower end of the distribution, do
                not cause significant economy-wide price increases.\33\ The Department
                thus does not believe that any limited net wage increase for the
                approximately 1.2 million covered workers (less than 1 percent of the
                total national workforce) will significantly increase prices or have
                any appreciable effect on the macro economy.
                ---------------------------------------------------------------------------
                 \32\ The 1979 GAO report about the DBA noted that ``minimum wage
                rates [such as the Davis-Bacon Act prevailing wage requirements]
                tend to have an inflationary effect on . . . the national economy as
                a whole.'' 1979 GAO Report, HRD-79-18 at 76, 83-84.
                 \33\ See, e.g., J.P. Morgan, Why Higher Wages Don't Always Lead
                to Inflation (Feb. 7, 2018), available at: https://www.jpmorgan.com/commercial-banking/insights/higher-wages-inflation; Daniel MacDonald
                & Eric Nilsson, The Effects of Increasing the Minimum Wage on
                Prices: Analyzing the Incidence of Policy Design and Context, Upjohn
                Institute working paper; 16-260 (June 2016), available at https://research.upjohn.org/up_workingpapers/260/; Nguyen Viet Cuong, Do
                Minimum Wage Increases Cause Inflation? Evidence from Vietnam, ASEAN
                Economic Bulletin Vol. 28, No. 3 (2011), pp. 337-59, available at:
                https://www.jstor.org/stable/41445397; Magnus Jonsson & Stefan
                Palmqvist, Do Higher Wages Cause Inflation?, Sveriges Riksbank
                Working Paper Series 159 (Apr. 2004), available at: http://archive.riksbank.se/Upload/WorkingPapers/WP_159.pdf; Kenneth M.
                Emery & Chih-Ping Chang, Do Wages Help Predict Inflation?, Federal
                Reserve Bank of Dallas, Economic Review First Quarter 1996 (1996),
                available at: https://www.dallasfed.org/~/media/documents/research/
                er/1996/er9601a.pdf.
                ---------------------------------------------------------------------------
                 Further, since the DBA legislates that minimum wages must be paid
                to workers on construction projects, the effect of such requirement is
                not a permissible basis for departing from the longstanding
                interpretation of the plain meaning of the term ``prevailing.'' The
                ``basic purpose of the Davis-Bacon Act is to protect the wages of
                construction workers even if the effect is to increase costs to the
                [F]ederal [G]overnment.'' Bldg. & Constr. Trades Dep't, AFL-CIO v.
                Donovan, 543 F. Supp. 1282, 1290 (D.D.C. 1982). Congress has considered
                cost concerns, and enacted and expanded the DBA notwithstanding them.
                Id. at 1290-91; 1963 House Committee Report at 2-3; Reorganization Plan
                No. 14 of 1950, 5 U.S.C. app. 1.\34\ Thus, even if concerns about an
                inflationary effect on government contract costs or speculative effects
                on the national macro economy were used to justify eliminating the 30-
                percent rule, the Department does not believe such reasoning now
                provides either a factual or legal basis to maintain the current
                majority rule.
                ---------------------------------------------------------------------------
                 \34\ In his message accompanying Reorganization Plan No. 14,
                President Truman noted that ``[s]ince the principal objective of the
                plan is more effective enforcement of labor standards, it is not
                probable that it will result in savings. But it will provide more
                uniform and more adequate protection for workers through the
                expenditures made for the enforcement of the existing legislation.''
                5 U.S.C. app. 1.
                ---------------------------------------------------------------------------
                 The Department is also no longer persuaded that the 30-percent rule
                gives undue weight to collectively bargained rates. The underlying
                concern at the time was that identification of a single prevailing wage
                could give more weight to union rates that more often tend to be the
                same across companies. If this occurs, however, it is a function of the
                plain meaning of the statutory term ``prevailing,'' which, as both the
                Department and OLC have concluded, refers to a predominant single wage
                rate, or a modal wage rate. The same weight is given to collectively
                bargained rates whether the Department chooses a 50-percent or 30-
                percent threshold. The Department accordingly now understands the
                concerns voiced at the time to be concerns about the potential outcome
                (of more wage determinations based on union rates) instead of concerns
                about any actual weight given to union rates by the choice of the modal
                threshold. To choose a threshold because the outcome would be more
                beneficial to non-union contractors--as the Department seems to have
                suggested it was doing in 1982--does not have any basis in the statute.
                Donovan, 543 F. Supp. at 1291, n.16 (noting that the Secretary's
                concern about weight to collectively bargained rates ``bear[s] no
                relationship to the purposes of the statute'').
                 Regardless, the Department's regulatory impact analysis does not
                suggest that a return to the 30-percent rule would give undue weight to
                collectively bargained rates. Among a sample of rates considered in an
                illustrative analysis, one-third of all rates (or about half of rates
                currently established based on weighted averages) would shift to a
                different method. Among these rates that would be set based on a new
                method, the majority would be based on non-collectively bargained
                rates. Specifically, in the V.D. illustration, Department estimates
                that the use of single wage rates that are not the product of
                collective bargaining agreements would increase from 12 percent to 36
                percent of all wage rates--an overall increase of 24 percentage points.
                The use of single wage rates that are based on collective bargaining
                agreements will increase from 25 percent to 34 percent--an overall
                increase of 9 percentage points.\35\
                ---------------------------------------------------------------------------
                 \35\ See below section V (Executive Order 12866, Regulatory
                Planning and Review et al.). As discussed in the regulatory impact
                analysis, the Department found that fringe benefits currently do not
                prevail in slightly over half of the classification-county
                observations it reviewed--resulting in no required fringe benefit
                rate for that classification. This would be largely unchanged under
                the proposed reversion to the 3-step process, with nearly half of
                classification rates still not requiring the payment of fringe
                benefits. Only about 13 percent of fringe rates would shift from no
                fringes or an average rate to a modal prevailing fringe rate.
                Overall under the estimate, the percentage of fringe benefit rates
                based on collective bargaining agreements would increase from 25
                percent to 34 percent. The percentage of fringe benefit rates not
                based on collective bargaining rates would increase from 3 percent
                to 7 percent.
                ---------------------------------------------------------------------------
                 The Department has also considered, but decided against, proposing
                to use the median wage rate as the ``prevailing'' rate. The median,
                like the average (mean), is a number that can be unrelated to the wage
                rate paid with the greatest frequency to employees working in the
                locality. Using either the median or the average as the primary method
                of determining the prevailing rate is not consistent with the meaning
                of the term ``prevailing.'' Accord 47 FR 23645. The Department is
                therefore proposing to return to the three-step process and the 30-
                percent rule, and is not proposing as alternatives the use of either
                the median or mean as the primary or sole methods for making wage
                determinations.
                (1) Former Subsection Sec. 1.2(a)(2)
                 In a non-substantive change, the Department proposes to move the
                language currently at Sec. 1.2(a)(2) that explains the interaction
                between the definition of prevailing wage and the sources of
                information in Sec. 1.3. Under the proposed rule, that language
                (altered to update the cross-reference to the definition of prevailing
                wage) would now appear in Sec. 1.3.
                [[Page 15706]]
                (2) Variable Rates That Are Functionally Equivalent
                 The Department also proposes to amend the regulations on compiling
                wage rate information at Sec. 1.3 to allow for variable rates that are
                functionally equivalent to be counted together for the purpose of
                determining whether a single wage rate prevails under the proposed
                definition of ``prevailing wage'' in Sec. 1.2. The Department
                generally followed this proposed approach until after the 2006 decision
                of the ARB in Mistick Construction. 2006 WL 861357.
                 Historically, the Department has considered wage rates included in
                survey data that may not be exactly the same to be functionally
                equivalent--and therefore counted as the same--as long as there was an
                underlying logic that explained the difference between them. For
                example, some workers may perform work under the same labor
                classification for the same contractor or under the same collective
                bargaining agreement (CBA) on projects in the same geographical area
                being surveyed and get paid different wages based on the time of day
                that they performed work--e.g., a ``night premium.'' In that
                circumstance, the Department would count the normal and night-premium
                wage rates to be the ``same wage'' rate for purposes of calculating
                whether that wage rate prevailed under the majority rule that is
                discussed in the section above. Similarly, where workers in the same
                labor classification were paid different ``zone rates'' for work on
                projects in different zones covered by the same CBA, the Department
                considered those rates as compensating workers for the burden of
                traveling or staying away from home and did not reflect fundamentally
                different underlying wage rates for the work actually completed.
                Variable zone rates would therefore be considered the ``same wage'' for
                the purpose of determining the prevailing wage rate.
                 In another example, the Department took into consideration
                ``escalator clauses'' in CBAs that may have increased wage rates across
                the board at some point during the survey period. Wages for workers
                working under the same CBA could be reported differently on a survey
                based on the week their employer used in responding to the wage survey
                rather than an actual difference in prevailing wages. The Department
                has historically treated such variable rates the same for the purposes
                of determining the prevailing wages paid to laborers or mechanics in
                the survey area. The Department has also considered wage rates to be
                the same where workers made the same combination of basic hourly rates
                and fringe rates, even if the basic hourly rates (and also the fringe
                rates) differed slightly.
                 In these circumstances, where the Department has treated certain
                variable rates as the same, it has generally chosen one of the variable
                rates to use as the prevailing rate. In the case of rates that are
                variable because of an escalator-clause issue, it uses the most current
                rate under the collective bargaining agreement. Similarly, where the
                Department identified combinations of hourly and fringe rates as the
                ``same,'' the Department identified one specific hourly rate and one
                specific fringe rate that prevailed, following the guidelines in 29 CFR
                5.24, 5.25, and 5.30.
                 In 2006, the ARB strictly interpreted the regulatory language of
                Sec. 1.2(a) in a way that has limited some of these practices. See
                Mistick Constr., 2006 WL 861357, at *5-7. The decision affirmed the
                Administrator's continued use of the escalator-clause rule, but found
                the use of the same combination of basic hourly and fringe rates did
                not amount to exactly the ``same'' wage and thus violated the use of
                the term ``same wage'' in Sec. 1.2(a). The ARB also viewed the
                flexibility shown to collective bargaining agreements as inconsistent
                with the ``purpose'' of the 1982 final rule, which the Administrator
                had explained was in part to avoid giving ``undue weight'' to
                collectively bargained rates. The ARB held that the Administrator could
                not consider variable rates under a collective bargaining agreement to
                be the ``same wage'' under Sec. 1.2(a) as written--and therefore, if
                there was no strictly ``same wage'' that would prevail under the
                majority rule, the Administrator would have to use the fallback
                weighted average on the wage determination.
                 The ARB's conclusion in Mistick--particularly its determination
                that even wage data reflecting the same aggregate compensation but
                slight variations in the basic hourly rate and fringe benefit rates did
                not reflect the ``same wage'' as that term was used under the current
                regulations--could be construed as a determination that wage rates need
                to be identical ``to the penny'' in order to be regarded as the ``same
                wage,'' and that nearly any variation in wage rates, no matter how
                small and regardless of the reason for the variation, might need to be
                regarded as reflecting different, unique wage rates.
                 The ARB's decision in Mistick limited the Administrator's
                methodology for determining a prevailing rate, thus contributing to the
                increased use of weighted average rates. As noted above, however, both
                the Department and OLC have agreed that averages should generally only
                be used as a last resort. As the OLC opinion noted, the use of an
                average is difficult to justify ``particularly in cases where it
                coincides with none of the actual wage rates being paid.'' 5 Op. O.L.C.
                at 177 (emphasis in original).\36\ In discussing those cases, OLC
                quoted from the 1963 House Report summarizing extensive congressional
                oversight hearings of the Act. The report had concluded that ``[u]se of
                an average rate would be artificial in that it would not reflect the
                actual wages being paid in a local community,'' and ``such a method
                would be disruptive of local wage standards if it were utilized with
                any great frequency.'' Id.\37\ To the extent that an inflexible, ``to
                the penny'' approach to determining if wage data reflects the ``same
                wage'' promotes the use of average rates even when wage rate variations
                are exceedingly slight and are based on practices reflecting that the
                rates, while not identical, are functionally equivalent, such an
                approach would be inconsistent with these authorities and the statutory
                purpose they reflect.
                ---------------------------------------------------------------------------
                 \36\ See note 1, supra.
                 \37\ See 1963 House Committee Report, supra, at 7-8.
                ---------------------------------------------------------------------------
                 For these reasons, and particularly because a mechanical, ``to the
                penny'' approach ultimately undermines rather than promotes the
                determination of actual prevailing wage rates, the Department believes
                that it is consistent with the language and purpose of the statute to
                treat slight variations in wages as the same rate in appropriate
                circumstances.
                 As reflected in Mistick, the existing regulation does not clearly
                authorize the use of functionally equivalent wages to determine the
                local prevailing wage. See 2006 WL 861357, at *5-7. Accordingly, the
                Department proposes to amend Sec. 1.3 to include a new paragraph at
                Sec. 1.3(e) that would permit the Administrator to count wage rates
                together--for the purpose of determining the prevailing wage--if the
                rates are functionally equivalent and the variation can be explained by
                a CBA or the written policy of a contractor.
                 Such flexibility would not be unlimited. Some variations within the
                same CBA clearly amount to different rates. For example, when a CBA
                authorizes the use of ``market recovery rates'' that are lower than the
                standard rate in order to win a bid, under certain circumstances those
                rates may not be appropriate to combine together with the CBA's
                standard rate as ``functionally equivalent'' because frequent use of
                such a rate could suggest (though does
                [[Page 15707]]
                not necessarily compel) a conclusion that the CBA's regular rate may
                not be prevailing in the area.
                 The Department welcomes comments on all aspects of this proposal
                regarding proposed changes to the definition of ``prevailing wage'' in
                Sec. 1.2 and to the regulation governing the obtaining and compiling
                of wage rate information in Sec. 1.3.
                (B) Area
                 The core definition of ``area'' in Sec. 1.2 largely reproduces the
                specification in the Davis-Bacon Act statute, prior to its 2002 re-
                codification, that the prevailing wage should be based on projects of a
                similar character in the ``city, town, village, or other civil
                subdivision of the State in which the work is to be performed.'' See 40
                U.S.C. 276a(a) (2002).
                 The rule's geography-based definition of area applies to federally
                assisted projects covered by the Davis-Bacon Related Acts as well as
                projects covered by the DBA itself. Some of the Related Acts have used
                different terminology to identify the appropriate ``area'' for a wage
                determination, including the terms ``locality'' and ``immediate
                locality.'' \38\ However, the Department has long concluded that these
                terms are best interpreted and applied consistent with the methodology
                for determining the area under the original DBA. See Virginia Segment
                C-7, METRO, WAB 71-4, 1971 WL 17609, at *3-4 (Dec. 7, 1971).\39\
                ---------------------------------------------------------------------------
                 \38\ See, e.g., National Housing Act, 12 U.S.C. 1715c(a)
                (locality); Housing and Community Development Act of 1974, 42 U.S.C.
                1440(g), 5310(a) (locality); Federal Water Pollution Control Act, 33
                U.S.C. 1372 (immediate locality); Federal-Aid Highway Acts, 23
                U.S.C. 113(a) (immediate locality).
                 \39\ The Wage Appeals Board (WAB) was the Department's
                administrative appellate entity from 1964 until 1996, when it was
                eliminated and the Administrative Review Board was created and
                provided jurisdiction over appeals from decisions of the
                Administrator and the Department's Administrative Law Judges (ALJs)
                under a number of statutes, including the Davis-Bacon and Related
                Acts. 61 FR 19978 (May 3, 1996). WAB decisions from 1964 to 1996 are
                available on the Department's website at https://www.dol.gov/agencies/oalj/public/dba_sca/references/caselists/wablist.
                ---------------------------------------------------------------------------
                 The Department proposes to revise the definition of area to address
                projects that span multiple counties and to address highway projects
                specifically. Under WHD's current methodology, if a project spans more
                than one county, the contracting officer is instructed to attach wage
                determinations for each county to the project and contractors may be
                required to pay differing wage rates to the same employees when their
                work crosses county lines. This policy was reinforced in 1971 when the
                Wage Appeals Board (WAB) found that, under the terms of the then-
                applicable regulations, there was no basis to provide a single
                prevailing wage rate for a project occurring in Virginia, the District
                of Columbia, and Maryland. See Virginia Segment C-7, METRO, 1971 WL
                17609.
                 Critics of this policy have pointed out that workers are very often
                hired and paid a single wage rate for a project, and--unless there are
                different city or county minimum wage laws--workers' pay rates often do
                not change as they move between tasks in different counties. The 2011
                report by the GAO, for example, quoted a statement from a contractor
                association representative that requiring different wage rates for the
                same workers on the same multi-county project is ``illogical.'' See
                2011 GAO Report at 24.\40\
                ---------------------------------------------------------------------------
                 \40\ See note 8, supra.
                ---------------------------------------------------------------------------
                 While requiring different prevailing wage rates for work by the
                same worker on the same project may be consistent with the current
                regulations, the DBA and Related Act statutes themselves do not address
                multi-jurisdictional projects. Issuing and applying a single project
                wage determination for such projects is not inconsistent with the text
                of the DBA. Nor is it inconsistent with the purpose of the DBA, which
                is to protect against the depression of local wage rates caused by
                competition from low-bid contractors from outside of the locality.
                 Accordingly, the Department proposes adding language in the
                definition of ``area'' in Sec. 1.2 that would expressly authorize WHD
                to issue project wage determinations with a single rate for each
                classification, using data from all of the relevant counties in which a
                project will occur. The Department solicits comments on whether this
                procedure should be mandatory for multi-jurisdictional projects or
                available at the request of the contracting agency or an interested
                party, if WHD determines that such a project wage determination would
                be appropriate.
                 The Department's other proposed change to the definition of
                ``area'' in Sec. 1.2 is to allow the use of State highway districts or
                similar transportation subdivisions as the relevant wage determination
                area for highway projects. Although there is significant variation
                between states, most states maintain civil subdivisions responsible for
                certain aspects of transportation planning, financing, and
                maintenance.\41\ These districts tend to be organized within State
                departments of transportation or otherwise through State and County
                governments.
                ---------------------------------------------------------------------------
                 \41\ See generally Am. Assoc. of State Highway and Transp.
                Offs., Transportation Governance and Financing: A 50-State Review of
                State Legislatures and Departments of Transportation (2016),
                available at: https://www.financingtransportation.org/pdf/50_state_review_nov16.pdf.
                ---------------------------------------------------------------------------
                 Using State highway districts as a geographic unit for wage
                determinations would be consistent with the Davis-Bacon Act's
                specification that wage determinations should be tied to a ``civil
                subdivision of a State.'' State highway districts were considered to be
                ``subdivisions of a State'' at the time the term was used in the
                original Davis-Bacon Act. See Wight v. Police Jury of Par. of
                Avoyelles, La., 264 F. 705, 709 (5th Cir. 1919) (describing the
                creation of highway districts as ``governmental subdivisions of the
                [S]tate'').
                 In identifying the appropriate geographic area of a wage
                determination, the Federal-Aid Highway Act of 1956 (FAHA), one of the
                Related Acts, uses the term ``immediate locality'' instead of ``civil
                subdivision.'' 23 U.S.C. 113. However, the FAHA requires the
                application of prevailing wage rates in the immediate locality to be
                ``in accordance with'' the DBA, id., and, as noted above, WHD has long
                applied these alternative definitions of area in the Related Acts in a
                manner consistent with the ``civil subdivision'' language in the
                original Act.
                 The Department also notes that Congress, in enacting the FAHA,
                envisioned that the Federal aid would be provided in a manner that
                sought to complement and cooperate with State departments of
                transportation. See Frank Bros. v. Wisconsin Dep't of Transp., 409 F.3d
                880, 887-89 (7th Cir. 2005). As State highway or transportation
                districts often plan, develop, and oversee federally financed highway
                projects, the provision of a single wage determination for each
                district would simplify the procedure for incorporating Federal
                financing into these projects.
                 As such, the Department proposes to authorize WHD to adopt State
                highway districts as the geographic area for determining prevailing
                wages on highway projects, where appropriate.
                (C) Type of Construction (or Construction Type)
                 The Department proposes to define ``type of construction'' or
                ``construction type'' to mean the general category of construction as
                established by the Administrator for the publication of general wage
                determinations. The proposed language also provides examples of types
                of construction,
                [[Page 15708]]
                including building, residential, heavy, and highway, consistent with
                the four construction types the Department currently uses in general
                wage determinations, but does not exclude the possibility of other
                types. The terms ``type of construction'' or ``construction type'' are
                already used elsewhere in part 1 to refer to these general categories
                of construction, as well as in wage determinations themselves. As used
                in this part, the terms ``type of construction'' and ``construction
                type'' are synonymous and interchangeable. The Department believes that
                including this definition would provide additional clarity for these
                references, particularly for members of the regulated community who
                might be less familiar with the term.
                (D) Other Definitions
                 The Department proposes additional conforming edits to 29 CFR 1.2
                in light of proposed changes to 29 CFR 5.2. As part of these conforming
                edits, the Department proposes to revise the definition of ``agency''
                (and add a sub-definition of ``Federal agency'') to mirror the
                definition proposed and discussed below in Sec. 5.2. The Department
                also proposes to add to Sec. 1.2 new defined terms also proposed in
                parts 3 and 5, including ``employed'', ``type of construction (or
                construction type),'' and ``United States or the District of
                Columbia.'' For further discussion on these proposed terms, see the
                corresponding discussion in Sec. 3.2 and 5.2 below.
                (E) Paragraph Designations
                 The Department is also proposing to amend Sec. Sec. 1.2, 3.2, and
                5.2 to remove paragraph designations of defined terms and instead to
                list defined terms in alphabetical order. The Department proposes to
                make conforming edits throughout parts 1, 3, and 5 in any provisions
                that currently reference lettered paragraph definitions.
                iii. Section 1.3 Obtaining and Compiling Wage Rate Information
                (A) 29 CFR 1.3(b)
                 The Department proposes to switch the order of Sec. 1.3(b)(4) and
                (5) for clarity. This nonsubstantive change would simply group together
                the subparagraphs in Sec. 1.3(b) that apply to wage determinations
                generally, and follow those subparagraphs with one that applies only to
                Federal-aid highway projects under 23 U.S.C. 113.
                (B) 29 CFR 1.3(d)
                 As part of its effort to modernize the regulations governing the
                determination of Davis-Bacon prevailing wage rates, the Department is
                considering whether to revise Sec. 1.3(d), regarding when survey data
                from Federal or federally assisted projects subject to Davis-Bacon
                prevailing wage requirements (hereinafter ``Federal project data'') may
                be used in determining prevailing wages for building and residential
                construction wage determinations. The Department is not proposing any
                specific revisions to Sec. 1.3(d) in this NPRM, but rather is seeking
                comment on whether this regulatory provision--particularly its
                limitation on the use of Federal project data in determining wage rates
                for building and residential construction projects--should be revised.
                 For approximately 50 years (beginning shortly after the DBA was
                enacted in 1931 and continuing until the 1981-1982 rulemaking), the
                Department used Federal project data in determining prevailing wage
                rates for all categories of construction, including building and
                residential construction. The final rule promulgated in May 1982
                codified this practice with respect to heavy and highway construction,
                providing in new Sec. 1.3(d) that ``[d]ata from Federal or federally
                assisted projects will be used in compiling wage rate data for heavy
                and highway wage determinations.'' \42\ The Department explained that
                ``it would not be practical to determine prevailing wages for `heavy'
                and `highway' construction projects if Davis-Bacon covered projects are
                excluded in making wage surveys because such a large portion of those
                types of construction receive Federal financing.'' \43\
                ---------------------------------------------------------------------------
                 \42\ See Final Rule, Procedures for Predetermination of Wage
                Rates, 47 FR 23644 (May 28, 1982).
                 \43\ Id.
                ---------------------------------------------------------------------------
                 With respect to building and residential construction, however, the
                1982 final rule concluded that such construction often occurred without
                Federal financial assistance subject to Davis-Bacon prevailing wage
                requirements, and that to invariably include Federal project data in
                calculating prevailing wage rates applicable to building and
                residential construction projects therefore would ``skew[ ] the results
                upward,'' contrary to congressional intent.\44\ The final rule
                therefore provided in Sec. 1.3(d) that ``in compiling wage rate data
                for building and residential wage determinations, the Administrator
                will not use data from Federal or federally assisted projects subject
                to Davis-Bacon prevailing wage requirements unless it is determined
                that there is insufficient wage data to determine the prevailing wages
                in the absence of such data.'' 29 CFR 1.3(d). In subsequent litigation,
                the D.C. Circuit upheld Sec. 1.3(d)'s limitation on the use of Federal
                project data as consistent with the DBA's purpose and legislative
                history--if not necessarily its plain text--and therefore a valid
                exercise of the Administrator's broad discretion to administer the
                Act.\45\
                ---------------------------------------------------------------------------
                 \44\ See Donovan, 712 F.2d at 620.
                 \45\ Id. at 621-22.
                ---------------------------------------------------------------------------
                 As a result of Sec. 1.3(d)'s limitation on the use of Federal
                project data in calculating prevailing wage rates applicable to
                building and residential construction, WHD first attempts to calculate
                a prevailing wage based on non-Federal project survey data at the
                county level--i.e., survey data that includes data from private
                projects or projects funded by State and local governments without
                assistance under the DBRA, but excludes data from Federal or federally
                assisted projects subject to Davis-Bacon prevailing wage requirements.
                See 29 CFR 1.3(d), 1.7(a); Manual of Operations at 38; Coal. for
                Chesapeake Hous. Dev., ARB No. 12-010, 2013 WL 5872049, at *4 (Sept.
                25, 2013) (Chesapeake Housing). If there is insufficient non-Federal
                project survey data for a particular classification in that county,
                then WHD considers survey data from Federal projects in the county if
                such data is available.
                 Under the current regulations, WHD expands the geographic scope of
                data that it considers when it is making a county wage determination
                when data is insufficient at the county level. This procedure is
                described below in the discussion of the ``scope of consideration''
                regulation at Sec. 1.7. For wage determinations for federally funded
                building and residential construction projects, WHD currently
                integrates Federal project data into this procedure at each level of
                geographic aggregation in the same manner it is integrated at the
                county level: If the combined Federal and non-Federal survey data
                received from a particular county is insufficient to establish a
                prevailing wage rate for a classification in a county, then WHD
                attempts to calculate a prevailing wage rate for that county based on
                non-Federal wage data from a group of surrounding counties. See 29 CFR
                1.7(a), (b). If non-Federal project survey data from the surrounding-
                county group is insufficient, then WHD includes Federal project data
                from all the counties in that county group. If both non-Federal project
                and Federal project data for a surrounding-county group is still
                insufficient to determine a prevailing wage rate, then, for
                classifications that have been designated as ``key''
                [[Page 15709]]
                classifications, WHD may expand to a ``super group'' of counties or
                even to the statewide level. See Chesapeake Housing, 2013 WL 5872049,
                at *6; PWRB, Davis-Bacon Surveys, at 6.\46\ At each stage of data
                expansion for building and residential wage determinations, WHD first
                attempts to determine prevailing wages based on non-Federal project
                data; however, if there is insufficient non-Federal data, WHD will
                consider Federal project data.
                ---------------------------------------------------------------------------
                 \46\ See note 16, supra.
                ---------------------------------------------------------------------------
                 As reflected in the plain language of Sec. 1.3(d) as well as WHD's
                implementation of that regulatory provision, the current formulation of
                Sec. 1.3(d) does not prohibit all uses of Federal project data in
                establishing prevailing wage rates for building and residential
                construction projects subject to Davis-Bacon requirements; rather it
                limits the use of such data to circumstances where ``there is
                insufficient wage data to determine the prevailing wages in the absence
                of such data.'' 29 CFR 1.3(d). WHD often uses Federal project data in
                calculating prevailing wage rates applicable to residential
                construction due to insufficient non-Federal project survey data
                submissions. By contrast, because WHD's surveys of building
                construction typically have a higher participation rate than
                residential surveys, WHD uses Federal project data less frequently in
                calculating prevailing wage rates applicable to building construction
                projects covered by the DBRA. For example, the 2011 GAO Report analyzed
                4 DBA surveys and found that over two-thirds of the residential rates
                for 16 key job classifications (such as carpenter and common laborer)
                included Federal project data because there was insufficient non-
                Federal project data, while only about one-quarter of the building wage
                rates for key classifications included Federal project data. 2011 GAO
                Report, at 26.\47\
                ---------------------------------------------------------------------------
                 \47\ See note 8, supra.
                ---------------------------------------------------------------------------
                 Notwithstanding the use of Federal project data in calculating
                prevailing wage rates for building and residential construction, the
                Department recognizes that some interested parties may believe that
                Sec. 1.3(d) imposes an absolute barrier to the use of Federal project
                data in determining prevailing wage rates. As a result, survey
                participants may not submit Federal project data in connection with
                WHD's surveys of building and residential construction--thereby
                reducing the amount of data that WHD receives in response to its
                building and residential surveys. The Department strongly encourages
                robust participation in Davis-Bacon prevailing wage surveys, including
                building and residential surveys, and it therefore urges interested
                parties to submit Federal project data in connection with building and
                residential surveys with the understanding that such data will be used
                in calculating prevailing wage rates if insufficient non-Federal
                project data is received. In the absence of such Federal project data,
                for example, a prevailing wage rate may be calculated at the
                surrounding-county group or even statewide level when it would have
                been calculated based on a smaller geographic area if more Federal
                project data had been submitted.
                 Although increased submission of such Federal project data thus
                could be expected to contribute to more robust wage determinations even
                without any change to Sec. 1.3(d), the Department recognizes that
                revisions to Sec. 1.3(d) may nonetheless be warranted. Specifically,
                the Department is interested in comments regarding whether to revise
                Sec. 1.3(d) in a way that would permit WHD to use Federal project data
                more frequently when it calculates building and residential prevailing
                wages. For example, particularly given the challenges that WHD has
                faced in achieving high levels of participation in residential wage
                surveys--and given the number of residential projects that are subject
                to Davis-Bacon labor standards under Related Acts administered by the
                U.S. Department of Housing and Urban Development--it may be appropriate
                to expand the amount of Federal project data that is available to use
                in setting prevailing wage rates for residential construction.
                 There may also be other specific circumstances that particularly
                warrant greater use of Federal project data. More generally, if the
                current limitation on the use of Federal project data were removed from
                Sec. 1.3(d), WHD could in all circumstances establish Davis-Bacon
                prevailing wage rates for building and residential construction based
                on all usable wage data in the relevant county or other geographic
                area, without regard to whether particular wage data was ``Federal''
                and whether there was ``insufficient'' non-Federal project data.
                Alternatively, Sec. 1.3(d) could be revised in order to provide a
                definition of ``insufficient wage data,'' thereby providing increased
                clarity regarding when Federal project data may and may not be used in
                establishing prevailing wage rates for building or residential
                construction. The Department specifically invites comments on these and
                any other issues regarding the use of Federal project data in
                developing building and residential wage determinations.
                (C) 29 CFR 1.3(f)--Frequently Conformed Rates
                 The Department is also proposing changes relating to the
                publication of rates for labor classifications for which conformance
                requests are regularly submitted when such classifications are missing
                from wage determinations. The Department's proposed changes to this
                subsection are discussed below in part III.B.1.xii (``Frequently
                conformed rates''), together with proposed changes to Sec. 5.5(a)(1).
                (D) 29 CFR 1.3(g)-(j)--Adoption of State/Local Prevailing Wage
                Determinations
                 The Department proposes to add new paragraphs (g), (h), (i), and
                (j) to Sec. 1.3 to permit the Administrator, under specified
                circumstances, to determine Davis-Bacon wage rates by adopting
                prevailing wage rates set by State and local governments.
                 About half of the States, as well as many localities, have their
                own prevailing wage laws (sometimes called ``little'' Davis-Bacon
                laws).\48\ Additionally, a few states have processes for determining
                prevailing wages in public construction even in the absence of such
                State laws.\49\ Accordingly, the Administrator has long taken
                prevailing wage rates set by States and localities into account when
                making wage determinations. Under the current regulations, one type of
                information that the Administrator may ``consider[ ]'' in determining
                wage rates is ``[w]age rates determined for public construction by
                State and local officials pursuant to State and local prevailing wage
                legislation.'' 29 CFR 1.3(b)(3). Additionally, for wage determinations
                on federally-funded highway construction projects, the Administrator is
                required by statute and regulation to ``consult[ ]'' with ``the highway
                department of the State'' in which the work is to be performed, and to
                ``give due regard to the information thus obtained.'' 23 U.S.C. 113(b);
                29 CFR 1.3(b)(4).
                ---------------------------------------------------------------------------
                 \48\ A list of such states, and the thresholds for coverage, can
                be found here: Dollar Threshold Amount for Contract Coverage, U.S.
                Dep't of Lab., Wage and Hour Div., https://www.dol.gov/agencies/whd/state/prevailing-wages (last updated Jan. 2021).
                 \49\ These states include Iowa, North Dakota, and South Dakota.
                ---------------------------------------------------------------------------
                 In reliance on these provisions, WHD has sometimes adopted and
                published certain states' highway wage determinations in lieu of
                conducting wage surveys in certain areas. According to a 2019 report by
                the Department's Office of the Inspector General (OIG), WHD used
                highway wage
                [[Page 15710]]
                determinations from 15 states between fiscal years 2013 and 2017. See
                2019 OIG Report at 10.\50\
                ---------------------------------------------------------------------------
                 \50\ See note 11, supra.
                ---------------------------------------------------------------------------
                 The OIG report expressed concern about the high number of out-of-
                date Davis-Bacon wage rates, particularly non-union rates, noting, for
                example, that some published wage rates were as many as 40 years old.
                Id. at 5. The OIG report further noted that at the time, 26 states and
                the District of Columbia had their own prevailing wage laws, and
                recommended that WHD ``should determine whether it would be statutorily
                permissible and programmatically appropriate to adopt [S]tate or local
                wage rates other than those for highway construction.'' Id. at 10-11.
                WHD indicated to OIG that in the absence of a regulatory revision, it
                viewed adoption of State rates for non-highway construction as in
                tension with the definition of prevailing wage in Sec. 1.2(a) and the
                ARB's Mistick decision. Id. at 10.
                 The Department shares OIG's concern regarding outdated wage rates.
                Outdated and/or inaccurate wage determinations are inconsistent with
                the intent of the Davis-Bacon labor standards, which aim to ensure that
                laborers and mechanics on covered projects are paid locally prevailing
                wages and fringe benefits. Wage rates that are significantly out-of-
                date do not reflect this intent and could even have the effect of
                depressing wages if covered contractors pay no more than an
                artificially-low prevailing wage rate that has not been adjusted over
                time to continue to reflect the wages paid to workers in a geographic
                area. Accordingly, the Department agrees with OIG that, where
                appropriate, adoption of more current wage determinations made by
                states and localities would be consistent with the DBA's purpose.
                States often conduct wage surveys far more frequently than WHD.\51\
                Furthermore, if a State or locality is already engaged in efforts to
                determine prevailing wages--and if the State's methods are reliable,
                rigorous, and transparent--similar activities conducted by WHD on a
                less regular basis can be duplicative and an inefficient use of survey
                respondents' efforts and WHD's scarce resources. Relatedly, states and
                localities that regularly update their own wage determinations may have
                ongoing relationships with stakeholders in the relevant geographic
                areas that facilitate that process. In contrast, WHD may lack similarly
                strong relationships with those stakeholders given the relative
                infrequency with which it surveys any given area. Thus, many states and
                localities may be in a position to ensure greater participation in wage
                surveys, which can improve wage survey accuracy.
                ---------------------------------------------------------------------------
                 \51\ Some states, such as Minnesota, conduct surveys annually.
                See Prevailing Wage: Annual Statewide Survey, Minn. Dep't of Labor &
                Indus., https://www.dli.mn.gov/business/employment-practices/prevailing-wage-annual-statewide-survey (last visited Nov. 17,
                2021). Others use a different frequency; for example, Nevada
                conducts a survey every 2 years. See Nevada's 2021-2023 Prevailing
                Wage Survey Released, Nev. Dep't of Bus. & Indus., https://business.nv.gov/News_Media/Press_Releases/2021/Labor_Commissioner/Nevada%E2%80%99s_2021-2023_Prevailing_Wage_Survey_Released/ (last
                visited Nov. 17, 2021).
                ---------------------------------------------------------------------------
                 The Department believes that a regulatory revision would best
                ensure that WHD can incorporate State and local wage determinations
                where doing so would further the purposes of the Davis-Bacon labor
                standards. As noted above, the current regulations permit WHD to
                ``consider'' State or local prevailing wage rates among a variety of
                sources of information used to make wage determinations, and require
                WHD to give ``due regard'' to information obtained from State highway
                departments for highway wage determinations. See 29 CFR 1.3(b)(3)-(4).
                However, they also provide that any information WHD considers when
                making wage determinations must ``be evaluated in the light of [the
                prevailing wage definition set forth in] Sec. 1.2(a).'' 29 CFR 1.3(c).
                While some States and localities' definitions of prevailing wage mirror
                the Department's regulatory definition, many others' do not.\52\
                Because the current regulations at Sec. Sec. 1.2(a) and 1.3(c), as
                well as the ARB's decision in Mistick, suggest that any information
                (such as State or local wage rates) that WHD obtains and
                ``consider[s]'' under Sec. 1.3(b) must be filtered through the
                definition of ``prevailing wage'' in Sec. 1.2, the Department is
                proposing a regulatory change to clarify that WHD may adopt State or
                local prevailing wage determinations under certain circumstances even
                where the State or locality's definition of prevailing wage differs
                from the Department's.
                ---------------------------------------------------------------------------
                 \52\ For example, Washington uses a definition similar to the
                Department's current majority rule. See Wash. Rev. Code Sec.
                39.12.010(1) (2021). Wyoming, in contrast, uses a method that
                mirrors the three-step process in this proposed rule. Wyo. Stat.
                Ann. Sec. Sec. 27-4-401-413 (2021). Other states use CBA rates as a
                starting point. N.M. Stat. Ann. Sec. Sec. 13-4-10-17 (2021); N.M.
                Code R. Sec. 11.1.2.12 (2021); N.Y. Lab. Law Sec. Sec. 220-224
                (McKinney 2021).
                ---------------------------------------------------------------------------
                 Additionally, the Department's regulations apply numerous
                requirements and constraints to WHD's own wage determinations, such as
                those concerning geographic scope, see Sec. 1.7, and the type of
                project data that may be used, see Sec. 1.3(d). Like the definition of
                prevailing wage, analogous requirements under State and local
                prevailing wage laws vary. Although, as noted above, the Department's
                regulations permit WHD to ``consider'' State and local determinations
                and to give ``due regard'' to State rates for highway construction, the
                current regulations do not specifically address whether WHD may adopt
                State or local rates derived using methods and requirements that differ
                from those used by WHD.
                 Accordingly, and in light of the advantages of adopting State and
                local rates discussed above, the Department is proposing to add a new
                paragraph, Sec. 1.3(g), which would explicitly permit WHD to adopt
                prevailing wage rates set by State or local officials, even where the
                methods used to derive such rates, including the definition of the
                prevailing wage, may differ in some respects from the methods the
                Administrator uses under the DBA and the regulations in 29 CFR part 1.
                The proposal would permit WHD to adopt such wage rates provided that
                the Administrator, after reviewing the rate and the processes used to
                derive the rate, concludes that they meet certain listed criteria. The
                criteria, which are explained further below, are intended to allow WHD
                to adopt State and local prevailing wage rates where appropriate while
                also ensuring that adoption of such rates is consistent with the
                statutory requirements of the Davis-Bacon Act and does not create
                arbitrary distinctions between jurisdictions where WHD makes wage
                determinations by using its own surveys and jurisdictions where WHD
                makes wage determinations by adopting adopt State or local rates.
                 Importantly, the proposed rule requires the Administrator to make
                an affirmative determination that the enumerated criteria have been met
                in order to adopt a State or local wage rate, and to do so only after
                careful review of both the rate and the process used to derive the
                rate. This makes clear that if the proposed rule is finalized, the
                Department may not simply accept State or local data with little or no
                review. Such actions would be inconsistent with the Secretary's
                statutory responsibility to ``determine[ ]'' the wages that are
                prevailing. 40 U.S.C. 3142(b). Adoption of State or local rates after
                appropriate review, however, is consistent with the authority Congress
                granted to the Department in the Davis-Bacon Act. The DBA ``does not
                prescribe a method for determining prevailing wages.'' Chesapeake
                Housing, 2013 WL 5872049, at *4.
                [[Page 15711]]
                Rather, the statute ``delegates to the Secretary, in the broadest terms
                imaginable, the authority to determine which wages are prevailing.''
                Donovan, 712 F.2d at 616. The D.C. Circuit has explained that the DBA's
                legislative history reflects that Congress ``envisioned that the
                Secretary could establish the method to be used'' to determine DBA
                prevailing wage rates. Id. (citing 74 Cong. Rec. 6,516 (1931) (remarks
                of Rep. Kopp) (``A method for determining the prevailing wage rate
                might have been incorporated in the bill, but the Secretary of Labor
                can establish the method and make it known to the bidders.'')).
                 Reliance on prevailing wage rates calculated by State or local
                authorities for similar purposes is a permissible exercise of this
                broad statutory discretion. In areas where states or localities are
                already gathering reliable information about prevailing wages in
                construction, it may be inefficient for the Department to use its
                limited resources to perform the same tasks. As a result, the
                Department is proposing to use State and local wage determinations
                under specified circumstances where, based on a review and analysis of
                the processes used in those wage determinations, the Administrator
                determines that such use would be appropriate and consistent with the
                DBA. Such resource-driven decisions by Federal agencies are
                permissible. See, e.g., Hisp. Affs. Project v. Acosta, 901 F.3d 378,
                392 (D.C. Cir. 2018) (upholding Department's decision not to collect
                its own data but instead to rely on a ``necessarily . . . imprecise''
                estimate given that data collection under the circumstances would have
                been ``very difficult and resource-intensive''); Dist. Hosp. Partners,
                L.P. v. Burwell, 786 F.3d 46, 61-62 (D.C. Cir. 2015) (agency's use of
                ``imperfect[ ]'' data set was permissible under the Administrative
                Procedure Act).
                 The Department is proposing to permit the adoption of State and
                local rates for all types of construction. The FHWA's independent
                statutory obligation for the Department to consider and give ``due
                regard'' to information obtained from State highway agencies for
                highway wage determinations does not prohibit WHD from adopting State
                or local determinations, either for highway construction or for other
                types of construction, where appropriate. Rather, this language imposes
                a minimum requirement for the Secretary to consult with states and
                consider their wage determinations for highway construction. See
                Virginia, ex rel., Comm'r, Virginia Dep't of Highways and Transp. v.
                Marshall, 599 F.2d 588, 594 (4th Cir. 1979) (``Section 113(b) requires
                that the Secretary `consult' and give `due regard' to the information
                thus obtained.''). In sum, the FHWA's requirement sets a floor for
                reliance on State data for highway construction, not a ceiling, and
                does not foreclose reliance on State or local data for other types of
                construction.
                 The criteria the Department proposes for the adoption of State or
                local rates, which are included in proposed new paragraph Sec. 1.3(h),
                are as follows:
                 First, the State or local government must set prevailing wage
                rates, and collect relevant data, using a survey or other process that
                generally is open to full participation by all interested parties. This
                requirement ensures that WHD will not adopt a prevailing wage rate
                where the process to set the rate artificially favors certain entities,
                such as union or non-union contractors. Rather, the State or local
                process must reflect a good-faith effort to derive a wage that prevails
                for similar workers on similar projects within the relevant geographic
                area within the meaning of the Davis-Bacon Act statutory provisions.
                The use of the language ``survey or other process'' in the proposed
                regulatory text is intended to permit the Administrator to incorporate
                wage determinations from States or localities that do not necessarily
                engage in surveys but instead use a different process for gathering
                information and setting prevailing wage rates, provided that this
                process meets the required criteria.\53\
                ---------------------------------------------------------------------------
                 \53\ For example, a few states determine prevailing wage rates
                through stakeholder negotiations that typically involve labor and
                employer groups. The proposed rule does not foreclose acceptance of
                rates set using such a process providing that the process is
                generally open to full participation by all interested parties and
                that the other required criteria are met.
                ---------------------------------------------------------------------------
                 Second, the State or local wage rate must reflect both a basic
                hourly rate of pay as well as any locally prevailing bona fide fringe
                benefits, each of which can be calculated separately. Thus, under the
                proposed rule, WHD must be able to confirm during its review process
                that both figures are prevailing for the relevant classification(s),
                and must be able to list each figure separately on its wage
                determinations. This reflects the statutory requirement that a
                prevailing wage rate under the Davis-Bacon Act must include fringe
                benefits, 40 U.S.C. 3141(2)(B); 29 CFR 5.20, and that ``the Secretary
                is obligated to make a separate finding of the rate of contribution or
                cost of fringe benefits.'' 29 CFR 5.25(a). This requirement also would
                ensure that WHD could determine the basic or regular rate of pay in
                order to determine compliance with the Contract Work Hours and Safety
                Standards Act (CWHSSA) and the Fair Labor Standards Act (FLSA).
                 Third, the State or local government must classify laborers and
                mechanics in a manner that is recognized within the field of
                construction. The Department recognizes that differences in industry
                practices mean that the precise types of work done and tools used by
                workers in particular classifications may not be uniform across states
                and localities. For example, in some areas, a significant portion of
                work involving the installation of heating, ventilation, and air-
                conditioning (HVAC) duct work may be done by an HVAC Technician,
                whereas in other areas such work may be more typically performed by a
                Sheet Metal Worker. Indeed, unlike in the case of the Service Contract
                Act (SCA), WHD does not maintain a directory of occupations for the
                Davis-Bacon Act. However, under this proposed rule, in order for WHD to
                adopt a State or locality's wage rate, the State or locality's
                classification system must be in a manner recognized within the field
                of construction. This standard is intended to ensure that the
                classification system does not result in lower wages than are
                appropriate by, for example, assigning duties associated with skilled
                classifications to a classification for a general laborer.
                 Finally, the State or local government's criteria for setting
                prevailing wage rates must be substantially similar to those the
                Administrator uses in making wage determinations under 29 CFR part 1.
                The proposed regulation provides a non-exclusive list of factors to
                guide this determination, including, but not limited to, the State or
                local government's definition of prevailing wage; the types of fringe
                benefits it accepts; the information it solicits from interested
                parties; its classification of construction projects, laborers, and
                mechanics; and its method for determining the appropriate geographic
                area(s). Thus, the more similar a State or local government's methods
                are to those used by WHD, the greater likelihood that their
                corresponding wage rate(s) will be accepted. While the proposed
                regulation lists the above factors as guidelines, it ultimately directs
                that the Administrator's determination in this regard will be based on
                the totality of the circumstances. The reservation of such discretion
                in the Administrator intends to preserve the Administrator's ability to
                make an overall determination regarding whether adoption of a State or
                local wage rate is consistent with both
                [[Page 15712]]
                the language and purpose of the DBA, and thereby is consistent with the
                statutory directive for the Secretary (in this case, via delegation to
                the Administrator), to determine the prevailing wage. See 40 U.S.C.
                3142(b).
                 Proposed Sec. 1.3(g) permits the Administrator to adopt State or
                local wage rates with or without modification. This is intended to
                encompass situations where the Administrator reviews a State or local
                wage determination and determines that although the State or local wage
                determination might not satisfy the above criteria as initially
                submitted, it would satisfy those criteria with certain modifications.
                For example, the Administrator may obtain from the State or local
                government the State or locality's wage determinations and the wage
                data underlying those determinations, and, provided the data was
                collected in accordance with the criteria set forth earlier (such as
                that the survey was fully open to all participants) may determine,
                after review and analysis, that it would be appropriate to use the
                underlying data to adjust or modify certain classifications or
                construction types, or to adjust the wage rate for certain
                classifications. Consistent with the Secretary's authority to make wage
                determinations, the regulation permits the Administrator to modify a
                State or local wage rate as appropriate while still generally relying
                on it as the primary source for a wage determination. For instance,
                before using State or local government wage data to calculate
                prevailing wage rates under the DBA, the Administrator could regroup
                counties, apply the definition of ``prevailing wage'' set forth in
                Sec. 1.2, disregard data for workers who do not qualify as laborers or
                mechanics under the DBA, and/or segregate data based on the type of
                construction involved. It is anticipated that the Administrator would
                cooperate with the State or locality to make the appropriate
                modifications to any wage rates.
                 The Department also proposes to add a new paragraph Sec. 1.3(i),
                which would explain that in order for WHD to adopt a State or local
                government prevailing wage rate, the Administrator must obtain the wage
                rates and any relevant supporting documentation and data from the State
                or local entity, and provides instructions for submission.
                 Finally, the Department proposes to add a new paragraph Sec.
                1.3(j), which would explain that nothing in the additional proposed
                sections described above precludes the Administrator from considering
                State or local prevailing wage rates in a more holistic fashion,
                consistent with Sec. 1.3(b)(3), or from giving due regard to
                information obtained from State highway departments, consistent with
                Sec. 1.3(b)(4), as part of the Administrator's process of making
                prevailing wage determinations under 29 CFR part 1. For example, under
                this proposed rule, as under the current regulations, if a State or
                locality were to provide the Department with the underlying data that
                it uses to determine wage rates, even if the Administrator determines
                not to adopt the wage rates themselves, the Administrator may consider
                or use the data as part of the process to determine the prevailing wage
                within the meaning of 29 CFR 1.2, provided that the data is timely
                received and otherwise appropriate. The purpose of the proposed
                additional language is to clarify that the Administrator may, under
                certain circumstances, adopt State or local wage rates, and use them in
                wage determinations, even if the process and rules for State or local
                wage determinations differs from the Administrator's. These proposed
                revisions therefore address the concerns WHD voiced to OIG that the
                current regulations, and in particular the definition of prevailing
                wage as interpreted by the ARB in Mistick, could preclude, or at least
                be in tension with, such an approach.
                iv. Section 1.4 Report of Agency Construction Programs
                 Section 1.4 currently provides that, to the extent practicable,
                agencies that use wage determinations under the DBRA shall submit an
                annual report to the Department outlining proposed construction
                programs for the coming year. The reports described in Sec. 1.4 assist
                WHD in its multi-year planning efforts by providing information that
                may guide WHD's decisions regarding when to survey wages for particular
                types of construction in a particular locality. These reports are an
                effective way for the Department to know where Federal and federally
                assisted construction will be taking place, and therefore where updated
                wage determinations will be of most use.
                 Notwithstanding the importance of these reports to the program,
                contracting agencies have not regularly provided them to the
                Department. As a result, after careful consideration, the Department
                proposes to remove the language in the regulation that currently allows
                agencies to submit reports only ``to the extent practicable.'' Instead,
                as proposed, Sec. 1.4 would require Federal agencies to submit the
                construction reports.
                 The Department also now proposes to adopt certain elements of two
                prior AAMs addressing these reports. In 1985, WHD updated its guidance
                regarding the agency construction reports, including by directing that
                Federal agencies submit the annual report by April 10 each year and
                providing a recommended format for such agencies to submit the report.
                See AAM 144 (Dec. 27, 1985). In 2017, WHD requested that Federal
                agencies include in the reports proposed construction programs for an
                additional 2 fiscal years beyond the upcoming year. See AAM 224 (Jan.
                17, 2017). The proposed changes to Sec. 1.4 would codify these
                guidelines as part of the regulations.
                 The Department also proposes new language requiring Federal
                agencies to include notification of any expected options to extend the
                terms of current construction contracts. The Department is proposing
                this change because--like a new contract--the exercise of an option
                requires the incorporation of the most current wage determination. See
                AAM 157 (Dec. 9, 1992); see also 48 CFR 22.404-12(a). Receiving
                information concerning expected options to extend the terms of current
                construction contracts therefore will help the Department assess where
                updated wage determinations are needed for Federal and federally
                assisted construction, which will in turn contribute to the
                effectiveness of the overall Davis-Bacon wage survey program. The
                Department also proposes that Federal agencies include the estimated
                cost of construction in their reports, as this information also will
                help the Department prioritize areas where updated wage determinations
                will have the broadest effects.
                 In addition, the Department proposes to require that Federal
                agencies include in the annual report a notification of any significant
                changes to previously reported construction programs. In turn, the
                Department proposes eliminating the current directive that agencies
                notify the Administrator mid-year of any significant changes in their
                proposed construction programs. Such notification would instead be
                provided in Federal agencies' annual reports.
                 Finally, the Department proposes deleting the reference to the
                Interagency Reports Management Program as the requirements of that
                program were terminated by the General Services Administration (GSA) in
                2005. See 70 FR 3132 (Jan. 19, 2005).
                 The Department does not believe that these proposed changes will
                result in significant burdens on contracting agencies, as the proposed
                provisions request only information already on
                [[Page 15713]]
                hand. Furthermore, any burden resulting from the new proposal should be
                offset by the proposed elimination of the current directive that
                agencies notify the Administrator of any significant changes in a
                separate mid-year report. However, the Department also seeks comment on
                any alternative methods through which the Department may obtain the
                information and eliminate the need to require the agency reports.
                v. Section 1.5 Publication of General Wage Determinations and Procedure
                for Requesting Project Wage Determinations
                 The Department proposes a number of revisions to Sec. 1.5 to
                clarify the applicability of general wage determinations and project
                wage determinations. Except as noted below, these revisions are
                consistent with longstanding Department practice and subregulatory
                guidance.
                 First, the Department proposes to re-title Sec. 1.5, currently
                titled ``Procedure for requesting wage determinations,'' as
                ``Publication of general wage determinations and procedure for
                requesting project wage determinations.'' The proposed revision better
                reflects the content of the section as well as the distinction between
                general wage determinations, which the Department publishes for broad
                use, and project wage determinations, which are requested by
                contracting agencies on a project-specific basis.
                 Additionally, the Department proposes to add language to Sec.
                1.5(a) to explain that a general wage determination contains, among
                other information, a list of wage rates determined to be prevailing for
                various classifications of laborers and mechanics for specified type(s)
                of construction in a given area. Likewise, the Department proposes to
                add language to Sec. 1.5(b) to explain circumstances under which an
                agency may request a project wage determination, namely, where (1) the
                project involves work in more than one county and will employ workers
                who may work in more than one county; (2) there is no general wage
                determination in effect for the relevant area and type of construction
                for an upcoming project; or (3) all or virtually all of the work on a
                contract will be performed by one or more classifications that are not
                listed in the general wage determination that would otherwise apply,
                and contract award or bid opening has not yet taken place. The first of
                these three circumstances conforms to the proposed revision to the
                definition of ``area'' in Sec. 1.2 discussed above that would permit
                the issuance of project wage determinations for multi-county projects
                where appropriate. The latter two circumstances reflect the
                Department's existing practice. See PWRB, Davis-Bacon Wage
                Determinations, at 4-5.
                 The Department also proposes to add language to Sec. 1.5(b)
                clarifying that requests for project wage determinations may be sent by
                means other than the mail, such as email or online submission, as
                directed by the Administrator. Additionally, consistent with the
                Department's current practice, the Department proposes to add language
                to Sec. 1.5(b) requiring that when requesting a project wage
                determination for a project that involves multiple types of
                construction, the requesting agency must attach information indicating
                the expected cost breakdown by type of construction. See PWRB, Davis-
                Bacon Wage Determinations, at 5. The Department also proposes to
                clarify that in addition to submitting the information specified in the
                regulation, a party requesting a project wage determination must submit
                all other information requested in the Standard Form (SF) 308.
                 Finally, the Department proposes to clarify the term ``agency'' in
                Sec. 1.5. In proposed Sec. 1.5(b)(2) (renumbered, currently Sec.
                1.5(b)(1)), which describes the process for requesting a project wage
                determination, the Department proposes to delete the word ``Federal''
                that precedes ``agency.'' This proposed deletion, and the resulting
                incorporation of the definition of ``agency'' from Sec. 1.2, clarifies
                that, as already implied elsewhere in Sec. 1.5, non-Federal agencies
                may request project wage determinations. See, e.g., Sec. 1.5(b)(3)
                (proposed Sec. 1.5(b)(4)) (explaining that a State highway department
                under the Federal-Aid Highway Acts may be a requesting agency).
                vi. Section 1.6 Use and Effectiveness of Wage Determinations
                (A) Organizational, Technical and Clarifying Revisions
                 The Department proposes to reorganize, rephrase, and/or re-number
                several regulatory provisions and text in Sec. 1.6. These proposed
                revisions include adding headings to paragraphs and subparagraphs for
                clarity; changing the order of some of the paragraphs and subparagraphs
                so that discussions of general wage determinations precede discussions
                of project wage determinations, reflecting the fact that general wage
                determinations are (and have been for many years) the norm, whereas
                project wage determinations are the exception; adding the word
                ``project'' before ``wage determinations'' in locations where the text
                refers to project wage determinations but could otherwise be read as
                referring to both general and project wage determinations; using the
                term ``revised'' wage determination to refer both to cases where a wage
                determination is modified, such as due to updated CBA rates, and cases
                where a wage determination is re-issued entirely (referred to in the
                current regulatory text as a ``supersedeas'' wage determination), such
                as after a new wage survey; consolidating certain subsections that
                discuss revisions to wage determinations to eliminate redundancy and
                improve clarity; revising the regulation so that it references the
                publication of a general wage determination (consistent with the
                Department's current practice of publishing wage determinations
                online), rather than publication of notice of the wage determination
                (which the Department previously did in the Federal Register); and
                using the term ``issued'' to refer, collectively, to the publication of
                a general wage determination or WHD's provision of a project wage
                determination.
                 The Department also proposes minor revisions to clarify that there
                is only one appropriate use for wage determinations that are no longer
                current--which are referred to in current regulatory text as
                ``archived'' wage determinations, and the Department now proposes to
                describe as ``inactive'' to conform to the terminology currently used
                on the System for Award Management (SAM.gov). That permissible
                circumstance is when the contracting agency initially failed to
                incorporate the correct wage determination into the contract and
                subsequently must incorporate the correct wage determination after
                contract award or the start of construction (a procedure that is
                discussed in Sec. 1.6(f)). In that circumstance, even if the wage
                determination that should have been incorporated at the time of the
                contract award has since become inactive, it is still the correct wage
                determination to incorporate into the contract.
                 The Department also proposes that agencies should notify the
                Administrator prior to engaging in incorporation of an inactive wage
                determination, and that agencies may not incorporate the inactive wage
                determination if the Administrator instructs otherwise. While the
                current regulation requires the Department to ``approv[e]'' the use of
                an inactive wage determination, the proposed change permits the
                contracting agency to use an inactive wage determination under these
                limited circumstances as long as it has notified the Administrator and
                has
                [[Page 15714]]
                not been instructed otherwise. The proposed change is intended to
                ensure that contracting agencies incorporate omitted wage
                determinations promptly rather than waiting for approval.
                 The Department also proposes revisions to Sec. 1.6(b) to clarify
                when contracting agencies must incorporate multiple wage determinations
                into a contract. The proposed language states that when a construction
                contract includes work in more than one area (as the term is defined in
                Sec. 1.2), and no multi-county project wage determination has been
                obtained (as contemplated by the proposed revisions to Sec. 1.2), the
                applicable wage determination for each area must be incorporated into
                the contract so that all workers on the project are paid the wages that
                prevail in their respective areas, consistent with the DBA. The
                Department also proposes language stating that when a construction
                contract includes work in more than one type of construction (as the
                Department has proposed to define the term in Sec. 1.2), the
                contracting agency must incorporate the applicable wage determination
                for each type of construction where the total work in that category of
                construction is substantial. This accords with the Department's
                longstanding guidance published in AAM 130 (Mar. 17, 1978) and AAM 131
                (July 14, 1978).\54\ The Department intends to continue interpreting
                the meaning of ``substantial'' in subregulatory guidance.\55\ The
                Department requests comments on the above proposals, including
                potential ways to improve the standards for when and how to incorporate
                multiple wage determinations into a contract.
                ---------------------------------------------------------------------------
                 \54\ AAM 130 states that where a project ``includes construction
                items that in themselves would be otherwise classified, a multiple
                classification may be justified if such construction items are a
                substantial part of the project . . . [but] a separate
                classification would not apply if such construction items are merely
                incidental to the total project to which they are closely related in
                function,'' and construction is incidental to the overall project.
                AAM 130, p. 2, n.1. AAM 131 similarly states that multiple schedules
                are issued if ``the construction items are substantial in relation
                to project cost[s].'' However, it, it further explains that ``[o]nly
                one schedule is issued if construction items are `incidental' in
                function to the overall character of a project . . . and if there is
                not a substantial amount of construction in the second category.''
                AAM 131, p. 2.
                 \55\ Most recently, on December 14, 2020, the Administrator
                issued AAM 236, which states that ``[w]hen a project has
                construction items in a different category of construction,
                contracting agencies should generally apply multiple wage
                determinations when the cost of the construction exceeds either $2.5
                million or 20 percent of the total project costs,'' but that WHD
                will consider ``exceptional situations'' on a case-by-case basis.
                AAM 236, pp. 1-2.
                ---------------------------------------------------------------------------
                 The Department also proposes to add language to Sec. 1.6(b)
                clarifying and reinforcing the responsibilities of contracting
                agencies, contractors, and subcontractors with regard to wage
                determinations. Specifically, the Department proposes to clarify in
                Sec. 1.6(b)(1) that contracting agencies are responsible for making
                the initial determination of the appropriate wage determination(s) for
                a project. In Sec. 1.6(b)(2), the Department proposes to clarify that
                contractors and subcontractors have an affirmative obligation to ensure
                that wages are paid to laborers and mechanics in compliance with the
                DBRA labor standards.
                 The Department also proposes to revise language in Sec. 1.6(b)
                that currently states that the Administrator ``shall give foremost
                consideration to area practice'' in resolving questions about ``wage
                rate schedules.'' In the Department's experience, this language has
                created unnecessary confusion because stakeholders have at times
                interpreted it as precluding the Administrator from considering other
                factors when resolving questions about wage determinations.
                Specifically, the Department has long recognized that when ``it is
                clear from the nature of the project itself in a construction sense
                that it is to be categorized'' as either building, residential, heavy,
                or highway construction, ``it is not necessary to resort to an area
                practice'' to determine the proper category of construction. AAM 130,
                at 2; see also AAM 131, at 1 (``area practice regarding wages paid will
                be taken into consideration together with other factors,'' when ``the
                nature of the project in a construction sense is not clear.'');
                Chastleton Apartments, WAB No. 84-09, 1984 WL 161751, at *4 (Dec. 11,
                1984) (because the ``character of the structure in a construction sense
                dictates its characterization for Davis-Bacon wage purposes,'' where
                there was a substantial amount of rehabilitation work being done on a
                project similar to a commercial building in a construction sense, it
                was ``not necessary to determine whether there [was] an industry
                practice to recognize'' the work as residential construction). The
                regulatory reference to giving ``foremost consideration to area
                practice'' in determining which wage determination to apply to a
                project arguably is in tension with the Department's longstanding
                position, and has resulted in stakeholders contending on occasion that
                WHD or a contracting agency must in every instance conduct an
                exhaustive review of local area practice as to how work is classified,
                even if the nature of the project in a construction sense is clear. The
                revised language would resolve this perceived inconsistency and would
                streamline determinations regarding construction types by making clear
                that while the Administrator should continue considering area practice,
                the Administrator may consider other relevant factors, particularly the
                nature of the project in a construction sense. This proposed regulatory
                revision also would better align the Department's regulations with the
                FAR, which does not call for ``foremost consideration'' to be given to
                area practice in all circumstances, but rather provides, consistent
                with AAMs 130 and 131, that ``[w]hen the nature of a project is not
                clear, it is necessary to look at additional factors, with primary
                consideration given to locally established area practices.'' 48 CFR
                22.404-2(c)(5).
                 In Sec. 1.6(e), the Department proposes to clarify that if, prior
                to contract award (or, as appropriate, prior to the start of
                construction), the Administrator provides written notice that the
                bidding documents or solicitation included the wrong wage determination
                or schedule, or that an included wage determination was withdrawn by
                the Department as a result of an Administrative Review Board decision,
                the wage determination may not be used for the contract, without regard
                to whether bid opening (or initial endorsement or the signing of a
                housing assistance payments contract) has occurred. Current regulatory
                text states that under such circumstances, notice of such errors is
                ``effective immediately'' but does not explain the consequences of such
                effect. The proposed language is consistent with the Department's
                current practice and guidance. See Manual of Operations at 35.
                 In Sec. 1.6(g), the Department proposes to clarify that under the
                Related Acts, if Federal funding or assistance is not approved prior to
                contract award (or the beginning of construction where there is no
                contract award), the applicable wage determination must be incorporated
                retroactive to the date of the contract award or the beginning of
                construction; the Department proposes to delete language indicating
                that a wage determination must be ``requested,'' as such language
                appears to contemplate a project wage determination, which in most
                situations will not be necessary as a general wage determination will
                apply. The Department also proposes to revise Sec. 1.6(g) to clarify
                that it is the head of the applicable Federal agency who must request
                any waiver of the requirement that a wage determination
                [[Page 15715]]
                provided under such circumstances be retroactive to the date of the
                contract award or the beginning of construction. The current version of
                Sec. 1.6(g) uses the term ``agency'' and is therefore ambiguous as to
                whether it refers to the Federal agency providing the funding or
                assistance or the State or local agency receiving it. The proposed
                clarification that this term refers to Federal agencies reflects both
                the Department's current practice and its belief that it is most
                appropriate for the relevant Federal agency, rather than a State or
                local agency, to bear these responsibilities, including assessing, as
                part of the waiver request, whether non-retroactivity would be
                necessary and proper in the public interest based on all relevant
                considerations.
                (B) Requirement To Incorporate Most Recent Wage Determinations Into
                Certain Ongoing Contracts
                 The Department's longstanding position has been to require that
                contracts and bid solicitations contain the most recently issued
                revision to a wage determination to be applied to construction work to
                the extent that such a requirement does not cause undue disruption to
                the contracting process. See 47 FR 23644, 23646 (May 28, 1982); United
                States Army, ARB No. 96-133, 1997 WL 399373, at *6 (July 17, 1997)
                (``The only legitimate reason for not including the most recently
                issued wage determination in a contract is based upon disruption of the
                procurement process.''). Under the current regulations, a wage
                determination is generally applicable for the duration of a contract
                once incorporated. See 29 CFR 1.6(c)(2)(ii) and (c)(3)(vi). For
                clarity, the Department proposes to add language to Sec. 1.6(a) to
                state this affirmative principle.
                 The Department also proposes to add a new section, Sec.
                1.6(c)(2)(iii), to clarify two circumstances where this general
                principle does not apply. First, the Department proposes to explain
                that the most recent version of any applicable wage determination(s)
                must be incorporated when 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 agency exercises an option
                provision to unilaterally extend the term of a contract. This proposed
                change is consistent with the Department's guidance, case law, and
                historical practice, under which such modifications are considered new
                contracts. See United States Army, 1997 WL 399373, at *6 (noting that
                DOL has consistently ``required that new DBA wage determinations be
                incorporated . . . when contracts are modified beyond the obligations
                of the original contract''); Iowa Dep't of Transp., WAB No. 94-11, 1994
                WL 764106, at *5 (Oct. 7, 1994) (``A contract that has been
                `substantially' modified must be treated as a `new' contract in which
                the most recently issued wage determination is applied.''); AAM 157
                (Dec. 9, 1992) (explaining that exercising an option ``requires a
                contractor to perform work for a period of time for which it would not
                have been obligated . . . under the terms of the original contract,''
                and as such, ``once the option . . . is exercised, the additional
                period of performance becomes a new contract''). Under these
                circumstances, the most recent version of any wage determination(s)
                must be incorporated as of the date of the change or, where applicable,
                the date the agency exercises its option to extend the contract's term.
                These circumstances do not include situations where the contractor is
                simply given additional time to complete its original commitment or
                where the additional construction, alteration, and/or repair work in
                the modification is merely incidental.
                 Additionally, modern contracting methods frequently involve a
                contractor agreeing to perform construction as the need arises over an
                extended time period, with the quantity and timing of the construction
                not known when the contract is awarded.\56\ Examples of such contracts
                would include, but are not limited to: A multi-year indefinite-
                delivery-indefinite-quantity (IDIQ) contract to perform repairs to a
                Federal facility when needed; a long-term contract to operate and
                maintain part or all of a facility, including repairs and renovations
                as needed; \57\ or a schedule contract or blanket purchase agreement
                whereby a contractor enters into an agreement with a Federal agency to
                provide certain products or services (either of which may involve work
                subject to Davis-Bacon coverage, such as installation) or construction
                at agreed-upon prices to various agencies or other government entities,
                who can order from the schedule at any time during the contract. The
                extent of the required construction, the time, and even the place where
                the work will be performed may be unclear at the time such contracts
                are awarded.
                ---------------------------------------------------------------------------
                 \56\ Depending on the circumstances, these types of contracts
                may be principally for services and therefore subject to the SCA,
                but contain substantial segregable work that is covered by the DBA.
                See 29 CFR 4.116(c)(2).
                 \57\ The Department of Defense, for example, enters into such
                arrangements pursuant to the Military Housing Privatization
                Initiative, 10 U.S.C. 2871, et seq.
                ---------------------------------------------------------------------------
                 Particularly when such contracts are lengthy, using an outdated
                wage determination from the time of the underlying contract award is
                contrary to the text and purpose of the DBA because it does not
                sufficiently ensure that workers are paid prevailing wages.
                Additionally, in the Department's experience, agencies are sometimes
                inconsistent as to how they incorporate wage determination revisions
                into these types of contracts. Some agencies do so every time
                additional Davis-Bacon work is obligated, others do so annually, others
                only incorporate applicable wage determinations at the time the
                original, underlying contract is awarded, and sometimes no wage
                determination is incorporated at all. This inconsistency can prevent
                the payment of prevailing wages to workers and can disrupt the
                contracting process.
                 Accordingly, the Department proposes to require, for these types of
                contracts, that contracting agencies incorporate the most up-to-date
                applicable wage determination(s) annually on each anniversary date of a
                contract award or, where there is no contract, on each anniversary date
                of the start of construction, or another similar anniversary date where
                the agency has sought and received prior approval from the Department
                for the alternative date. This proposal is consistent with the rules
                governing wage determinations under the SCA, which require that the
                contracting agency obtain a wage determination prior to the ``[a]nnual
                anniversary date of a multi-year contract subject to annual fiscal
                appropriations of the Congress.'' See 29 CFR 4.4(a)(1)(v).
                Additionally, consistent with the discussion above, if an option is
                exercised for one of these types of contracts, the most recent version
                of any wage determination(s) would need to be incorporated as of the
                date the agency exercises its option to extend the contract's term
                (subject to the exceptions set forth in proposed Sec. 1.6(c)(2)(ii)),
                even if that date did not coincide with the anniversary date of the
                contract. When any construction work under such a contract is
                obligated, the most up-to-date wage determination(s) incorporated into
                the underlying contract must be included in each task order, purchase
                order, or any other method used to direct performance. Once an
                applicable wage determination revision is included in such an order,
                that revision would generally be applicable until the
                [[Page 15716]]
                construction items originally called for by that order are completed,
                even if the completion of that work extends beyond the twelve-month
                period following the most recent anniversary date of the underlying
                contract. By proposing this revision, the Department seeks to ensure
                that workers are being paid prevailing wages within the meaning of the
                Act, provide certainty and predictability to agencies and contractors
                as to when, and how frequently, wage rates in these types of contracts
                can be expected to change, and bring consistency to agencies'
                application of the DBA. The Department has also included language
                noting that contracting and ordering agencies remain responsible for
                ensuring that the applicable updated wage determination(s) is included
                in task orders, purchase orders, or other similar contract instruments
                that are issued under the master contract.
                (C) 29 CFR 1.6(c)(1)--Periodic Adjustments
                 The Department proposes to add a provision to 29 CFR 1.6(c)(1) to
                expressly provide a mechanism to regularly update certain non-
                collectively bargained prevailing wage rates. Such rates (both base
                hourly wages and fringe benefits) would be updated between surveys so
                that they do not become out-of-date and fall behind wage rates in the
                area.
                (1) Background
                 Based on the data that it receives through its prevailing wage
                survey program, WHD generally publishes two types of prevailing wage
                rates on the Davis-Bacon wage determinations that it issues: (1) Modal
                rates (under the current majority rule, wage rates that are paid to a
                majority of workers in a particular classification), and (2) weighted
                average rates, which are published whenever the wage data received by
                WHD reflects that no single wage rate was paid to a majority of workers
                in the classification. See 29 CFR 1.2(a)(1).
                 Under the current majority rule, modal majority wage rates
                typically reflect collectively bargained wage rates. When a CBA rate
                prevails on a general wage determination, WHD updates that prevailing
                wage rate based on periodic wage and fringe benefit increases in the
                CBA. Manual of Operations at 74-75; see also Mistick Construction, 2006
                WL 861357, at *7 n.4.\58\ However, when the prevailing wage is set
                through the weighted average method based on non-collectively bargained
                rates or a mix of collectively bargained rates and non-collectively
                bargained rates, or when a non-collectively bargained rate prevails,
                such wage rates (currently designated as ``SU'' rates) on general wage
                determinations are not updated between surveys, and therefore can
                become out-of-date. This proposal would expand WHD's practice of
                updating collectively bargained rates between surveys to include
                updating non-collectively bargained rates.
                ---------------------------------------------------------------------------
                 \58\ WHD similarly updates weighted average rates based entirely
                on collectively bargained rates (currently designated as ``UAVG''
                rates) using periodic wage and fringe benefit increases in the CBAs.
                ---------------------------------------------------------------------------
                 While the goal of WHD is to conduct surveys in each area every 3
                years, because of the resource intensive nature of the wage survey
                process and the vast number of survey areas, many years can pass
                between surveys conducted in any particular area. The 2011 GAO Report
                found that, as of 2010, while 36 percent of ``nonunion-prevailing
                rates'' \59\ were 3 years old or less, almost 46 percent of these rates
                were 10 or more years old. 2011 GAO Report at 18.\60\ As a result of
                lengthy intervals between Davis-Bacon surveys, the real value of the
                effectively-frozen rates erodes as compensation in the construction
                industry and the cost of living rise. The resulting decline in the real
                value of prevailing wage rates may adversely affect construction
                workers the DBA was intended to protect. See Coutu, 450 U.S. at 771
                (``The Court's previous opinions have recognized that `[o]n its face,
                the Act is a minimum wage law designed for the benefit of construction
                workers.' '' (citations omitted)).
                ---------------------------------------------------------------------------
                 \59\ ``Nonunion-prevailing rates,'' as used in the GAO report,
                is a misnomer, as it refers to weighted average rates that, as
                noted, are published whenever the same wage rate is not paid to a
                majority of workers in the classification, including when much or
                even most of the data reflects union wages, just not that the same
                union wage was paid to a majority of workers in the classification.
                 \60\ See note 8, supra.
                ---------------------------------------------------------------------------
                 This issue is one that program stakeholders raised with the GAO.
                According to several union and contractor officials interviewed in the
                2011 report, the age of the Davis-Bacon ``nonunion-prevailing rates''
                means they often do not reflect actual prevailing wages. 2011 GAO
                Report at 18.\61\ As a result, the officials said it is ``more
                difficult for both union and nonunion contractors to successfully bid
                on Federal projects because they cannot recruit workers with
                artificially low wages but risk losing contracts if their bids reflect
                more realistic wages.'' Id. Regularly updating these rates would
                alleviate this situation and better protect workers' wage rates. The
                Department anticipates that updated rates would also better reflect
                construction industry compensation in communities where federally
                funded construction is occurring.
                ---------------------------------------------------------------------------
                 \61\ See note 8, supra.
                ---------------------------------------------------------------------------
                 This proposal to update non-collectively bargained rates is
                consistent with, and builds upon, the current regulatory text at 29 CFR
                1.6(c)(1), which provides that wage determinations ``may be modified
                from time to time to keep them current.'' This regulatory provision
                provides legal authority for updating wage rates, and it has been used
                as a basis for updating collectively bargained prevailing wage rates
                based on CBA submissions between surveys. See Manual of Operations at
                74-75. In this rule, the Department proposes to extend this practice to
                non-collectively bargained rates based on ECI data. The Department
                believes that ``chang[ed] circumstances''--including an increase in
                weighted average rates--and the lack of an express mechanism to update
                non-collectively bargained rates between surveys under the existing
                regulations support this proposed ``extension of current
                regulation[s]'' to better effectuate the DBRA's purpose. Motor Vehicle
                Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
                29, 42 (1983); see also In re Permian Basin Area Rate Cases, 390 U.S.
                747, 780 (1968) (Court ``unwilling to prohibit administrative action
                imperative for the achievement of an agency's ultimate purposes''
                absent ``compelling evidence that such was Congress' intention'').
                 This proposal is consistent with the Department's broad authority
                under the statute to ``establish the method to be used'' to determine
                DBA prevailing wage rates. Donovan, 712 F.2d at 63. The Department
                believes that the new periodic adjustment proposal will ``on balance
                result in a closer approximation of the prevailing wage'' for these
                rates and therefore is an appropriate extension of the current
                regulation. Id. at 630 (citing American Trucking Ass'ns v. Atchison, T.
                & S.F. Ry., 387 U.S. 397, 416 (1967)).
                 This proposed new provision is particularly appropriate because it
                seeks to curb a practice the DBA and Related Acts were enacted to
                prevent: Payment of ``substandard'' wages (here, out-of-date non-
                collectively bargained rates) on covered construction projects that are
                less than current wages for similar work prevailing in the private
                sector. Regularly increasing non-collectively bargained weighted
                average and prevailing rates that are more than 3 years old would be
                consistent with the DBA's purpose of protecting local wage standards.
                [[Page 15717]]
                 As proposed, the periodic adjustment provision would help
                effectuate the DBA's purpose by updating significantly out-of-date non-
                collectively bargained wage rates, including thousands of wage rates
                that were published decades ago, that have not been updated since, and
                that therefore likely have fallen behind currently prevailing local
                rates. As of September 30, 2018, over 7,100 non-collectively bargained
                wage rates, or 5.3 percent of the 134,738 total unique published rates
                at that time, had not been updated in 11 to 40 years. See 2019 OIG
                Report at 3, 5. Updating such out-of-date construction wages would
                better align with the DBRA's main objective.
                 Tethering the proposed periodic updates to existing non-
                collectively bargained prevailing wage rates is intended to keep such
                rates more current in the interim period between surveys. It is
                reasonable to assume that non-collectively bargained rates, like other
                rates that the Secretary has determined to prevail, generally increase
                over time like other construction compensation measures. See, e.g.,
                Table A (showing recent annual rates of union and non-union
                construction wage increases in the United States); Table B (showing
                Employment Cost Index changes from 2001 to 2020).
                 Table A--Current Population Survey (CPS) Wage Growth by Union Status--Construction
                ----------------------------------------------------------------------------------------------------------------
                 Median weekly earnings
                 -------------------------------- Members of
                 Year Members of unions (%) Non-union (%)
                 unions Non-union
                ----------------------------------------------------------------------------------------------------------------
                2015............................................ $1,099 $743 .............. ..............
                2016............................................ 1,168 780 6 5
                2017............................................ 1,163 797 0 2
                2018............................................ 1,220 819 5 3
                2019............................................ 1,257 868 3 6
                2020............................................ 1,254 920 0 6
                 ---------------------------------------------------------------
                 Average..................................... .............. .............. 3 4
                ----------------------------------------------------------------------------------------------------------------
                Source: Current Population Survey, Table 43: Median weekly earnings of full-time wage and salary workers by
                 union affiliation, occupation, and industry, Bureau of Labor Statistics, https://www.bls.gov/cps/cpsaat43.htm
                 (last modified Jan. 22, 2021).
                Note: Limited to workers in the construction industry.
                 Table B--Employment Cost Index (ECI), 2001-2020, Total Compensation of
                 Private Workers in Construction, and Extraction, Farming, Fishing, and
                 Forestry Occupations
                 [Average 12-month percent changes (rounded to the nearest tenth)]
                ------------------------------------------------------------------------
                 Average %
                 Year change
                ------------------------------------------------------------------------
                2001........................................................ 4.5
                2002........................................................ 3.5
                2003........................................................ 3.9
                2004........................................................ 4.5
                2005........................................................ 3.1
                2006........................................................ 3.5
                2007........................................................ 3.5
                2008........................................................ 3.7
                2009........................................................ 1.7
                2010........................................................ 2.0
                2011........................................................ 1.6
                2012........................................................ 1.5
                2013........................................................ 1.8
                2014........................................................ 2.0
                2015........................................................ 2.0
                2016........................................................ 2.4
                2017........................................................ 2.7
                2018........................................................ 2.3
                2019........................................................ 2.3
                2020........................................................ 2.4
                ------------------------------------------------------------------------
                Source: Bureau of Labor Statistics, https://www.bls.gov/web/eci/eci-constant-real-dollar.pdf.
                (2) Periodic Adjustment Proposal
                 This proposal seeks to update non-collectively bargained rates that
                are 3 or more years old by adjusting them regularly based on total
                compensation data to keep pace with current construction wages and
                benefits. Specifically, the Department proposes to add language to
                Sec. 1.6(c)(1) to expressly permit adjustments to non-collectively
                bargained rates on general wage determinations based on U.S. Bureau of
                Labor Statistics (BLS) Employment Cost Index (ECI) data or its
                successor data. The Department's proposal provides that non-
                collectively bargained 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, continuing until the next survey
                results in a new general wage determination. This proposed interval
                would be consistent with WHD's goal to increase the percentage of
                Davis-Bacon wage rates that are 3 years old or less. Under the
                proposal, non-collectively bargained rates (wages and fringe benefits)
                would be adjusted from the date the rate was originally published and
                brought up to their present value. Going forward under the proposed 30-
                percent rule, any non-collectively bargained prevailing or weighted
                average rates published after this rule became effective would be
                updated if they were not re-surveyed within 3 years after publication.
                The Department anticipates implementing this new regulatory provision
                by issuing general wage determination modifications.
                 The Department believes that ECI data is appropriate for these
                proposed rate adjustments because the ECI tracks both wages and
                benefits, and may be used as a proxy for construction compensation
                changes over time. Therefore, the Department proposes to use a
                compensation growth rate based on the change in the ECI total
                compensation index for construction, extraction, farming, fishing, and
                forestry occupations to adjust non-collectively bargained rates (both
                base hourly and fringe benefit rates) published in 2001 or after.\62\
                ---------------------------------------------------------------------------
                 \62\ Because this particular index is unavailable prior to 2001,
                the Department proposes to use the compensation growth rate based on
                the change in the ECI total compensation index for the goods-
                producing industries (which includes the construction industry) to
                bring the relatively small percentage of non-collectively bargained
                rates published before 2001 up to their 2000 value. The Department
                would then adjust the rates up to the present value using the ECI
                total compensation index for construction, extraction, farming,
                fishing, and forestry occupations.
                ---------------------------------------------------------------------------
                 In addition, because updating non-collectively bargained rates
                would be resource-intensive, the Department does not anticipate making
                all initial adjustments to such rates that are 3 or more years old
                simultaneously, but rather anticipates that such adjustments would be
                made over a period of time (though as quickly as is reasonably
                possible). Similarly, particularly due to the effort involved, the
                process of adjusting non-collectively bargained rates that are 3 or
                more years old is
                [[Page 15718]]
                unlikely to begin until approximately 6 months to a year after a final
                rule implementing this proposal becomes effective.
                 The Department seeks comments on this proposal, and invites
                comments on alternative data sources to adjust non-collectively
                bargained rates. The Department considered proposing to use the
                Consumer Price Index (CPI) but considers this data source to be a less
                appropriate index to use to update non-collectively bargained rates
                because the CPI measures movement of consumer prices as experienced by
                day-to-day living expenses, unlike the ECI, which measures changes in
                the costs of labor in particular. The CPI does not track changes in
                wages or benefits, nor does it reflect the costs of construction
                workers nationwide. The Department nonetheless invites comments on use
                of the CPI to adjust non-collectively bargained rates.
                (D) 29 CFR 1.6(f)
                 Section 1.6(f) addresses post-award determinations that a wage
                determination has been wrongly omitted from a contract. The
                Department's proposed changes to this subsection are discussed below in
                part III.B.3.xx (``Post-award determinations and operation-of-law''),
                together with proposed changes to Sec. Sec. 5.5 and 5.6.
                vii. Section 1.7 Scope of Consideration
                 The Department's existing regulations in Sec. 1.7 address two
                related concepts. The first is the level of geographic aggregation of
                wage data that should be the default for making a wage determination.
                The second is how the Department should expand that level of geographic
                aggregation when it does not have sufficient wage survey data to make a
                wage determination at the default level. The Department is considering
                whether to update the language of Sec. 1.7 to more clearly describe
                WHD's process for expanding the geographic scope of survey data, and
                whether to modify the regulations by eliminating the current bar on
                mixing wage data from ``metropolitan'' and ``rural'' counties when the
                geographic scope is expanded.
                (A) Background
                 With regard to the first concept addressed in Sec. 1.7, the
                default level of geographic aggregation, the DBA specifies that the
                relevant geographic area for determining the prevailing wage is the
                ``civil subdivision of the State'' where the contract is performed. 40
                U.S.C. 3142(b). For many decades now, the Secretary has used the county
                as the default civil subdivision for making a wage determination. The
                Department codified this procedure in the 1981-1982 rulemaking in Sec.
                1.7(a), in which it stated that the relevant area for a wage
                determination will ``normally be the county.'' 29 CFR 1.7(a); see 47 FR
                23644, 23647 (May 28, 1982).
                 The use of the county as the default ``area'' means that in making
                a wage determination the Administrator first considers the wage survey
                data WHD has received from projects of a ``similar character'' in a
                given county. See 40 U.S.C. 3142(b). If there is sufficient county-
                level data for a ``corresponding class[ ]'' of covered workers (e.g.,
                laborers, painters, etc.) working on those projects, the Administrator
                then makes a determination of the prevailing wage rate for that class
                of workers. Id; 29 CFR 1.7(a). This has a practical corollary for
                contracting agencies--in order to determine what wages apply to a given
                construction project, the agency needs to identify the county (or
                counties) in which the project will be constructed and obtain the wage
                determination for the correct type of construction for that county (or
                counties) from SAM.gov.
                 The second concept currently addressed in Sec. 1.7 is the
                procedure that WHD follows when it does not receive sufficient survey
                wage data at the county level to determine a prevailing wage rate for a
                given classification of workers. This process is described in detail in
                the 2013 Chesapeake Housing ARB decision. 2013 WL 5872049. In short, if
                there is insufficient data to determine a prevailing wage rate for a
                classification of workers in a given county, WHD will determine that
                county's wage-rate for that classification by progressively expanding
                the geographic scope of data (still for the same classification of
                workers) that it uses to make the determination. First, WHD expands to
                include a group of surrounding counties at a ``group'' level. See 29
                CFR 1.7(b) (discussing consideration of wage data in ``surrounding
                counties''); Chesapeake Housing, 2013 WL 5872049, at *2-3. If there is
                still not sufficient data at the group level, WHD considers a larger
                grouping of counties in the State called a ``supergroup,'' and
                thereafter uses data at a statewide level. See 29 CFR 1.7(c);
                Chesapeake Housing, 2013 WL 5872049, at *2-3.\63\ Currently, WHD
                identifies county groupings by using metropolitan statistical areas
                (MSAs) and other related designations from the Office of Management and
                Budget (OMB). See 75 FR 37246 (June 28, 2010).
                ---------------------------------------------------------------------------
                 \63\ As discussed above in part III.B.1.iii.(A), for residential
                and building construction, this expansion of the scope of data
                considered also involves the use of data from Federal and federally
                assisted projects subject to Davis-Bacon labor standards at each
                county-grouping level when data from non-Federal projects is not
                sufficient. Data from Federal and federally assisted projects
                subject to Davis-Bacon labor standards is used in all instances to
                determine prevailing wage rates for heavy and highway construction.
                ---------------------------------------------------------------------------
                 The current regulations do not define the term ``surrounding
                counties'' that delineates the initial county grouping level. However,
                the provision at Sec. 1.7(b) that describes ``surrounding counties''
                limits the counties that may be used in this grouping by excluding the
                use of any data from a ``metropolitan'' county in any wage
                determination for a ``rural'' county, and vice versa. 29 CFR 1.7(b). To
                be consistent with the existing prohibition at Sec. 1.7(b), WHD's
                current practice is to use the OMB designations (discussed above) to
                identify whether a county is metropolitan or rural.\64\ Under the
                current constraints, such a proxy designation is reasonable, and the
                practice has been approved by the ARB. See Mistick Construction, 2006
                WL 861357, at *7-8. Although the language in Sec. 1.7(b) does not
                apply explicitly to the consideration of data above the surrounding
                county level, see Sec. 1.7(c), the Department's current procedures do
                not mix metropolitan and rural county data at any level in the
                expansion of geographic scope, including even at the statewide level.
                ---------------------------------------------------------------------------
                 \64\ OMB does not specifically identify counties as ``rural''
                and disclaims that its MSA standards ``produce an urban-rural
                classification.'' 75 FR 37246, 37246 (June 28, 2010). Nonetheless,
                because OMB identifies counties that have metropolitan
                characteristics as part of MSAs, the practice of the WHD
                Administrator has been to designate counties as rural if they are
                not within an OMB-designated MSA and metropolitan if they are within
                an MSA. See Mistick Construction, 2006 WL 861357, at *8.
                ---------------------------------------------------------------------------
                (B) Proposals for Use of ``Metropolitan'' and ``Rural'' Wage Data
                 The current language in Sec. 1.7(b) barring the cross-
                consideration of metropolitan and rural wage data was added to the
                Department's regulations in the 1981-1982 rulemaking. See 47 FR 23644
                (May 28, 1982). As the Department noted in that rulemaking, the prior
                practice up until that point had been to allow the Department to look
                to metropolitan wage rates for nearby rural areas when there was
                insufficient data from the rural area to determine a prevailing wage
                rate. See id. at 23647. In explaining the change in the longstanding
                policy, the Department noted commenters had stated that ``importing''
                higher rates from metropolitan areas caused labor disruptions where
                workers were ``unwilling to return to their usual pay scales after the
                project was completed.'' Id. The Department stated that a more
                [[Page 15719]]
                appropriate alternative would be to use data from rural counties in
                other parts of the State. See id. To effectuate this, it imposed the
                bar on cross-consideration of rural and metropolitan county data in
                Sec. 1.7(b).
                 The Department has received feedback that that this blanket
                decision did not adequately consider the heterogeneity of commuting
                patterns and local labor markets between and among counties that may be
                designated overall as ``rural'' or ``metropolitan.'' As noted in the
                2011 GAO report, the DBA program has been criticized for using
                ``arbitrary geographic divisions,'' given that the relevant regional
                labor markets, which are reflective of area wage rates, ``frequently
                cross county and state lines.'' 2011 GAO Report at 24.\65\ OMB itself
                notes that ``[c]ounties included in Metropolitan and Micropolitan
                Statistical Areas and many other counties may contain both urban and
                rural territory and population.'' 75 FR 37246, 37246 (June 28, 2010).
                ---------------------------------------------------------------------------
                 \65\ See note 8, supra.
                ---------------------------------------------------------------------------
                 The Department understands the point articulated in the GAO report
                that actual local labor markets are not constrained by or defined by
                county lines--even those lines between counties identified (by OMB or
                otherwise) as ``metropolitan'' or ``rural.'' This is particularly the
                case for the construction industry, in which workers tend to commute
                longer distances than other professionals--resulting in geographically
                larger labor markets. See, e.g., Keren Sun et al., Hierarchy Divisions
                of the Ability to Endure Commute Costs: An Analysis based on a Set of
                Data about Construction Workers, J. of Econ. & Dev. Stud., Dec. 2020,
                at 1, 6.\66\ Even within the construction industry, workers in certain
                trades have greater or lesser tolerance for longer commutes. Keren Sun,
                Analysis of the Factors Affecting the Commute Distance/Time of
                Construction Workers, Int'l J. of Arts & Humanities, June 2020, at 34-
                35.\67\
                ---------------------------------------------------------------------------
                 \66\ http://jedsnet.com/journals/jeds/Vol_8_No_4_December_2020/1.pdf.
                 \67\ http://ijah.cgrd.org/images/Vol6No1/3.pdf.
                ---------------------------------------------------------------------------
                 By excluding a metropolitan county's wage rates from consideration
                in a determination for a bordering rural county, the current language
                in Sec. 1.7(b) ignores the potential for projects in both counties to
                compete for the same supply of construction workers and be in the same
                local construction labor market. In many cases, the workers working on
                the metropolitan county projects may themselves live across the county
                lines in the neighboring rural county and commute to the urban
                projects. In such cases, under the current bar, the Department may not
                be able to use the wage rates of the same workers to determine the
                prevailing wage rate for projects in the county in which they live.
                Instead, WHD would import wage rates from other ``rural''-designated
                counties, potentially somewhere far across the State. Such a practice
                can result in Davis-Bacon wage rates that are lower than the wage rates
                that actually prevail in a bi-county labor market and that are based on
                wage data from distant locales rather than from neighboring counties.
                 For these reasons, the Department believes that limitations based
                on binary rural and metropolitan designations at the county level can
                result in geographic groupings that at times do not fully account for
                the realities of relevant construction labor markets. To address this
                concern, the Department has considered the possibility of using smaller
                basic units than the county as the initial area for a wage
                determination--and expanding to labor market areas that do not directly
                track county lines. The Department, however, has concluded that
                continuing the longstanding practice of using counties as the civil
                subdivision basis unit is more administratively feasible.\68\ As a
                result, the Department is now considering the option of eliminating the
                metropolitan-rural bar in Sec. 1.7(b) and relying instead on other
                approaches to determine how to appropriately expand geographic
                aggregation when necessary.
                ---------------------------------------------------------------------------
                 \68\ The Department also considered this option in the 1981-1982
                rulemaking, but similarly concluded that the proposal to use the
                county as the basic unit of a wage determination was the ``most
                administratively feasible.'' See 47 FR 23644, 23647 (May 28, 1982).
                ---------------------------------------------------------------------------
                 In addition to allowing WHD to account for actual construction
                labor market patterns, this proposal could have other benefits. It
                could allow WHD to publish more rates at the group level rather than
                having to rely on data from larger geographic areas, because it could
                increase the number of counties that may be available to supply data at
                the group level. The proposal could also allow WHD to publish more
                rates overall by authorizing the use of both metropolitan and rural
                county data together when it must rely on statewide data. Combining
                rural and urban data at the State level would be a final option for
                geographic expansion when otherwise the data could be insufficient to
                identify any prevailing wage at all.\69\ The Department believes that
                the purposes of the Act are better served by using such combined
                statewide data to determine the prevailing wage, when the alternative
                could be to fail to publish a wage rate at all.
                ---------------------------------------------------------------------------
                 \69\ The Department is also considering the option of more
                explicitly tailoring the ban on mixing metropolitan and rural data
                so that it applies only at the ``surrounding counties'' level, but
                not at the statewide level or an intermediate level.
                ---------------------------------------------------------------------------
                 The proposal to eliminate the strict rural-metropolitan bar would
                result in a program that would be more consistent with the Department's
                original practice between 1935 and the 1981-1982 rulemaking. Reverting
                to this prior status quo would be appropriate in light of the text and
                legislative history of the DBA. Congressional hearings shortly after
                the passage of the initial 1931 Act suggest that Congress understood
                the DBA as allowing the Secretary to refer to metropolitan rates where
                rural rates were not available--including by looking to the nearest
                city when there was insufficient construction in a village or ``little
                town'' to determine a prevailing wage. See 75 Cong. Rec. 12,366, 12,377
                (1932) (remarks of Rep. Connery). Likewise, the Department's original
                1935 regulations directed the Department to ``the nearest large city''
                when there had been no similar construction in the locality in recent
                years. See Labor Department Regulation No. 503 section 7(2) (1935).
                 In light of the above, the Department solicits comments on its
                proposal to allow the Administrator the discretion to determine
                reasonable county groupings, at any level, without the requirement to
                make a distinction between counties WHD designates as rural or
                metropolitan.
                (C) Proposals for Amending the County Grouping Methodology
                 In addition to considering whether to eliminate the metropolitan-
                rural proviso language in Sec. 1.7(b), the Department is also
                considering other potential changes to the methods for describing the
                county groupings procedure.
                (1) Defining ``Surrounding Counties''
                 One potential change is to more precisely define ``surrounding
                counties,'' as used in Sec. 1.7(b). Because the term is not currently
                defined, this has from time to time led to confusion among stakeholders
                regarding whether a county can be considered ``surrounding'' if it does
                not share a border with the county for which more data is needed. As
                noted above, WHD's current method of creating ``surrounding county''
                groupings is to use OMB-designed MSAs to create pre-determined county
                groupings. This method does not require that all counties in the
                grouping share a border with (in other words, be a direct neighbor to)
                the county in need. Rather,
                [[Page 15720]]
                at the ``surrounding county'' grouping, WHD will include counties in a
                group as long as they are all a part of the same contiguous area of
                either metropolitan or rural counties--even though each county included
                may not be directly adjacent to every other county in the group.\70\
                ---------------------------------------------------------------------------
                 \70\ In addition, in certain limited circumstances, WHD has
                allowed the aggregation of counties at the ``surrounding counties''
                level that are not part of a contiguous grouping of all-metropolitan
                or all-rural counties. This has been considered appropriate where,
                for example, two rural counties border an MSA on different sides and
                do not themselves share a border with each other or with any other
                rural counties. Under WHD's current practice, those two rural
                counties could be considered to be a county group at the
                ``surrounding counties'' level even though they neither share a
                border nor are part of a contiguous group of counties.
                ---------------------------------------------------------------------------
                 For example, in the Chesapeake Housing case, one ``surrounding
                county'' group that WHD had compiled included the independent city of
                Portsmouth, combined with Virginia Beach, Norfolk, and Suffolk
                counties. 2013 WL 5872049, at *1, n.1. That was appropriate because
                those jurisdictions all were part of the same contiguous OMB-designated
                metropolitan area, and each county thus shared a border with at least
                one other county in the group--even if they did not all share a border
                with every other county in the group. See id. at *5-6. Thus, by using
                the group, WHD combined data from Virginia Beach and Suffolk counties
                at the ``surrounding counties'' level, even though those two counties
                do not themselves touch each other.
                 This grouping strategy--of relying on OMB MSA designations--has
                been found to be consistent both with the term ``surrounding counties''
                as well as with the metropolitan-rural limitation proviso in Sec.
                1.7(b). See Mistick, 2006 WL 861357, at *7-8. An OMB-designated
                metropolitan statistical area is, at least by OMB's definition, made up
                entirely of ``metropolitan'' counties and thus WHD can group these
                counties together without violating the proviso. See id.; Manual of
                Operations at 39. Thus, the Department has used these OMB designations
                to put together pre-determined groups that can be used as the same
                first-level county grouping for any county within the grouping. While
                relying on OMB designations is not the only way that the Department
                could currently group counties together and comply with the proviso,
                the Department recognizes that, if it eliminates the metropolitan-rural
                proviso at Sec. 1.7(b), it could be helpful to include in its place
                some further language to explain or delimit the meaning of
                ``surrounding counties'' in another way that would be both
                administrable and faithful to the purpose of the Davis-Bacon and
                Related Acts.
                 The first option would be to eliminate the metropolitan-rural
                proviso but not replace it with a further definition or limitation for
                ``surrounding counties.'' The Department has included this proposal in
                the proposed regulatory text of this NPRM. The term ``surrounding
                counties'' is not so ambiguous and devoid of meaning that it requires
                further definition. Even without some additional specific limitation,
                the Department believes the term could reasonably be read to require
                that such a grouping be of a contiguous grouping of counties as the
                Department currently requires in its use of OMB MSAs (as described
                above), with limited exceptions. Thus, while the elimination of the
                proviso would allow a nearby rural county to be included in a
                ``surrounding county'' grouping with metropolitan counties that it
                borders, it would not allow WHD to append a faraway rural county to a
                ``surrounding county'' group made up entirely of metropolitan counties
                with which the rural county shares no border at all. Conversely, the
                term does not allow the Department to consider a faraway metropolitan
                county to be part of the ``surrounding counties'' of a grouping of
                rural counties with which the metropolitan county shares no border at
                all. Although containing such an inherent definitional limit, this
                first option would allow the Department the discretion to develop new
                methodologies of grouping counties at the ``surrounding county'' level
                and apply them as along as it does so in a manner that is not arbitrary
                or capricious.\71\
                ---------------------------------------------------------------------------
                 \71\ For example, the Department could rely on county groupings
                in use by State governments for little Davis-Bacon laws or similar
                purposes, as long as they are contiguous county groupings that
                reasonably can be characterized as ``surrounding counties.''
                ---------------------------------------------------------------------------
                 The second option the Department is considering is to limit
                surrounding counties to solely those counties that share a border with
                the county for which additional wage data is sought. Such a limitation
                would create a relatively narrow grouping at the initial county
                grouping stage--narrower than the current practice of using OMB MSAs.
                As discussed above, construction workers tend to commute longer than
                other professionals. This potential one-county-over grouping limitation
                would ensure that, in the vast majority of cases, the ``surrounding
                county'' grouping would not expand outward beyond the home counties or
                commuting range of the construction workers who would work on projects
                in the county at issue. The narrowness of such a limitation would also
                be a drawback, as it could lead to fewer wage rates being set at the
                ``surrounding counties'' group level. Another drawback is that such a
                limitation would not allow for the use of pre-determined county
                groupings that would be the same for a number of counties--because each
                county may have a different set of counties with which it alone shares
                a border. This could result in a significant burden on WHD in
                developing far more county-grouping rates than it currently does, and
                could result in less uniformity in required prevailing wage rates among
                nearby counties.
                 A third option would be to include language that would define the
                ``surrounding counties'' grouping as a grouping of counties that are
                all a part of the same ``contiguous local construction labor market''
                or some comparable definition. In practice, this methodology could
                result in similar (but not identical) groupings as the current
                methodology, as the Department could decide to use OMB designations to
                assist in determining what counties are part of the contiguous local
                labor market. Without the strict metropolitan-rural proviso, however,
                this option would allow the Department to use additional evidence on a
                case-by-case basis to determine whether the OMB designations--which do
                not track construction markets specifically--are too narrow for a given
                construction market. Under this option, the Department could consider
                other measures of construction labor market integration, including
                whether construction workers in general (or workers in specific
                construction trades) typically commute between or work in two bordering
                counties or in a cluster of counties.
                 This third option also would bring with it some potential benefits
                and drawbacks. On the one hand, the ability to identify local
                construction labor markets would allow the Department to make pre-
                determined county groupings much like it does now. This would reduce
                somewhat the burden of the second option--of calculating a different
                county grouping for each individual county to account for the counties
                that border specifically that county. It would also explicitly
                articulate the limitation that the Department believes is inherent in
                the term ``surrounding counties''--that the grouping must be limited to
                a ``contiguous'' group of counties, with limited exceptions. On the
                other hand, the case-by-case determination of a local ``construction''
                labor market (that might
                [[Page 15721]]
                be different from an OMB MSA) could also be burdensome on WHD. The
                definition, however, could allow such a case-by-case determination but
                not require it. Accordingly, if such case-by-case determinations become
                too burdensome, WHD could revert to the adoption of designations from
                OMB or some other externally-defined metric.
                 Finally, the Department recognizes that even if it retains the
                metropolitan-rural proviso, doing so does not bind WHD to the current
                practice of using OMB-designated county groupings and other procedures.
                Under the language of the current regulation, the Department retains
                the authority to make its own determinations regarding whether a county
                is ``metropolitan'' or ``rural.'' See 29 CFR 1.7(b). The Department
                also retains certain flexibility for determining how to group counties
                at each level and is not limited to using the OMB designations. As
                noted above, the Department also believes that the plain text of Sec.
                1.7(b) does not necessarily limit it from combining metropolitan and
                rural data beyond the ``surrounding counties'' group level.
                (2) Other Proposed Changes to Sec. 1.7
                 The Department is also considering other proposed changes to Sec.
                1.7. These include nonsubstantive changes to the wording of the
                paragraphs that clarify that the threshold for expansion in each one is
                insufficient ``current wage data.'' The existing regulation now defines
                ``current wage data'' in Sec. 1.7(a) as ``data on wages paid on
                current projects or, where necessary, projects under construction no
                more than one year prior to the beginning of the survey or the request
                for a wage determination, as appropriate.'' The Department seeks
                comment on whether this definition should be kept in its current format
                or amended to narrow or expand its scope.
                 The Department is also considering whether to amend Sec. 1.7(c) to
                better describe the process for expanding from the ``surrounding
                county'' level to consider data from an intermediary level (such as the
                current ``supergroup'' level) before relying on statewide data. For
                example, as the Department has included in the current proposed
                regulatory text, the Department could describe this second level of
                county groupings as a consideration of ``comparable counties or groups
                of counties in the State.'' As with the third option discussed above
                for defining ``surrounding counties,'' this ``comparable counties''
                language in Sec. 1.7(c) would allow the Department to continue to use
                the procedure described in Chesapeake Housing of combining various MSAs
                or various non-contiguous groups of rural counties to create
                ``supergroups.'' It would also allow a more nuanced analysis of
                comparable labor markets using construction market data specifically.
                 As the foregoing discussion reflects, there is no perfect solution
                for identifying county groupings in Sec. 1.7. Each possibility
                described above has potential benefits and drawbacks. In addition, the
                Department notes that the significance of this section in the wage
                determination process is also related to the level of participation by
                interested parties in WHD's voluntary wage survey. If more interested
                parties participate in the wage survey, then there will be fewer
                counties without sufficient wage data for which the Sec. 1.7 expansion
                process becomes relevant. Absent sufficient survey information,
                however, WHD will need to continue to include a larger geographic scope
                to ensure that it effectuates the purposes of the DBA and Related
                Acts--to issue wage determinations to establish minimum wages on
                federally funded or assisted construction projects. The Department thus
                seeks comment on all aspects of amending the county grouping
                methodology of Sec. 1.7--including administrative feasibility and the
                distinction between rural and metropolitan counties--to ensure that it
                has considered the relevant possibilities for amending or retaining the
                various elements of this methodology.
                viii. Section 1.8 Reconsideration by the Administrator
                 The Department proposes revisions to Sec. Sec. 1.8 and 5.13 to
                explicitly provide procedures for reconsideration by the Administrator
                of decisions, rulings, or interpretations made by an authorized
                representative of the Administrator. Parts 1 and 5 both define the term
                ``Administrator'' to mean the WHD Administrator or an authorized
                representative of the Administrator. See 29 CFR 1.2(c), 5.2(b).
                Accordingly, when parties seek rulings, interpretations, or decisions
                from the Administrator regarding the Davis-Bacon labor standards, it is
                often the practice of the Department to have such decisions made in the
                first instance by an authorized representative. After an authorized
                representative issues a decision, the party may request reconsideration
                by the Administrator. The decision typically provides a time frame in
                which to request reconsideration by the Administrator, often 30 days.
                To provide greater clarity and uniformity, the Department proposes to
                codify this practice and to clarify how and when reconsideration may be
                sought.
                 First, the Department proposes to amend Sec. 1.8, which concerns
                reconsideration by the Administrator of wage determinations and
                decisions regarding the application of wage determinations under part
                1, to provide that if a decision for which reconsideration is sought
                was made by an authorized representative of the Administrator, the
                interested party seeking reconsideration may request further
                reconsideration by the Administrator of the Wage and Hour Division. The
                Department proposes that such requests must be submitted within 30 days
                from the date the decision is issued, and that this time period may be
                extended for good cause at the Administrator's discretion upon a
                request by the interested party. Second, the Department proposes to
                amend Sec. 5.13, which concerns rulings and interpretations under
                parts 1, 3, and 5, to similarly provide for the Administrator's
                reconsideration of rulings and interpretations issued by an authorized
                representative. The Department proposes to apply the same procedures
                for such reconsideration requests as apply to reconsideration requests
                under Sec. 1.8. The Department also proposes to divide Sec. Sec. 1.8
                and 5.13 into paragraphs for clarity and readability, and to add email
                addresses for parties to submit requests for reconsideration or for
                rulings or interpretations, respectively.
                ix. Section 1.10 Severability
                 The Department proposes to add a new Sec. 1.10, titled
                ``Severability.'' The proposed severability provision explains that
                each provision is capable of operating independently from one another,
                and that if any provision of part 1 is held to be invalid or
                unenforceable by its terms, or as applied to any person or
                circumstance, or stayed pending further agency action, the Department
                intends that the remaining provisions remain in effect.
                x. References to Website for Accessing Wage Determinations
                 The Department proposes to revise Sec. Sec. 1.2, 1.5, and 1.6 to
                reflect, in more general terms, that wage determinations are maintained
                online without a reference to a specific website.
                 The current regulations reference Wage Determinations OnLine
                (WDOL), previously available at https://www.wdol.gov, which was
                established following the enactment of the E-Government Act of 2002,
                Public Law 107-347, 116 Stat. 2899 (2002). WDOL.gov served as the
                source for Federal contracting agencies to use when obtaining wage
                determinations.
                [[Page 15722]]
                See 70 FR 50887 (Aug. 26, 2005). WDOL.gov was decommissioned on June
                14, 2019, and the System for Award Management (SAM.gov) became the
                authoritative and single location for obtaining DBA general wage
                determinations.\72\ The transition of wage determinations onto SAM.gov
                was part of the Integrated Award Environment, a government-wide
                initiative administered by GSA to manage and integrate multiple online
                systems used for awarding and administering Federal financial
                assistance and contracts.\73\
                ---------------------------------------------------------------------------
                 \72\ WDOL.gov Decommissioning Approved by IAE Governance: System
                Set to Transition to beta.SAM.gov on June 14, 2019, GSA Interact
                (May 21, 2019), https://interact.gsa.gov/blog/wdolgov-decommissioning-approved-iae-governance-system-set-transition-betasamgov-june-14-2019.
                 \73\ About This Site, System for Award Management, https://sam.gov/content/about/this-site (last visited Nov. 19, 2021).
                ---------------------------------------------------------------------------
                 Currently, wage determinations can be found at https://sam.gov/content/wage-determinations. In order to avoid outdated website domain
                references in the regulations should the domain name change in the
                future, the Department proposes to use the more general term
                ``Department of Labor-approved website,'' which would refer to any
                official government website the Department approves for posting wage
                determinations.
                xi. Appendices A and B to Part 1
                 The Department proposes to remove Appendices A and B from 29 CFR
                part 1 and make conforming technical edits to sections that reference
                those provisions. Appendix A lists the Davis-Bacon Act and the Related
                Acts, in other words, the statutes related to the Davis-Bacon Act that
                require the payment of wages at rates predetermined by the Secretary of
                Labor pursuant to the Davis-Bacon Act, and Appendix B lists regional
                offices of the Wage and Hour Division. The Department proposes to
                rescind these appendices as they are no longer current, and updated
                information contained in both appendices can be found on WHD's website
                at https://www.dol.gov/agencies/whd/. Specifically, a listing of
                statutes requiring the payment of wages at rates predetermined by the
                Secretary of Labor under the Davis-Bacon Act is currently at https://www.dol.gov/agencies/whd/government-contracts, and a listing of WHD
                regional offices is currently found at https://www.dol.gov/agencies/whd/contact/local-offices.
                xii. Frequently Conformed Rates
                 The Department also proposes to revise Sec. Sec. 1.3 and 5.5 to
                provide that, 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 nonetheless may
                list the classification and wage and fringe benefit rates for the
                classification on the wage determination, provided that the three basic
                criteria for conformance of a classification and wage and fringe
                benefit rate have been satisfied: (1) The work performed by the
                classification is not performed by a classification in the wage
                determination; (2) the classification is used in the area by the
                construction industry; and (3) the wage rate for the classification
                bears a reasonable relationship to the wage rates contained in the wage
                determination. The Department specifically proposes that the wage and
                fringe benefit rates for these classifications be determined in
                accordance with the ``reasonable relationship'' criterion that is
                currently used in conforming missing classifications pursuant to
                current 29 CFR 5.5(a)(1)(ii)(A). The Department welcomes comments
                regarding all aspects of this proposal, which is described more fully
                below.
                 WHD determines DBA prevailing wage rates based on wage survey data
                that responding contractors and other interested parties voluntarily
                provide. See 29 CFR 1.1 through 1.7. WHD sometimes receives robust
                participation in its wage surveys, thereby enabling it to publish wage
                determinations that list prevailing wage rates for numerous
                construction classifications. However, stakeholder participation can be
                more limited, particularly in surveys for residential construction or
                in rural areas, and WHD therefore does not always receive sufficient
                wage data to publish prevailing wage rates for various classifications
                generally necessary for various types of construction.
                 Whenever a wage determination lacks a classification of work that
                is necessary for performance of DBRA-covered construction, the missing
                classification and an appropriate wage rate must be added to the wage
                determination on a contract-specific basis through the conformance
                process. Conformance is the expedited process by which a classification
                and wage and fringe benefit rate are added to an existing wage
                determination applicable to a specific DBRA-covered contract. See 29
                CFR 5.5(a)(1)(ii)(A). When, for example, a wage determination lists
                only certain skilled classifications such as carpenter, plumber, and
                electrician (because they are the skilled classifications for which WHD
                received sufficient wage data through its survey process), the
                conformance process is used to provide contractors with minimum wage
                rates for other necessary classifications (such as, in this example,
                painters and bricklayers).
                 ``By design, the Davis-Bacon conformance process is an expedited
                proceeding created to `fill in the gaps' '' in an existing wage
                determination, with the ``narrow goal'' of establishing an appropriate
                wage rate for a classification needed for performance of the contract.
                Am. Bldg. Automation, Inc., ARB No. 00-067, 2001 WL 328123, at *3 (Mar.
                30, 2001). As a general matter, WHD is given ``broad discretion'' in
                setting a conformed wage rate, and the Administrator's decisions ``will
                be reversed only if inconsistent with the regulations, or if they are
                unreasonable in some sense[.]'' Millwright Loc. 1755, ARB No. 98-015,
                2000 WL 670307, at *6 (May 11, 2000) (internal quotations and citations
                omitted). See, e.g., Constr. Terrebonne Par. Juvenile Justice Complex,
                ARB No. 17-0056, 2020 WL 5902440, at *2-4 (Sept. 4, 2020) (reaffirming
                the Administrator's ``broad discretion'' in determining appropriate
                conformed wage rates); Courtland Constr. Corp., ARB No. 17-074, 2019 WL
                5089598, at *2 (Sept. 30, 2019) (same).
                 The regulations require the following criteria be met for a
                proposed classification and wage rate to be conformed to a wage
                determination: (1) The work to be performed by the requested
                classification is not performed by a classification in the wage
                determination; (2) the classification is used in the area by the
                construction industry; and (3) the proposed wage rate, including any
                bona fide fringe benefits, bears a reasonable relationship to the wage
                rates in the wage determination. See 29 CFR 5.5(a)(1)(ii)(A).
                 Pursuant to the first conformance criterion, WHD may approve a
                conformance request only where the work of the proposed classification
                is not performed by any classification on the wage determination. WHD
                need not ``determine that a classification in the wage determination
                actually is the prevailing classification for the tasks in question,
                only that there is evidence to establish that the classification
                actually performs the disputed tasks in the locality.'' Am. Bldg.
                Automation, 2001 WL 328123, at *4. Even if workers perform only a
                subset of the duties of a classification, they are still performing
                work that is covered by the classification, and conformance of a new
                classification thus would be inappropriate. See, e.g., Fry Bros. Corp.,
                WAB No. 76-06, 1977 WL 24823, at *6
                [[Page 15723]]
                (June 14, 1977). In instances where the first and second conformance
                criteria are satisfied and it has been determined that the requested
                classification should be added to the contract wage determination, WHD
                will address whether the third criterion has also been satisfied, i.e.,
                whether ``[t]he proposed wage rate, including any bona fide fringe
                benefits, bears a reasonable relationship to the wage rates'' in the
                wage determination.
                 WHD typically receives thousands of conformance requests each year
                (sometimes over 10,000 in a given year). In some instances, including
                instances where contractors are unaware that their work falls within
                the scope of work performed by an established classification on the
                wage determination, WHD receives conformance requests where conformance
                plainly is not appropriate because the wage determination already
                contains a classification that performs the work of the proposed
                classification. In other instances, however, conformance is necessary
                because the applicable wage determination does not contain all of the
                classifications that are necessary to complete the project. The
                considerable need for conformances due to the absence of necessary
                classifications on wage determinations reduces certainty for
                prospective contractors in the bidding process, who may be unsure of
                what wage rate must be paid to laborers and mechanics performing work
                on the project, and taxes WHD's resources. If such uncertainty causes
                contractors to underbid on construction projects and subsequently to
                pay subminimum wages to workers, missing classifications on wage
                determinations can result in the underpayment of wages to workers.
                 To address this issue, the Department proposes revising 29 CFR 1.3
                and 5.5(a)(1) to expressly authorize WHD to list classifications and
                corresponding wage and fringe benefit rates on wage determinations even
                when WHD has received insufficient data through its wage survey
                process. Under this proposal, for key classifications or other
                classifications for which conformance requests are regularly
                submitted,\74\ the Administrator would be authorized to list the
                classification on the wage determination along with wage and fringe
                benefit rates that bear a ``reasonable relationship'' to the prevailing
                wage and fringe benefit rates contained in the wage determination,
                using essentially the same criteria under which such classifications
                and rates are currently conformed by WHD pursuant to current Sec.
                5.5(a)(1)(ii)(A)(3). In other words, for a classification for which
                conformance requests are regularly submitted, and for which WHD
                received insufficient data through its wage survey process, WHD would
                be expressly authorized to essentially ``pre-approve'' certain
                conformed classifications and wage rates, thereby providing contracting
                agencies, contractors and workers with advance notice of the minimum
                wage and fringe benefits required to be paid for work within those
                classifications. WHD would list such classifications and wage and
                fringe benefit rates on wage determinations where: (1) The work
                performed by the classification is not performed by a classification in
                the wage determination for which a prevailing wage rate has been
                determined; (2) the classification is used in the area by the
                construction industry; and (3) the wage rate for the classification
                bears a reasonable relationship to the prevailing wage rates contained
                in the wage determination. The Administrator would establish wage rates
                for such classifications in accordance with proposed Sec.
                5.5(a)(1)(iii)(A)(3). Contractors would be required to pay workers
                performing work within such classifications at no less than the rates
                listed on the wage determination. Such classifications and rates on a
                wage determination would be designated with a distinct term,
                abbreviation, or description to denote that they essentially reflect
                pre-approved conformed rates rather than prevailing wage and fringe
                benefit rates that have been determined through the Davis-Bacon wage
                survey process.
                ---------------------------------------------------------------------------
                 \74\ As explained in WHD's Prevailing Wage Resource Book, WHD
                has identified several ``key classifications'' normally necessary
                for one of the four types of construction (building, highway, heavy,
                and residential) for which WHD publishes general wage
                determinations. Davis-Bacon Surveys at 6. The Prevailing Wage
                Resource Book contains a table that lists the key classifications
                for each type of construction. The table, which may be updated
                periodically as warranted, currently identifies the key
                classifications for building construction as heat and frost
                insulators, bricklayers, boilermakers, carpenters, cement masons,
                electricians, iron workers, laborers (common), painters,
                pipefitters, plumbers, power equipment operators (operating
                engineers), roofers, sheet metal workers, tile setters, and truck
                drivers; the key classifications for residential construction as
                bricklayers, carpenters, cement masons, electricians, iron workers,
                laborers (common), painters, plumbers, power equipment operators
                (operating engineers), roofers, sheet metal workers, and truck
                drivers; and the key classifications for heavy and highway
                construction as carpenters, cement masons, electricians, iron
                workers, laborers (common), painters, power equipment operators
                (operating engineers), and truck drivers. Id.
                ---------------------------------------------------------------------------
                 These rates would apply to the applicable classification without
                the need to submit a conformance request in accordance with current
                Sec. 5.5(a)(1)(ii)(A)-(C). However, if a contracting agency,
                contractor, union, or other interested party has questions or concerns
                about how particular work should be classified--and, specifically,
                whether the work at issue is performed by a particular classification
                included on a wage determination (including classifications listed
                pursuant to this proposal) as a matter of local area practice or
                otherwise, the contracting agency should submit a conformance request
                in accordance with Sec. 5.5(a)(1) or seek guidance from WHD under 29
                CFR 5.13. Moreover, under this proposal, contracting agencies would
                still be required to submit conformance requests for any needed
                classifications not listed on the wage determination, which would be
                approved, modified or disapproved as warranted after award of the
                contract, as required by the regulatory provisions applicable to
                conformance requests.
                2. 29 CFR Part 3
                 ``Anti-kickback'' and payroll submission regulations under section
                2 of the Act of June 13, 1934, as amended, 40 U.S.C. 3145, popularly
                known as the Copeland Act, are set forth in 29 CFR part 3. This part
                details the obligations of contractors and subcontractors relative to
                the weekly submission of statements regarding the wages paid on work
                covered by the Davis-Bacon labor standards; sets forth the
                circumstances and procedures governing the making of payroll deductions
                from the wages of those employed on such work; and delineates the
                methods of payment permissible on such work.
                i. Corresponding Edits to Part 3
                 The Department proposes multiple revisions to various sections in
                part 3 to update the language and ensure that terms are used in a
                manner consistent with the terminology used in 29 CFR parts 1 and 5, to
                update websites and contact information, and to make other similar,
                non-substantive changes. The Department also proposes conforming edits
                to part 3 to reflect proposed changes to part 5, such as revising Sec.
                3.2 to clarify existing definitions or to add new defined terms also
                found in parts 1 and 5. The Department welcomes comment on whether it
                should further consolidate and/or harmonize the definitions in
                Sec. Sec. 1.2, 3.2, and 5.2 in a final rule, such as by placing all
                definitions in a single regulatory section applicable to all three
                parts.
                 The Department further proposes to change certain requirements
                associated with the submission of certified payrolls. To the extent
                that such
                [[Page 15724]]
                changes are substantive, the reasons for these proposed changes are
                provided in the discussions of proposed Sec. Sec. 5.2 and 5.5. The
                Department also proposes to remove Sec. 3.5(e) regarding deductions
                for the purchase of United States Defense Stamps and Bonds, as the
                Defense Stamps and Bonds are no longer available for purchase.
                Similarly, the Department proposes to simplify the language regarding
                deductions for charitable donations at Sec. 3.5(g) by eliminating
                references to specific charitable organizations and instead permitting
                voluntary deductions to charitable organizations as defined by 26
                U.S.C. 501(c)(3).
                 Finally, the Department proposes to add language to Sec. 3.11
                explaining that the requirements set forth in part 3 are considered to
                be effective as a matter of law, whether or not these requirements are
                physically incorporated into a covered contract, and cross-referencing
                the proposed new language discussing incorporation by operation of law
                at Sec. 5.5(e), discussed further below.
                3. 29 CFR Part 5
                i. Section 5.1 Purpose and Scope
                 The Department proposes minor technical revisions to Sec. 5.1 to
                update statutory references, and further proposes to revise Sec. 5.1
                by deleting the listing of laws requiring Davis-Bacon labor standards
                provisions, given that any such list inevitably becomes out-of-date due
                to statutory revisions and the enactment of new Related Acts. In lieu
                of this listing in the regulation, the Department proposes to add new
                sub-paragraph (a)(1) to reference the WHD website (https://www.dol.gov/agencies/whd/government-contracts) on which a listing of laws requiring
                Davis-Bacon labor standards provisions is currently found and regularly
                updated.
                ii. Section 5.2 Definitions
                (A) Agency, Agency Head, Contracting Officer, Secretary, and Davis-
                Bacon Labor Standards
                 The Department proposes to revise the definitions of ``agency
                head'' and ``contracting officer'' and to add a definition of
                ``agency'' to reflect more clearly that State and local agencies enter
                into contracts for projects that are subject to the Davis-Bacon labor
                standards and that they allocate Federal assistance they have received
                under a Davis-Bacon Related Act to sub-recipients. These proposed
                definitional changes also are intended to reflect that, for some
                funding programs, the responsible Federal agency has delegated
                administrative and enforcement authority to states or local agencies.
                When the current regulations refer to the obligations or authority of
                agencies, agency heads, and contracting officers, they are referring to
                Federal agencies and Federal contracting officers. However, as noted
                above, State or local agencies and their agency heads and contracting
                officers exercise similar authority in the administration and
                enforcement of Davis-Bacon labor standards. Because the existing
                definitions define ``agency head'' and ``contracting officer'' as
                particular ``Federal'' officials or persons authorized to act on their
                behalf, which does not clearly reflect the role of State and local
                agencies in effectuating Davis-Bacon requirements, including by
                entering into contracts for projects subject to the Davis-Bacon labor
                standards and inserting the Davis-Bacon contract clauses in such
                contracts, the Department proposes to revise these definitions to
                reflect the role of State and local agencies. The proposed revisions
                also enable the regulations to specify the obligations and authority
                held by both State or local and Federal agencies, as opposed to
                obligations that are specific to one or the other.
                 The Department also proposes to define the term ``Federal agency''
                as a sub-definition of ``agency'' to distinguish those situations where
                the regulations refer specifically to an obligation or authority that
                is limited solely to a Federal agency that enters into contracts for
                projects subject to the Davis-Bacon labor standards or allocates
                Federal assistance under a Davis-Bacon Related Act.
                 The Department also proposes to add the District of Columbia to the
                definition of ``Federal agency.'' The DBA states in part that it
                applies to every contract in excess of $2,000, to which the Federal
                Government ``or the District of Columbia'' is a party. See 40 U.S.C.
                3142(a). As described above, Reorganization Plan No. 14 of 1950
                authorizes the Department to prescribe regulations to ensure that the
                Act is implemented in a consistent manner by all agencies subject to
                the Act. See 5 U.S.C. app 1. Accordingly, the proposed change to the
                definition of ``Federal agency'' in Sec. 5.2 clarifies that the
                District of Columbia is subject to the DBA and the regulations
                implemented by the Department pursuant to Reorganization Plan No. 14 of
                1950.\75\ The proposed change is also consistent with the definition of
                ``Federal agency'' in part 3 of this title, which specifically includes
                the District of Columbia. See 29 CFR 3.2(g). The proposed change simply
                reflects the DBA's applicability to the District of Columbia and is not
                intended to reflect a broader or more general characterization of the
                District as a Federal Government entity.
                ---------------------------------------------------------------------------
                 \75\ The 1973 Home Rule Act, Public Law 93-198, transferred from
                the President to the District of Columbia the authority to organize
                and reorganize specific governmental functions of the District of
                Columbia, but does not contain any language removing the District of
                Columbia from the Department's authority to prescribe DBA
                regulations pursuant to Reorganization Plan No. 14 of 1950.
                ---------------------------------------------------------------------------
                 The Department also proposes a change to the definition of
                ``Secretary'' to delete a reference to the Under Secretary for
                Employment Standards; as noted above, the Employment Standards
                Administration was eliminated in a reorganization in 2009 and its
                authorities and responsibilities were devolved into its constituent
                components, including WHD.
                 Lastly, the Department proposes a minor technical edit to the
                definition of ``Davis-Bacon labor standards'' to reflect proposed
                changes to Sec. 5.1, discussed above.
                (B) Building or Work
                (1) Energy Infrastructure and Related Activities
                 The Department proposes to modernize the definition of the terms
                ``building or work'' by including solar panels, wind turbines,
                broadband installation, and installation of electric car chargers to
                the non-exclusive list of construction activities encompassed by the
                definition. These proposed changes to the definition are intended to
                reflect the significance of energy infrastructure and related projects
                to modern-day construction activities subject to the Davis-Bacon and
                Related Acts, as well as to illustrate the types of energy-
                infrastructure and related activities that are encompassed by the
                definition of ``building or work.''
                (2) Coverage of a Portion of a Building or Work
                 The Department proposes to add language to the definitions of
                ``building or work'' and ``public building or public work'' to clarify
                that these definitions can be met even when the construction activity
                involves only a portion of an overall building, structure, or
                improvement. The definition of ``building or work'' already states that
                the terms ``building'' and ``work'' ``generally include construction
                activity as distinguished from manufacturing, furnishing of materials,
                or servicing and maintenance work,'' and includes ``without limitation,
                buildings, structures, and improvements of all types.'' 29 CFR 5.2(i).
                In addition, the
                [[Page 15725]]
                regulation already provides several examples of construction activity
                included within the term ``building or work'' that do not constitute an
                entire building, structure, or improvement, such as ``dredging,
                shoring, . . . scaffolding, drilling, blasting, excavating, clearing,
                and landscaping.'' Id. Moreover, the current regulations define the
                term ``construction, prosecution, completion, or repair'' to mean ``all
                types of work done on a particular building or work at the site thereof
                . . . including, without limitation . . . [a]ltering, remodeling,
                installation . . . ; [p]ainting and decorating.'' Id. Sec. 5.2(j).
                 However, to further make plain that ``building or work'' includes
                not only construction activity involving an entire building, structure,
                or improvement, but also construction activity involving a portion of a
                building, structure, or improvement, or the installation of equipment
                or components into a building, structure, or improvement, the
                Department proposes to add a sentence to this definition stating that
                ``[t]he term building or work also includes a portion of a building or
                work, or the installation (where appropriate) of equipment or
                components into a building or work.'' The Department also proposes to
                include additional language in the definition of ``public building or
                public work'' to clarify that a ``public building'' or ``public work''
                includes the construction, prosecution, completion, or repair of a
                portion of a building or work that is carried on directly by authority
                of or with funds of a Federal agency to serve the interest of the
                general public, even where construction of the entire building or work
                does not fit within this definition.
                 These proposed revisions are consistent with the Davis-Bacon Act.
                The concepts of alteration or repair presuppose that only a portion of
                a building, structure, or improvement will be affected. By specifically
                including the alteration or repair of public buildings or works within
                its scope of coverage, the Davis-Bacon Act itself necessitates that
                construction activity involving merely a portion of a building or work
                may be subject to coverage.
                 These proposed revisions are also consistent with the Department's
                longstanding policy that a ``public building'' or ``public work''
                includes construction activity involving a portion of a building or
                work, or the installation of equipment or components into a building or
                work when the other requirements for Davis-Bacon coverage are
                satisfied. See, e.g., AAM 52 (July 9, 1963) (holding that the upgrade
                of communications systems at a military base, including the
                installation of improved cabling, constituted the construction,
                alteration or repair of a public work); Letter from Sylvester L. Green,
                Director, Division of Contract Standards Operations, to Robert Olsen,
                Bureau of Reclamation (Mar. 18, 1985) (finding that the removal and
                replacement of stator cores in a hydroelectric generator was covered
                under the Davis-Bacon Act as the alteration or repair of a public
                work); Letter from Samuel D. Walker, Acting Administrator, to Edward
                Murphy (Aug. 29, 1990) (stating that ``[t]he Department has ruled on
                numerous occasions that repair or alteration of boilers, generators,
                furnaces, etc. constitutes repair or alteration of a `public work' '');
                Letter from Nancy Leppink, Deputy Administrator, to Armin J. Moeller
                (Dec. 12, 2012) (finding that the installation of equipment such as
                generators or turbines into a hydroelectric plant is considered to be
                the improvement or alteration of a public work).
                 Similarly, the proposed revisions are consistent with the
                Department's longstanding position that a ``public building'' or
                ``public work'' may include structures, buildings, or improvements that
                will not be owned by the Federal government when construction is
                completed, so long as the construction is carried on directly by
                authority of or with funds of a Federal agency to serve the interest of
                the general public. Accordingly, the Department has long held that the
                Davis-Bacon labor standards provisions may apply to construction
                undertaken when the government is merely going to have the use of the
                building or work, such as in lease-construction contracts, depending
                upon the facts and circumstances surrounding the contract. See
                Reconsideration of Applicability of the Davis-Bacon Act to the Veteran
                Admin.'s Lease of Med. Facilities, 18 Op. O.L.C. 109, 119 n.10 (May 23,
                1994) (``1994 OLC Memorandum'') (``[T]he determination whether a lease-
                construction contract calls for construction of a public building or
                public work likely will depend on the details of the particular
                arrangement.''); FOH 15b07. In AAM 176 (June 22, 1994), WHD provided
                guidance to the contracting community regarding the DBA's application
                to lease-construction contracts, and specifically advised that the
                following non-exclusive list of factors from the 1994 OLC Memorandum
                should be considered in determining the scope of DBA coverage: (1) The
                length of the lease; (2) the extent of Government involvement in the
                construction project (such as whether the building is being built to
                Government requirements and whether the Government has the right to
                inspect the progress of the work); (3) the extent to which the
                construction will be used for private rather than public purposes; (4)
                the extent to which the costs of construction will be fully paid for by
                the lease payments; and (5) whether the contract is written as a lease
                solely to evade the requirements of the DBA.
                 In sum, as noted above, a building or work includes construction
                activity involving only a portion of a building, structure, or
                improvement. As also noted above, a public building or public work is
                not limited to buildings or works that will be owned by the Federal
                Government, but may include buildings or works that serve the general
                public interest, including spaces to be leased or used by the Federal
                Government. Accordingly, it necessarily follows that a contract for the
                construction of a portion of a building, structure, or improvement may
                be a covered contract for construction of a ``public building'' or
                ``public work'' where the other requirements for coverage are met, even
                if the Federal Government is not going to own, lease, use, or otherwise
                be involved with the construction of the remaining portions of the
                building or work. For example, as WHD has repeatedly asserted in
                connection with one contracting agency's lease-construction contracts,
                where the Federal government enters into a lease for a portion of an
                otherwise private building--and, as a condition of the lease, requires
                and pays for specific tenant improvements requiring alterations and
                repairs to that portion to prepare the space for government occupancy
                in accordance with government specifications--Davis-Bacon labor
                standards may apply to the tenant improvements or other specific
                construction activity called for by such a contract. In such
                circumstances, the factors discussed in AAM 176 would still need to be
                considered to determine if coverage is appropriate, but the factors
                would be applied specifically with reference to the leased portion of
                the building and the construction required by the lease.
                 Finally, these proposed revisions would further the remedial
                purpose of the Davis-Bacon Act by ensuring that the Act's protections
                apply to contracts for construction activity for which the government
                is responsible. Walsh v. Schlecht, 429 U.S. 401, 411 (1977)
                (reiterating that the DBA ``was not enacted to benefit contractors, but
                rather to protect their employees from substandard earnings by fixing a
                floor under wages on Government projects'')
                [[Page 15726]]
                (citation and internal quotation marks omitted); 1994 OLC Memorandum,
                18 Op. O.L.C. at 121 (``[W]here the government is financially
                responsible for construction costs, the purposes of the Davis-Bacon Act
                may be implicated.''). If the Davis-Bacon Act were only applied in
                situations where the Federal government is involved in the construction
                of the entire (or even the majority of the) building or work, coverage
                of contracts would be dependent on the size of the building or work,
                even if two otherwise equivalent contracts involved the same square
                footage and the government was paying for the same amount of
                construction. Such an application of coverage would undermine the
                statute's remedial purpose by permitting publicly funded construction
                contracts for millions of dollars of construction activity to evade
                coverage merely based on the size of the overall structure or building.
                 Accordingly, and as noted above, the Department proposes revisions
                to the definitions of ``building or work'' and ``public building or
                public work'' that serve to clarify rather than change existing
                coverage requirements. However, the Department understands that in the
                absence of such clarity under the existing regulations, contracting
                agencies have differed in their implementation of Davis-Bacon labor
                standards where construction activity involves only a portion of a
                building, structure, or improvement, particularly in the context of
                lease-construction contracts. Thus, as a practical matter, the proposed
                revisions will result in broader application of Davis-Bacon labor
                standards. The Department therefore invites comment on the benefits and
                costs of these proposed revisions to private business owners, workers,
                and the Federal government, particularly in the context of leasing.
                (C) Construction, Prosecution, Completion, or Repair
                 The Department also proposes to add a new sub-definition to the
                term ``construction, prosecution, completion, or repair'' in Sec. 5.2,
                to better clarify when demolition and similar activities are covered by
                the Davis-Bacon labor standards.
                 In general, the Davis-Bacon labor standards apply to contracts
                ``for construction, alteration or repair . . . of public buildings and
                public works[.]'' 40 U.S.C. 3142(a). Early in the DBA's history, the
                Attorney General examined whether demolition fit within these terms,
                and concluded that ``[t]he statute is restricted by its terms to
                `construction, alteration, and/or repair,' '' and that this language
                ``does not include the demolition of existing structures'' alone. 38
                Op. Atty. Gen. 229 (1935). The Attorney General ``reserve[d] . . . the
                question . . . of [the coverage of] a razing or clearing operation
                provided for in a building contract, to be performed by the contractor
                as an incident of the building project.'' Id. Consistent with the
                Attorney General's opinion, the Department has long maintained that
                standalone demolition work is generally not covered by the Davis-Bacon
                labor standards. See AAM 190 (Aug. 29, 1998); WHD Opinion Letter SCA-78
                (Nov. 27, 1991); WHD Opinion Letter DBRA-40 (Jan. 24, 1986); WHD
                Opinion Letter DBRA-48 (Apr. 13, 1973); AAM 54 (July 29, 1963); FOH
                15d03(a).
                 However, the Department has understood the Davis-Bacon labor
                standards to cover demolition and removal under certain circumstances.
                First, demolition and removal activities are covered by Davis-Bacon
                labor standards when such activities themselves constitute
                construction, alteration, or repair of a public building or work. Thus,
                for example, the Department has explained that removal of asbestos or
                paint from a facility that will not be demolished--even if subsequent
                reinsulating or repainting is not considered--is covered by Davis-Bacon
                because the asbestos or paint removal is an ``alteration'' of the
                facility. See AAM 153 (Aug. 6, 1990). Likewise, the Department has
                explained that Davis-Bacon can apply to certain hazardous waste removal
                contracts, because ``substantial excavation of contaminated soils
                followed by restoration of the environment'' is ``construction work''
                under the DBA and because the term ``landscaping'' as used in the DBA
                regulations includes ``elaborate landscaping activities such as
                substantial earth moving and the rearrangement or reclamation of the
                terrain that, standing alone, are properly characterized as the
                construction, restoration, or repair of the a public work.'' AAM 155
                (Mar. 25, 1991); see also AAM 190 (noting that ``hazardous waste
                removal contracts that involve substantial earth moving to remove
                contaminated soil and recontour the surface'' can be considered DBA-
                covered construction activities)
                 Second, the Department has consistently maintained that if future
                construction that will be subject to the Davis-Bacon labor standards is
                contemplated on a demolition site--either because the demolition is
                part of a contract for such construction or because such construction
                is contemplated as part of a future contract, then the demolition of
                the previously-existing structure is considered part of the
                construction of the subsequent building or work and therefore within
                the scope of the Davis-Bacon labor standards. See AAM 190. This
                position is also articulated in the Department's SCA regulations at 29
                CFR 4.116(b). Likewise, the Department has explained that certain
                activities under hazardous waste removal and remediation contracts,
                including ``the dismantling or demolition of buildings, ground
                improvements and other real property structures and . . . the removal
                of such structures or portions of them'' are covered by Davis-Bacon
                labor standards ``if this work will result in the construction,
                alteration, or repair of a public building or public work at that
                location.'' AAM 187 (Nov. 18, 1996), attachment: Superfund Guidance,
                Davis Bacon Act/Service Contract Act and Related Bonding, Jan. 1992)
                (emphasis in original).
                 While the Department has addressed these distinctions to a degree
                in the SCA regulations and in subregulatory guidance, the Department
                believes that clear standards for the coverage of demolition and
                removal and related activities in the DBA regulations will assist
                agencies, contractors, workers, and other stakeholders in identifying
                whether contracts for demolition are within the scope of the DBA. This,
                in turn, would ensure that the correct contract provisions and wage
                determinations are incorporated into the contract, thereby providing
                contractors with the correct wage determinations prior to bidding and
                requiring the payment of Davis-Bacon prevailing wages where
                appropriate.\76\ Accordingly, the Department proposes to add a new
                paragraph (2)(v) to the definition of ``construction, prosecution,
                completion, or repair'' to assist agencies, contractors, workers, and
                other stakeholders in identifying when demolition and related
                activities fall within the scope of the DBA.
                ---------------------------------------------------------------------------
                 \76\ The Department notes that under Federal contracts and
                subcontracts, demolition contracts that do not fall within the DBA's
                scope are instead service contracts covered by the SCA, and the
                Department uses DBA prevailing wage rates as a basis for the SCA
                wage determination. See AAM 190. However, federally-funded
                demolition work carried out by State or local governments that does
                not meet the criteria for coverage under a Davis-Bacon Related Act
                would generally not be subject to Federal prevailing wage
                protections.
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                 Specifically, the Department proposes to clarify that demolition
                work is covered under any of three circumstances: (1) Where the
                demolition and/or removal activities themselves constitute
                construction, alteration, and/or repair of an existing public building
                or work; (2) where subsequent
                [[Page 15727]]
                construction covered in whole or in part by the Davis-Bacon labor
                standards is planned or contemplated at the site of the demolition or
                removal, either as part of the same contract or as part of a future
                contract; or (3) where otherwise required by statute.\77\
                ---------------------------------------------------------------------------
                 \77\ This third option accounts for Related Acts whose broader
                language may permit greater coverage of demolition work.
                ---------------------------------------------------------------------------
                 While determining whether demolition is performed in contemplation
                of a future construction project is a fact-specific question, the
                Department also proposes a non-exclusive list of factors that can
                inform this determination. Although the inclusion of demolition
                activities in the scope of a contract for the subsequent construction
                of a public building or work is sufficient to warrant Davis-Bacon
                coverage, such a condition is not a necessary one. Other factors that
                may be relevant include the existence of engineering or architectural
                plans or surveys; the allocation of, or an application for, Federal
                funds; contract negotiations or bid solicitations; the stated intent of
                the relevant government officials; the disposition of the site after
                demolition (e.g., whether it is to be sealed and abandoned or left in a
                State that is prepared for future construction); and other factors.
                Based on these guidelines, Davis-Bacon coverage may apply, for example,
                to the removal and disposal of contaminated soil in preparation for
                construction of a building, or the demolition of a parking lot to
                prepare the site for a future public park. In contrast, Davis-Bacon
                likely would not apply to the demolition of an abandoned, dilapidated,
                or condemned building to eliminate it as a public hazard, reduce
                likelihood of squatters or trespassers, or to make the land more
                desirable for sale to private parties for purely private construction.
                (D) Contract, Contractor, Prime Contractor, and Subcontractor
                 The Department proposes non-substantive revisions to the definition
                of ``contract'' and also proposes new definitions in Sec. 5.2 for the
                terms ``contractor,'' ``subcontractor'' and ``prime contractor.'' These
                definitions apply to 29 CFR part 5, including the DBRA contract clauses
                in Sec. 5.5(a) and (b) of this part.
                 Neither the DBA nor CWHSSA defines the terms ``contract,''
                ``contractor,'' ``prime contractor,'' or ``subcontractor.'' The
                language of the Davis-Bacon and Related Acts, however, makes it clear
                that Congress intended the prevailing wage and overtime requirements to
                apply broadly to both prime contracts executed directly with Federal
                agencies as well as any subcontracts through which the prime
                contractors carry out the work on the prime contract. See 40 U.S.C.
                3142(c); 40 U.S.C. 3702(b), (d). Thus, the Department's existing
                regulations define the term ``contract'' as including ``any prime
                contract . . . and any subcontract of any tier thereunder.'' 29 CFR
                5.2(h). As indicated by the reference in the existing regulations to
                the laws listed in Sec. 5.1, the term also may include the contracts
                between Federal, State or local government entities administering
                Federal assistance and the direct recipients or beneficiaries of that
                assistance, where such assistance is covered by one of the Related
                Acts--as well as the construction contracts and subcontracts of any
                tier financed by or facilitated by such a contract for assistance.
                 In other Federal contractor labor standards regulations, the
                Department has sometimes included more detailed definitions of a
                ``contract.'' In the regulations implementing Executive Order 13658
                (Establishing a Minimum Wage for Contractors), for example, the
                Department defined contract as ``an agreement between two or more
                parties creating obligations that are enforceable or otherwise
                recognizable at law'' and listed many types of specific instruments
                that fall within that definition. 29 CFR 10.2. The Department's SCA
                regulations, while containing a definition of ``contract'' that is
                similar to the current Davis-Bacon regulatory definition at 29 CFR
                5.2(h), separately specify that ``the nomenclature, type, or particular
                form of contract used . . . is not determinative of coverage'' at 29
                CFR 4.111(a).
                 The term ``contract'' in the Davis-Bacon and Related Acts has been
                interpreted in a similarly broad manner. See, e.g., Bldg. & Const.
                Trades Dep't, AFL-CIO v. Turnage, 705 F. Supp. 5, 6 (D.D.C. 1988)
                (``The Court finds that it is reasonable to conclude, as the WAB has
                done, that the nature of the contract is not controlling so long as
                construction work is part of it.''). Similarly, in its 1994 memorandum,
                the OLC cited the basic common-law understanding of the term to explain
                that, for the purposes of the DBA, ``[t]here can be no question that a
                lease is a contract, obliging each party to take certain actions.''
                1994 OLC Memorandum, 18 Op. O.L.C. at 113 n.3 (citing Arthur Linton
                Corbin, Corbin on Contracts sections 1.2-1.3 (rev. ed., Joseph M.
                Perillo, ed., 1993)). The Davis-Bacon and Related Acts thus have been
                routinely applied to various types of agreements that meet the common-
                law definition of a ``contract''--such as, for example, leases, utility
                privatization agreements, individual job orders or task letters issued
                under basic ordering agreements, and loans or agreements in which the
                only consideration from the agency is a loan guarantee--as long as the
                other elements of DBRA coverage are satisfied.
                 However, the Department considers that it may not be necessary to
                include in the regulatory text itself a similarly detailed recitation
                of types of agreements that may be considered to be contracts, because
                such a list necessarily follows from the use of the term ``contract''
                in the statute and the Department is not aware of any argument to the
                contrary. The Department thus seeks comment on whether a more detailed
                definition of the term ``contract'' is warranted, including whether
                aspects of the definition at 29 CFR 10.2 or the SCA regulations should
                or should not be included in the regulatory definition of contract at
                Sec. 5.2.
                 The Department also seeks comment on whether it is necessary to
                explicitly promulgate in the definition of ``contract'' in Sec. 5.2,
                or elsewhere in the regulations, an explanation regarding contracts
                that may be found to be void. The Department intends the use of the
                term in the regulations to apply also to any agreement in which the
                parties intended for a contract to be formed, even if (as a matter of
                the common law) the contract may later be considered to be void ab
                initio or otherwise fail to satisfy the elements of the traditional
                definition of a contract. Such usage follows from the statutory
                requirement that the relevant labor standards clauses must be included
                not just in ``contracts'' but also in the advertised specifications
                that may (or may not) become a covered contract. See 40 U.S.C. 3142(a).
                 In addition to the term ``contract,'' the existing DBRA regulations
                use the terms ``contractor,'' ``subcontractor,'' and ``prime
                contractor,'' but do not currently define the latter three terms. The
                Department proposes to include a definition of the term ``contractor''
                to clarify that, where used in the regulations, it applies to both
                prime contractors and subcontractors. In addition, the definition would
                clarify that sureties may also--under appropriate circumstances--be
                considered ``contractors'' under the regulations. This is consistent
                with the Department's longstanding interpretation. See Liberty Mutual
                Ins., ARB No. 00-018, 2003 WL 21499861 at *6 (June 30, 2003) (finding
                that the term ``contractor'' included sureties
                [[Page 15728]]
                completing a contract pursuant to a performance bond). As the ARB
                explained in the Liberty Mutual case, the term ``contractor'' in the
                DBA should be interpreted broadly in light of Congress's ``overarching
                . . . concern'' in the 1935 amendments to the Act that the new
                withholding authority included in those amendments would ensure workers
                received the pay they were due. Id. (citing S. Rep. No. 1155, at 3
                (1935)). As discussed below, the proposed definition of contractor also
                reflects the long-held interpretation that bona fide ``material
                suppliers'' are generally not considered to be contractors under the
                DBRA, subject to certain exceptions.
                 The Department also proposes a nonsubstantive change to move, with
                minor nonsubstantive edits, two sentences from the existing definition
                of ``contract'' to the new definition of ``contractor.'' These
                sentences clarify that State and local governments are not regarded as
                contractors or subcontractors under the Related Acts in situations
                where construction is performed by their own employees, but that under
                statutes that require payment of Davis-Bacon prevailing wages to all
                laborers and mechanics employed in the assisted project or in the
                project's development, State and local recipients of Federal aid must
                pay these employees according to Davis-Bacon labor standards. In
                addition, the Department proposes to supplement that language to
                explain (as the Department has similarly clarified in the SCA
                regulations) that the U.S. Government, its agencies, and
                instrumentalities are also not contractors or subcontractors for the
                purposes of the Davis-Bacon and Related Acts. Cf. 29 CFR 4.1a(f).
                 The Department proposes to add a definition for the term ``prime
                contractor'' as it is used in part 5 of the regulations. Consistent
                with the ARB's decision in Liberty Mutual, discussed above, the
                Department proposes a broad definition of prime contractor that
                prioritizes the appropriate allocation of responsibility for contract
                compliance and enhances the effectiveness of the withholding remedy.
                The proposed definition clarifies that the label an entity gives itself
                is not controlling, and an entity is considered to be a ``prime
                contractor'' based on its contractual relationship with the Government,
                its control over the entity holding the prime contract, or the duties
                it has been delegated.
                 The definition begins by identifying as a prime contractor any
                person or entity that enters into a covered contract with an agency.
                This includes, under appropriate circumstances, entities that may not
                be understood in lay terms to be ``construction contractors.'' For
                example, where a non-profit organization, owner/developer, borrower or
                recipient, project manager, or single-purpose entity contracts with a
                State or local government agency for covered financing or assistance
                with the construction of housing--and the other required elements of
                the relevant statute are satisfied--that owner/developer or recipient
                entity is considered to be the ``prime contractor'' under the
                regulations. This is so even if the entity does not consider itself to
                be a ``construction contractor'' and itself does not employ laborers
                and mechanics and instead subcontracts with a general contractor to
                complete the construction. See, e.g., Phoenix Dev. Co., WAB No. 90-09,
                1991 WL 494725, at *1 (Mar. 29, 1991) (``It is well settled that prime
                contractors (`owners-developers' under the HUD contract at hand) are
                responsible for the Davis-Bacon compliance of their subcontractors.'');
                Werzalit of Am., Inc., WAB No. 85-19, 1986 WL 193106, at *3 (Apr. 7,
                1986) (rejecting petitioner's argument that it was a loan ``recipient''
                standing in the shoes of a State or local government and not a prime
                ``contractor'').
                 The proposed definition also includes as a ``prime contractor'' the
                controlling shareholder or member of any entity holding a prime
                contract, the joint venturers or partners in any joint venture or
                partnership holding a prime contract, any contractor (e.g., a general
                contractor) that has been delegated all or substantially all of the
                responsibilities for overseeing and/or performing the construction
                anticipated by the prime contract, and any other person or entity that
                has been delegated all or substantially all of the responsibility for
                overseeing Davis-Bacon labor standards compliance on a prime contract.
                Under this definition, more than one entity on a contract--for example,
                both the owner/developer and the general contractor--may be considered
                to be ``prime contractors'' on the same contract. Accordingly, the
                proposal also explains that any two of these nominally different legal
                entities are considered to be the ``same prime contractor'' for the
                purposes of cross-withholding.
                 Although the Department has not previously included a definition of
                prime contractor in the implementing regulations, the proposed
                definition is consistent with the Department's prior enforcement of the
                DBRA. In appropriate circumstances, for example, the Department has
                considered a general contractor to be a ``prime contractor'' that is
                therefore responsible for the violations of its subcontractors under
                the regulations--even where that general contractor does not directly
                hold the contract with the Government (or is not the direct recipient
                of Federal assistance), but instead has been hired by the private
                developer that holds the overall construction contract. See Palisades
                Urb. Renewal Enters. LLP., OALJ No. 2006-DBA-00001 (Aug. 3, 2007), at
                16, aff'd, ARB No. 07-124, (July 30, 2009); Milnor Constr. Corp., WAB
                No. 91-21, 1991 WL 494763, at *1, 3 (Sept. 12, 1991); cf. Vulcan Arbor
                Hill Corp. v. Reich, 81 F.3d 1110, 1116 (D.C. Cir. 1996) (referencing
                agreement by developer that ``its prime'' contractor would comply with
                Davis-Bacon standards). Likewise, where a joint venture holds the
                contract with the government, the Department has characterized the
                actions of the parties to that joint venture as the actions of ``prime
                contractors.'' See Big Six, Inc., WAB No. 75-03, 1975 WL 22569, at *2
                (July 21, 1975).
                 The proposed definition of prime contractor is also similar to,
                although somewhat narrower than, the broad definition of the term
                ``contractor'' in the FAR part 9 regulations that govern suspension and
                debarment across a broad swath of Federal procurement contracts. In
                that context, where the Federal Government seeks to protect its
                interest in effectively and efficiently completing procurement
                contracts, the FAR Council has adopted an expansive definition of
                contractor that includes affiliates or principals that functionally
                control the prime contract with the government. See 48 CFR 9.403. Under
                that definition, ``Contractor'' means any individual or entity that
                ``[d]irectly or indirectly (e.g., through an affiliate)'' is awarded a
                Government contract or ``[c]onducts business . . . with the Government
                as an agent or representative of another contractor.'' Id.\78\ The
                Department has a similar interest here in protecting against the use of
                the corporate form to avoid
                [[Page 15729]]
                responsibility for the Davis-Bacon labor standards.
                ---------------------------------------------------------------------------
                 \78\ The definition section in 48 CFR 9.403 specifies that it
                applies only ``as used in this subpart''--referring to subpart 9.4
                of the FAR. It thus applies only to the general suspension and
                debarment provisions of the FAR and thus does not apply to the
                regulations within the FAR that implement the Davis-Bacon labor
                standards, which are located in FAR part 22 and the contract clauses
                FAR part 52. The DBRA-specific provisions of the FAR are based on
                the Department's regulations in parts 1, 3, and 5 of subtitle 29 of
                the CFR, which are the subject of this NPRM. Thus, the Department
                expects that, after this rule is final, the FAR Council will
                consider how to amend FAR part 22 and the FAR contract clauses to
                appropriately incorporate the new and amended definitions that are
                adopted in the Department's final rule. The Department does not
                anticipate that this rulemaking would affect FAR subpart 9.4.
                ---------------------------------------------------------------------------
                 The Department seeks comment on the proposed definition of ``prime
                contractor,'' in particular as it affects the withholding contract
                clauses at Sec. 5.5(a)(2) and (b)(3), the prime contractor
                responsibility provisions at Sec. 5.5(a)(6) and (b)(4), and the
                proposed provisions in Sec. 5.9 regarding the authority and
                responsibility of contracting agencies for satisfying requests for
                cross-withholding.
                 Finally, the Department proposes a new definition of the term
                ``subcontractor.'' The proposed definition would affirmatively state
                that a ``subcontractor'' is ``any contractor that agrees to perform or
                be responsible for the performance of any part of a contract that is
                subject wholly or in part to the labor standards provisions of any of
                the laws referenced in Sec. 5.1.'' Like the current definition of
                ``contract,'' the proposed definition of ``subcontractor'' also
                reflects that the Act covers subcontracts of any tier--and thus the
                proposed definition of ``subcontractor'' would state that the term
                includes subcontractors of any tier. See 40 U.S.C. 3412; Castro v. Fid.
                & Deposit Co. of Md., 39 F. Supp. 3d 1, 6-7 (D.D.C. 2014). The proposed
                definition for ``subcontractor'' necessarily excludes material
                suppliers (except for narrow exceptions), because such material
                suppliers are excluded from the definition of ``contractor,'' as
                proposed, and that definition applies to both prime contractors and
                subcontractors. Finally, the proposed definition of ``subcontractor''
                also clarifies that the term does not include laborers or mechanics for
                whom a prevailing wage must be paid. As discussed below, and as
                Congress expressly indicated, the requirement to pay a prevailing wage
                to ordinary laborers and mechanics cannot be evaded by characterizing
                such workers as ``owner operators'' or ``subcontractors.'' See 40
                U.S.C. 3142(c)(1) (requiring payment of prevailing wage ``regardless of
                any contractual relationship which may be alleged to exist between the
                contractor or subcontractor and the laborers and mechanics'').
                (E) Apprentice and Helper
                 The Department proposes to amend the current regulatory definition
                in Sec. 5.2(n) of ``apprentice, trainee, and helper'' to remove
                references to trainees. A trainee is currently defined as a person
                registered and receiving on-the-job training in a construction
                occupation under a program approved and certified in advance by ETA as
                meeting its standards for on-the-job training programs, but ETA no
                longer reviews or approves on-the-job training programs so this
                definition is unnecessary. See section III.B.3.iii.(C) (``29 CFR
                5.5(a)(4) Apprentices.''). The Department also proposes to modify the
                definition of ``apprentice and helper'' to reflect the current name of
                the office designated by the Secretary of Labor, within the Department,
                to register apprenticeship programs.
                (F) Laborer or Mechanic
                 The Department proposes to amend the regulatory definition of
                ``laborer or mechanic'' to remove the reference to trainees and to
                replace the term ``foremen'' with the gender-neutral term ``working
                supervisors.'' \79\ The Department does not propose any additional
                substantive changes to this definition.
                ---------------------------------------------------------------------------
                 \79\ The proposal addressing trainees is discussed in greater
                detail below in section III.B.3.iii.(C) (``29 CFR 5.5(a)(4)
                Apprentices.'').
                ---------------------------------------------------------------------------
                 However, because the Department frequently receives questions
                pertaining to the application of the definition of ``laborer or
                mechanic''--and thus the application the Davis-Bacon labor standards--
                to members of survey crews, the Department provides the following
                information to clarify when survey crew members are laborers or
                mechanics under the existing definition of that term.
                 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.\80\ Whether or not a specific survey crew member is covered
                by these standards is a question or fact, which takes into account the
                actual duties performed and whether these duties are ``manual or
                physical in nature'' including the ``use of tools or . . . work of a
                trade.'' 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 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), it would
                be covered by the Davis-Bacon labor standards.
                ---------------------------------------------------------------------------
                 \80\ See, e.g., AAM 212 (Mar. 22, 2013). While AAM 212 was
                rescinded to allow the Department to seek a broader appreciation of
                the coverage issue it addressed and due to its incomplete
                implementation, see AAM 235 (Dec. 14, 2020), its rescission did not
                change the applicable standard, which is the definition of ``laborer
                or mechanic'' as currently set forth in 29 CFR 5.2(m).
                ---------------------------------------------------------------------------
                 The Department seeks comment on issues relevant to the application
                of the current definition to survey crew members, especially the range
                of duties performed by, and training required of, survey crew members
                who perform work on construction projects and whether the range of
                duties or required training varies for different roles within a survey
                crew based on the licensure status of the crew members, or for
                different types of construction projects.
                (G) Site of the Work and Related Provisions
                 The Department proposes the following revisions related to the
                DBRA's ``site of the work'' requirement: (1) Revising the definition of
                ``site of the work'' to further encompass certain construction of
                significant portions of a building or work at secondary worksites, (2)
                clarifying the application of the ``site of the work'' principle to
                flaggers, (3) revising the regulations to better delineate and clarify
                the ``material supplier'' exemption, and (4) revising the regulations
                to set clear standards for DBA coverage of truck drivers.
                (1) Current Statutory and Regulatory Provisions Related to Site of the
                Work
                a. Site of the Work
                 The DBA and Related Acts generally apply to ``mechanics and
                laborers employed directly on the site of the work'' by
                ``contractor[s]'' and ``subcontractor[s]'' on contracts for
                ``construction, alteration, or repair, including painting and
                decorating, of [covered] public buildings and public works.'' 40 U.S.C.
                3142(a), (c)(1). The Department's current regulations define ``site of
                the work'' as including ``the physical place or places where the
                building or work called for in the contract will remain'' and ``any
                other site where a significant portion of the building or work is
                constructed, provided that such site is established specifically for
                the performance of the contract or project.'' 29 CFR 5.2(l)(1). They
                further provide that in general, ``job headquarters, tool yards, batch
                plants, borrow pits, etc.'' are part of the
                [[Page 15730]]
                ``site of the work'' if they are ``dedicated exclusively, or nearly so,
                to performance of the covered contract or project'' and also are
                ``adjacent or virtually adjacent to the site of the work'' itself. 29
                CFR 5.2(l)(2).
                 The ``site of the work'' requirement does not apply to Related Acts
                that extend Davis-Bacon coverage to all laborers and mechanics employed
                in the ``development'' of a project; such statutes include the United
                States Housing Act of 1937; the Housing Act of 1949; and the Native
                American Housing Assistance and Self-Determination Act of 1996. See
                Sec. 5.2(j)(1); 42 U.S.C. 1437j(a); 25 U.S.C. 4114(b)(1),
                4225(b)(1)(B); 42 U.S.C. 12836(a). As the Department has previously
                noted, ``the language and/or clear legislative history'' of these
                statutes ``reflected clear congressional intent that a different
                coverage standard be applied.'' 65 FR 80267 at 80275; see, e.g., L.T.G.
                Constr. Co., WAB Case No. 93-15, 1994 WL 764105, at *4 (Dec. 30, 1994)
                (noting that ``the Housing Act [of 1937] contains no `site of work'
                limitation similar to that found in the Davis-Bacon Act'').
                b. Off-Site Transportation
                 The ``site of the work'' requirement is also referenced in the
                current regulation's definition of ``construction, prosecution,
                completion, or repair,'' which provides that ``the transportation of
                materials or supplies to or from the site of the work'' is not covered
                by the DBRA, except for such transportation under the statutes to which
                the ``site of the work'' requirement does not apply. 29 CFR 5.2(j)(2).
                However, transportation to or from the site of the work is covered by
                the DBRA where a covered laborer or mechanic (1) transports materials
                between an ``adjacent or virtually adjacent'' dedicated support site
                that is part of the site of the work pursuant to 29 CFR 5.2(l)(2), or
                (2) transports portions of the building or work between a site where a
                significant portion of the building or work is constructed and that is
                established specifically for contract or job performance, which is part
                of the site of the work pursuant to 29 CFR 5.2(l)(1), and the physical
                place or places where the building or work will remain.\81\
                ---------------------------------------------------------------------------
                 \81\ For more detail on this topic, see the section titled
                ``Coverage of Construction Work at Secondary Construction Sites.''
                ---------------------------------------------------------------------------
                c. Material Supplier Exception
                 While not explicitly set out in the statute, the DBA has long been
                understood to exclude from coverage employees of bona fide ``material
                suppliers'' or ``materialmen'' whose sole responsibility is to provide
                materials (such as sand, gravel, and ready-mixed concrete) to a project
                if they also supply those materials to the general public, and the
                plant manufacturing the materials is not established specifically for a
                particular contract or located at the site of the work. See AAM 45
                (Nov. 9, 1962) (enclosing WHD Opinion Letter DB-30 (Oct. 15, 1962));
                AAM 36 (Mar. 16, 1952) (enclosing WHD Opinion Letter DB-22 (Mar. 12,
                1962)); H.B. Zachry Co. v. United States, 344 F.2d 352, 359 (Ct. Cl.
                1965); FOH 15e16. This principle has generally been understood to
                derive from the limitation of the DBA's statutory coverage to
                ``contractor[s]'' and ``subcontractor[s].'' See AAM 36, WHD Opinion
                Letter DB-22, at 2 (discussing ``the application of the term
                subcontractor, as distinguished from materialman or submaterialman'');
                cf. MacEvoy v. United States, 322 U.S. 102 (1944) (distinguishing a
                ``subcontractor'' from ``ordinary laborers and materialmen'' under the
                Miller Act); FOH 15e16 (``[B]ona fide material suppliers are not
                considered contractors under DBRA.''). As the Department has explained,
                this exception applies to employees of companies ``whose only
                contractual obligations for on-site work are to deliver materials and/
                or pick up materials.'' PWRB, DBA/DBRA Compliance Principles at 7
                (emphasis added).
                 Like the ``site of the work'' restriction, the material supplier
                exception does not apply to work under statutes that extend Davis-Bacon
                coverage to all laborers and mechanics employed in the ``development''
                of a project, regardless of whether they are employed by
                ``contractors'' or ``subcontractors.'' See existing regulation 29 CFR
                5.2(j)(1) (defining ``construction, prosecution, completion, or
                repair'' as including ``[a]ll types of work done on a particular
                building or work at the site thereof . . . by laborers and mechanics
                employed by a construction contractor or construction subcontractor
                (or, under the United States Housing Act of 1937; the Housing Act of
                1949; and the Native American Housing Assistance and Self-Determination
                Act of 1996, all work done in the construction or development of the
                project)''); existing regulation 29 CFR 5.2(i) (``The manufacture or
                furnishing of materials, articles, supplies or equipment . . . is not a
                building or work within the meaning of the regulations in this part
                unless conducted in connection with and at the site of such a building
                or work as is described in the foregoing sentence, or under the United
                States Housing Act of 1937 and the Housing Act of 1949 in the
                construction or development of the project.'').
                d. Relevant Regulatory History and Case Law
                 The regulatory provisions discussed above were shaped by three
                appellate court decisions between 1992 and 2000. The language in Sec.
                5.2(l) that deems dedicated sites such as batch plants and borrow pits
                part of the site of the work only if they are ``adjacent or virtually
                adjacent'' to the construction site was adopted in 2000 in response to
                Ball, Ball & Brosamer, Inc. v. Reich, 24 F. 3d 1447 (D.C. Cir. 1994)
                and L.P. Cavett Company v. U.S. Dep't of Labor, 101 F.3d 1111 (6th Cir.
                1996), which concluded that batch plants located only a few miles from
                the construction site (2 miles in Ball, 3 miles in L.P. Cavett) were
                not part of the ``site of the work.'' See 65 FR 80268 (``2000 final
                rule'').\82\ The ``adjacent or virtually adjacent'' requirement in the
                current regulatory text is one that the courts in Ball and L.P. Cavett
                suggested would be permissible. Similarly, the provision in Sec.
                5.2(j)(2) that excludes, with narrow exceptions, ``the transportation
                of materials or supplies to or from the site of the work'' from
                coverage stems from a 1992 interim final rule, see 57 FR 19204 (May 4,
                1992) (``1992 IFR''), that implemented Building & Construction Trades
                Dep't, AFL-CIO v. U.S. Dep't of Labor Wage Appeals Bd. (Midway), in
                which the D.C. Circuit held that drivers of a prime contractor's
                subsidiary who picked up supplies and transported them to the job site
                were not covered by the DBA because ``the Act applies only to employees
                working directly on the physical site of the public building or public
                work under construction.'' 932 F.2d 985, 990 (D.C. Cir. 1991).\83\
                ---------------------------------------------------------------------------
                 \82\ Prior to 2000, the Department had interpreted ``site of the
                work'' more broadly to include, in addition to the site where the
                work or building would remain, ``adjacent or nearby property used by
                the contractor or subcontractor in such construction which can
                reasonably be said to be included in the `site.' '' 29 CFR 5.2(l)
                (1990); see 65 FR 80268, 80269 (Dec. 20, 2000); AAM 86 (Feb. 11,
                1970).
                 \83\ Prior to 1992, the Department had interpreted the DBA as
                covering the transportation of materials and supplies to or from the
                site of the work by workers employed by a contractor or
                subcontractor. See 29 CFR 5.2(j) (1990).
                ---------------------------------------------------------------------------
                (2) Proposed Regulatory Revisions
                 The Department proposes the following regulatory changes related to
                the ``site of the work'' requirement: (1) Revising the definition of
                ``site of the work'' to further encompass certain construction of
                significant portions of a
                [[Page 15731]]
                building or work at secondary worksites, (2) clarifying the application
                of the ``site of the work'' principle to flaggers, (3) revising the
                regulations to better delineate and clarify the ``material supplier''
                exemption, and (4) revising the regulations to set clear standards for
                DBA coverage of truck drivers. Each proposal is explained in turn.
                a. Coverage of Construction Work at Secondary Construction Sites
                 In the 2000 final rule, the Department amended the definition of
                ``site of the work'' to include a site away from the location where the
                building or work will remain, where the site is established
                specifically for the performance of the contract or project and a
                ``significant portion'' of a building or work is constructed at the
                site. 29 CFR 5.2(l)(1). The Department explained that this change was
                intended to respond to technological developments that had enabled
                companies in some cases to construct entire portions of public
                buildings or works off-site, leaving only assembly or placement of the
                building or work remaining. See 65 FR 80273 (describing ``the
                innovative construction techniques developed and currently in use,
                which allow significant portions of public buildings and public works
                to be constructed at locations other than the final resting place of
                the building or work''). The Department cited examples, including a dam
                project where ``two massive floating structures, each about the length
                of a football field'' were constructed upriver and then floated
                downriver and submerged, the construction and assembly of military
                housing units in Portland for final placement in Alaska, and the
                construction of modular units to be assembled into a mobile service
                tower for Titan missiles. See id. (citing ATCO Construction, Inc., WAB
                No. 86-1 (Aug. 22, 1986), and Titan IV Mobile Serv. Tower, WAB No. 89-
                14 (May 10, 1991)).
                 The Department stressed that this new provision would apply only at
                a location where ``such a large amount of construction is taking place
                that it is fair and reasonable to view such location as a site where
                the public building or work is being constructed,'' and reaffirmed its
                longstanding position that ``[o]rdinary commercial fabrication plants,
                such as plants that manufacture prefabricated housing components,'' are
                not part of the site of the work. 65 FR at 80274; see, e.g., AAM 86
                (Feb. 11, 1970) at 1-2 (explaining that the site of the work does not
                include a contractor's permanent ``fabrication plant[s] . . . whose
                locations and continuance are governed by his general business
                operations . . . even though mechanics and laborers working at such an
                establishment may . . . make doors, windows, frames, or forms''). It
                accordingly described this expansion of coverage as a narrow one. See
                65 FR at 80276 (``[T]he Department believes that the instances where
                substantial amounts of construction are performed at one location and
                then transported to another location for final installation are
                rare.''). Consistent with this amendment, the Department also revised
                Sec. 5.2(j) to cover transportation of portion(s) of the building or
                work between such a site and the location where the building or work
                would remain.
                 Since 2000, technological developments have continued to facilitate
                off-site construction that replaces on-site construction to an even
                greater degree, and the Department expects such trends to continue in
                the future. For example, one recent industry analysis notes that both
                design firms and contractors ``are forecasting expanded use of both
                [prefabrication and modular construction] over the coming years as the
                benefits are more widely measured, owners become increasingly
                comfortable with the process and the outcomes, and the industry
                develops more resources to support innovative applications.'' Dodge
                Data and Analytics, Prefabrication and Modular Construction 2020
                (2020), at 4.\84\ In the specific context of Federal government
                contracting, a GSA document cites several benefits to ``pre-
                engineered'' or ``modular'' construction, including decreased
                construction time, cost savings, and fewer environmental and safety
                hazards. GSA, Schedule 56--Building and Building Materials, Industrial
                Service and Supplies, Pre-Engineered/Prefabricated Buildings Customer
                Ordering Guide (GSA Schedule 56), at 5-7.\85\
                ---------------------------------------------------------------------------
                 \84\ http://modular.org/documents/public/PrefabModularSmartMarketReport2020.pdf.
                 \85\ https://www.gsa.gov/cdnstatic/SCHEDULE_56_-_ORDERING_GUIDE.pdf.
                ---------------------------------------------------------------------------
                 In the 2000 final rule, the Department explained that ``[i]t [was]
                the Department's intention in [that] rulemaking to require in the
                future that workers who construct significant portions of a Federal or
                federally assisted project at a location other than where the project
                will finally remain, will receive prevailing wages as Congress intended
                when it enacted the Davis-Bacon and related Acts.'' 65 FR at 80274.
                However, by limiting such coverage to facilities that are established
                specifically for the performance of a particular contract or project,
                the current regulation falls short of its stated goal. The Department
                stated at the time that this limit was necessary to exclude
                ``[o]rdinary commercial fabrication plants, such as plants that
                manufacture prefabricated housing components.'' 65 FR at 80274.
                However, such an exclusion can be more effectively accomplished with
                language that expands on the term ``significant portion.''
                 The Department accordingly proposes to revise Davis-Bacon coverage
                of off-site construction of ``significant portions'' of a building or
                work so that such coverage is not limited to facilities established
                specifically for the performance of a contract or project. Rather, the
                Department proposes to amend the definition of ``site of the work'' to
                include off-site construction where the ``significant portions'' are
                constructed for specific use in a designated building or work, rather
                than simply reflecting products that the contractor or subcontractor
                makes available to the general public. The Department also proposes to
                explain the term ``significant portions'' to ensure that this expansion
                does not result in the coverage of activities that have long been
                understood to be outside the DBA's scope.
                 Specifically, the Department proposes to explain that ``significant
                portion'' means that entire portions or modules of the building or
                work, as opposed to smaller prefabricated components, are delivered to
                the place where the building or work will remain, with minimal
                construction work remaining other than the installation and/or assembly
                of the portions or modules. As the Midway court observed, the 1932
                House debate on the DBA demonstrates that its drafters understood that
                off-site prefabrication sites would generally not beconsidered part of
                the site of the work. See Midway, 932 F.2d at 991 n.12. As in 2000, the
                Department does not propose to alter this well-established principle.
                Such prefabrication, however, is distinguishable from modern methods of
                ``pre-engineering'' or ``modular'' construction, in which significant
                portions of a building or work are constructed and then simply
                assembled onsite ``similar to a child's building block kit.'' GSA
                Schedule 56 at 5.\86\ Under the latter circumstances, as the Department
                noted in 2000, ``such a large amount of construction is taking place
                [at an offsite location] that it is fair and reasonable to view such
                location as a site where the public building or work is being
                constructed.'' 65 FR at 80274; see also id. at 80272 (stating that
                ``the Department views such [secondary construction] locations as the
                actual
                [[Page 15732]]
                physical site of the public building or work being constructed''). In
                other words, when ``significant portions'' of a building or work that
                historically would have been built where the building or work will
                ultimately remain are instead constructed elsewhere, the exclusion from
                the DBA of laborers and mechanics engaged in such construction is
                inconsistent with the DBA.
                ---------------------------------------------------------------------------
                 \86\ See note 85, supra.
                ---------------------------------------------------------------------------
                 In light of the contractor/material supplier distinction discussed
                above, the Department also proposes to add, as an additional
                requirement for coverage of offsite construction, that the portions or
                modules are constructed for specific use in a designated building or
                work, rather than simply reflecting products that the contractor or
                subcontractor makes available to the general public. When significant
                portions or modules are constructed specifically for a particular
                building or work and not as part of the contractor's regular
                manufacturing operations, the company is not a material supplier but a
                contractor or subcontractor. See United Constr. Co., Inc., WAB No. 82-
                10, 1983 WL 144675, at *3 (Jan. 14, 1983) (examining, as part of an
                inquiry into whether support activities are on the ``site of the
                work,'' ``whether the activities are sufficiently independent of the
                primary project to determine that the function of the support
                activities may be viewed as similar to that of materialman'').
                 For clarity, the Department also proposes to amend Sec. 5.2 to use
                the term ``secondary construction sites'' to describe such locations,
                and to use the term ``primary construction sites'' to describe the
                place where the building or work will remain. The Department
                additionally proposes to use the term ``nearby dedicated support site''
                to describe locations such as batch plants that are part of the site of
                the work because they are dedicated exclusively, or nearly so, to the
                project, and are adjacent or nearly adjacent to a primary or secondary
                construction site.
                 The Department specifically seeks public comment on (1) examples of
                the types of off-site construction techniques described above, and the
                extent to which they are used in government and government-funded
                contracting, and (2) whether the proposed limits, including the
                clarification of ``significant portion,'' are appropriate.
                b. Clarification of Application of ``Site of the Work'' Principle to
                Flaggers
                 The Department also proposes to clarify that workers engaged in
                traffic control and related activities adjacent or nearly adjacent to
                the primary construction site are working on the site of the work.
                Often, particularly for heavy and highway projects, it is necessary to
                direct pedestrian or vehicular traffic around or away from the primary
                construction site. Certain workers of contractors or subcontractors,
                typically called ``flaggers'' or ``traffic directors,'' may therefore
                engage in activities such as setting up barriers and traffic cones,
                using a flag and/or stop sign to control and direct traffic, and
                related activities such as helping heavy equipment move in and out of
                construction zones. Although some flaggers work within the confines of
                the primary construction site, others work outside of that area and do
                not enter the construction zone itself.
                 The Department has previously explained that flaggers are laborers
                or mechanics within the meaning of the DBA. See AAM 141 (Aug. 16,
                1985); FOH 15e10(a); Superior Paving & Materials, Inc., ARB No. 99-065
                (June 12, 2002). The Department now proposes to clarify, in the
                definition of ``nearby dedicated support sites,'' that such workers,
                even if they are not working precisely on the site where the building
                or work would 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. Although the Department believes that any adjacent or
                virtually adjacent locations at which such work is performed are
                included within the current regulatory ``site of the work'' definition,
                given that questions have arisen regarding this coverage issue, the
                Department proposes to make this principle explicit.
                 As the Department has previously noted, such work by flaggers and
                traffic operators is integrally related to other construction work at
                the worksite and construction at the site would not be possible
                otherwise. See AAM 141; FOH 15e10(a). Additionally, as noted above and
                as the ARB has previously explained, the principle of adjacency or
                virtual adjacency in this context is consistent with the statutory
                ``site of the work'' limitation as interpreted by courts. See Bechtel
                Constructors Corp., ARB No. 97-149, 1998 WL 168939, at *5 (March 25,
                1998) (explaining that ``it is not uncommon or atypical for
                construction work related to a project to be performed outside the
                boundaries defined by the structure that remains upon completion of the
                work,'' such as where a crane in an urban environment is positioned
                adjacent to the future building site). This proposed change would
                therefore be consistent with the DBA and would eliminate any ambiguity
                regarding these workers' coverage.
                c. Clarification of ``Material Supplier'' Distinction
                 Next, the Department proposes to clarify the distinction between
                subcontractors and ``material suppliers'' and to make explicit that
                employees of material suppliers are not covered by the DBA and most of
                the Related Acts. Although, as explained above, this distinction has
                existed since the DBA's inception, the precise line between ``material
                supplier'' and ``subcontractor'' is not always clear, and is sometimes
                the subject of litigation.
                 The Department proposes to clarify the scope of the material
                supplier exception consistent with case law and WHD guidance. First,
                the Department proposes to add a new definition of ``material
                supplier'' to Sec. 5.2, and to define the term as an employer meeting
                three criteria: First, the employer's only obligations for work on the
                contract or project are the delivery of materials, articles, supplies,
                or equipment, which may include pickup in addition to, but not
                exclusive of, delivery; \87\ second, the employer also supplies
                materials to the general public; and third, the employer's facility
                manufacturing the materials, articles, supplies, or equipment, is
                neither established specifically for the contract or project nor
                located at the site of the work. See H.B. Zachry, 344 F.2d at 359; AAM
                5 (Dec. 26, 1957); AAM 31 (Dec. 11, 1961); AAM 36 (Mar. 16, 1962); AAM
                45 (Nov. 9, 1962); AAM 53 (July 22, 1963). The subsection further
                clarifies that if an employer, in addition to being engaged in material
                supply and pickup, also engages in other construction, prosecution,
                completion, or repair work at the site of the work, it is not a
                material supplier but a subcontractor. See PWRB, DBA/DBRA Compliance
                Principles, at 7-8 (``[I]f a material supplier, manufacturer, or
                carrier undertakes to perform a part of a construction contract as a
                subcontractor, its laborers and mechanics employed at the site of the
                work would be subject to Davis-Bacon labor standards in the same manner
                as those employed by any other
                [[Page 15733]]
                contractor or subcontractor.''); FOH 15e16(c) (same).
                ---------------------------------------------------------------------------
                 \87\ The Department notes that under this definition, an
                employer that contracts only for pickup of materials from the site
                of the work is not a material supplier but a subcontractor. This is
                consistent with the plain meaning of the term ``material supplier''
                and with the Department's case law. See Kiewit-Shea, Case No. 84-
                DBA-34, 1985 WL 167240 (OALJ Sept. 6, 1985), at *2 (concluding that
                companies whose contractual duties ``called for hauling away
                material and not for its supply'' were subcontractors, not material
                suppliers''), aff'd, Maryland Equipment, Inc., WAB No. 85-24, 1986
                WL 193110 (June 13, 1986).
                ---------------------------------------------------------------------------
                 While the Davis-Bacon regulations have not previously included
                definitions of ``contractor'' or ``subcontractor,'' this proposed rule,
                as discussed above, would add such definitions into Sec. 5.2. The
                Department therefore proposes to incorporate the material supplier
                exception into the proposed new definition of ``contractor,'' which is
                incorporated into the proposed definition of ``subcontractor.''
                Specifically, the Department proposes to exclude material suppliers
                from the regulatory definition of ``contractor,'' with the exception of
                entities performing work under Related Acts that apply the Davis-Bacon
                labor standards to all laborers and mechanics employed in a project's
                development, given that, as explained, the application of such statutes
                is not limited to ``contractors'' or ``subcontractors.''
                d. Coverage of Time for Truck Drivers
                 Finally, the Department proposes to revise the regulations to
                clarify coverage of truck drivers under the DBA. Since Midway, various
                questions have arisen regarding the application of the DBA and the
                Related Acts to truck drivers. While the Department's regulations
                address this issue to a certain extent, the Department has expanded on
                these issues in regulatory preambles and subregulatory guidance, which
                differ depending on whether truck drivers are employed by material
                suppliers or by contractors or subcontractors.
                 As noted above, the DBA does not apply to workers employed by bona
                fide material suppliers. However, under current WHD policy, if a
                material supplier, in addition to providing supplies, also performs
                onsite construction, alteration, or repair work as a subcontractor--
                such as a precast concrete item supplier that also repairs and cleans
                such items at the worksite or an equipment rental dealer that also
                repairs its leased equipment onsite--then its workers are covered for
                any on-site time for such construction work that is ``more than . . .
                incidental.'' FOH 15e16(c); PWRB, DBA/DBRA Compliance Principles at 7-
                8. For enforcement purposes, if a material supplier's worker spends
                more than 20 percent of the workweek performing such construction work
                on-site, all of the employee's on-site time during that workweek is
                covered.
                 For truck drivers employed by contractors or subcontractors, the
                Department has explained that such drivers' time is covered under
                certain circumstances. See FOH 15e22. First, ``truck drivers who haul
                materials or supplies from one location on the site of the work to
                another location on the site of the work'' are covered. 65 FR at 80275.
                Such ``on-site hauling'' is unaffected by Midway, which concerned the
                coverage of off-site hauling. Based on the same principle, any other
                construction work that drivers perform on the site of the work that is
                not related to off-site hauling is also covered. See FOH 15e22(a)(1)
                (stating that drivers are covered ``for time spent working on the site
                of the work''). Second, ``truck drivers who haul materials or supplies
                from a dedicated facility that is adjacent or virtually adjacent to the
                site of the work'' are covered for all of their time spent in those
                activities. 65 FR at 80275-76; 29 CFR 5.2(j)(1)(iv)(A); FOH
                15e22(a)(3). Such drivers are hauling materials or supplies between two
                locations on the site of the work, and given the requirement of
                adjacency or virtual adjacency, any intervening off-site time is likely
                extremely minimal. Third, drivers are covered for time spent
                transporting portion(s) of the building or work between a secondary
                site, established specifically for contract or project performance and
                where a ``significant portion'' of the work is constructed, and the
                site where the building or work will remain. See 29 CFR
                5.2(j)(1)(iv)(B); 65 FR at 80276; FOH 15e22(a)(4). As the Department
                has explained, ``under these circumstances[,] the site of the work is
                literally moving between the two work sites,'' 65 FR 57269, 57273, and
                as such, ``workers who are engaged in transporting a significant
                portion of the building or work between covered sites . . . are
                `employed directly upon the site of the work[.]' '' 65 FR at 80276.
                Fourth, drivers are covered for any time spent on the site of the work
                that is related to hauling materials to or from the site, such as
                loading or unloading materials, provided that such time is more than de
                minimis--a standard that, as currently applied, excludes drivers ``who
                come onto the site of the work for only a few minutes at a time merely
                to drop off construction materials.'' 65 FR at 80276; FOH 15e22(a)(2);
                PWRB, DBA/DBRA Compliance Principles, at 6-7.
                 Feedback from stakeholders, including contractors and contracting
                agencies, indicates that there is significant uncertainty regarding
                this topic. Such uncertainty includes the distinction between drivers
                for material supply companies versus drivers for construction
                contractors or subcontractors; what constitutes de minimis; whether the
                de minimis determination is made on a per trip, per day, or per week
                basis; and whether the 20 percent threshold for construction work
                performed onsite by material supply drivers is also applicable to
                delivery time spent on site by drivers employed by a contractor or
                subcontractor. This lack of clarity has also led to divergent
                interpretations by Department ALJs. Compare Rogers Group, ALJ No. 2012-
                DBA-00005 (OALJ May 28, 2013) (concluding that a subcontractor was not
                required to pay its drivers prevailing wages for sometimes-substantial
                amounts of on-site time (as much as 7 hours 30 minutes in a day) making
                deliveries of gravel, sand, and asphalt from offsite) with E.T. Simonds
                Constr. Co., ALJ No. 2021-DBA-00001 (OALJ May 25, 2021), appeal
                pending, ARB No. 21-054 (concluding that drivers employed by a
                subcontractor who hauled materials from the site of the work and spent
                at least 15 minutes per hour--25 percent of the workday--on site were
                covered for their onsite time).
                 Taking the above into account, the Department proposes to revise
                the regulations to clarify coverage of truck drivers in the following
                manner:
                 First, as noted above, the Department has proposed to clarify that
                employees of ``material suppliers'' are not covered by the DBRA, except
                for those Related Acts to which the material supplier exception does
                not apply. The proposed definition of a ``material supplier'' is
                limited to companies whose only contractual responsibilities are
                material supply and thus excludes companies that also perform any on-
                site construction, alteration, or repair. The Department believes that
                this proposed clarification will make the distinction between
                contractors/subcontractors and material suppliers clear. It also
                obviates the need for the 20 percent threshold for coverage of
                construction work performed onsite by material supply drivers discussed
                above, because, by definition, any drivers whose responsibilities
                include performing onsite construction work in addition to material
                supply are employed by subcontractors, not material suppliers. Thus,
                under this proposed rule, any time that drivers spend performing such
                construction work on the site of the work would be covered regardless
                of amount, as is the case for other laborers and mechanics.
                 Second, the Department proposes to amend its regulations concerning
                the coverage of transportation by truck drivers who are included within
                the DBA's scope generally (i.e., truck drivers employed by contractors
                and subcontractors, as well as any truck drivers employed in project
                [[Page 15734]]
                construction or development under certain Related Acts). Specifically,
                the Department proposes to amend the definition of ``construction,
                prosecution, completion, or repair'' in Sec. 5.2 to include
                ``transportation'' under five specific circumstances, which the
                Department proposes to define, collectively, as ``covered
                transportation'': (1) Transportation that takes place entirely within a
                location meeting the definition of site of the work (for example,
                hauling materials from one side of a construction site to the other
                side of the same site); (2) transportation of portion(s) of the
                building or work between a ``secondary construction site'' and a
                ``primary construction site''; (3) transportation between a ``nearby
                dedicated support site'' and either a primary or secondary construction
                site; (4) a driver or driver's assistant's ``onsite activities
                essential or incidental to offsite transportation,'' discussed further
                below, where the driver or driver's assistant's time spent on the site
                of the work is not so insubstantial or insignificant that it cannot as
                a practical administrative matter be precisely recorded; and (5) any
                transportation and related activities, whether on or off the site of
                the work, by laborers and mechanics under a statute that extends Davis-
                Bacon coverage to all laborers and mechanics employed in the
                construction or development of a project.
                 Items (1), (2), (3), and (5) set forth principles reflected in the
                current regulations, but in a clearer and more transparent fashion.
                Item (4) seeks to resolve the ambiguities discussed above regarding the
                coverage of on-site time by delivery drivers. Specifically, the
                Department proposes to explain that truck drivers and their assistants
                are covered for their time engaged in ``onsite activities essential or
                incidental to offsite transportation,'' defined as activities by a
                truck driver or truck driver's assistant on the site of the work that
                are essential or incidental to the transportation of materials or
                supplies to or from the site of the work, such as unloading, loading,
                and waiting time, where the driver or assistant's time is not ``so
                insubstantial or insignificant that it cannot as a practical
                administrative matter be precisely recorded.''
                 This proposed language is identical to the standard the Department
                uses to describe the de minimis principle under the Fair Labor
                Standards Act. See 29 CFR 785.47. Importantly, while the amount of time
                is relevant to this principle, the key inquiry is not merely whether
                the amount of time is small, but rather whether it is administratively
                feasible to track it, as the FLSA de minimis rule ``applies only where
                there are uncertain and indefinite periods of time involved of a few
                seconds or minutes duration, and where the failure to count such time
                is due to considerations justified by industrial realities.'' Id.
                (emphasis added). Moreover, ``an employer may not arbitrarily fail to
                count as hours worked any part, however small, of the employee's fixed
                or regular working time or practically ascertainable period of time he
                is regularly required to spend on duties assigned to him.'' Id. Thus,
                under the proposed language, where a driver's duties include dropping
                off and/or picking up materials on the site of the work, the driver
                must be compensated under the DBRA for any ``practically
                ascertainable'' time spent on the site of the work. The Department
                anticipates that in the vast majority of cases, it will be feasible to
                record the amount of time a truck driver or driver's assistant spends
                on the site of the work, and, therefore, that the Davis-Bacon labor
                standards will apply to any such time under the proposed rule. However,
                under the narrow circumstances where it is infeasible or impractical to
                measure a driver's very small amount of time spent on the site of the
                work, such time need not be compensated under this proposed rule.
                 This proposal is also consistent with the statutory ``site of the
                work'' restriction as interpreted in Midway. As the Department has
                previously explained, given the small amount of time the Midway drivers
                spent on-site, no party in the case had argued whether such on-site
                time alone could be subject to coverage. See 65 FR at 80275-76. Given
                that the court did not consider this issue, the Department does not
                understand Midway as precluding coverage of any time that drivers spend
                on the site of the work, ``no matter how brief.'' 65 FR at 80275-76.
                However, as with the FLSA, the Department proposes to exclude such time
                from DBRA coverage under the rare circumstances where it is very small
                in duration and industrial realities make it impossible or impractical
                to measure such time.
                e. Non-Substantive Changes for Conformance and Clarity
                 In addition to the above changes, the Department proposes a number
                of revisions to the regulatory definitions related to the ``site of the
                work'' and ``material supplier'' principle to conform to the above
                substantive revisions and for general clarity. The Department proposes
                to delete, from the definition of ``building or work,'' the language
                explaining that in general, ``[t]he manufacture or furnishing of
                materials, articles, supplies or equipment . . . is not a building or
                work.'' Instead, the Department proposes to clarify in the definition
                of the term ``construction (or prosecution, completion, or repair)''
                that ``construction, prosecution, completion, or repair'' only includes
                ``manufacturing or furnishing of materials, articles, supplies or
                equipment'' under certain limited circumstances. Additionally, the
                Department proposes to remove the citation to Midway from the
                definition of the term ``construction (or prosecution, completion, or
                repair)''; although, as discussed above, some of the regulatory changes
                the Department has made reflect the holdings in the three appellate
                cases noted above, the Department does not believe it is necessary to
                cite the case in the regulation.
                 The Department also proposes defining the term ``development
                statute'' to mean a statute that requires payment of prevailing wages
                under the Davis-Bacon labor standards to all laborers and mechanics
                employed in the development of a project. As noted above, some statutes
                extend Davis-Bacon coverage to all laborers and mechanics employed in
                the ``development'' of a project, regardless of whether they are
                working on the site of the work or employed by ``contractors'' or
                ``subcontractors.'' The current regulations reference three specific
                statutes--the United States Housing Act of 1937; the Housing Act of
                1949; and the Native American Housing Assistance and Self-Determination
                Act of 1996--that fit this description, but do not consistently
                reference all three. Use of the defined term ``development statute''
                would improve regulatory clarity and ensure that the regulations to not
                become obsolete if existing statutes meeting this description are
                revised or if new statutes meeting this description are added. The
                Department proposes to make conforming changes in Sec. 5.5 to
                incorporate this new term.
                 Finally, the Department proposes several linguistic changes to
                defined terms in Sec. 5.2 to improve clarity and readability.
                (H) Paragraph Designations
                 The Department is also proposing to amend Sec. 5.2 to remove
                paragraph designations of defined terms and instead to list defined
                terms in alphabetical order. The Department proposes to make conforming
                edits throughout parts 1, 3, and 5 in any
                [[Page 15735]]
                provisions that currently reference lettered paragraphs of Sec. 5.2.
                iii. Section 5.5 Contract Provisions and Related Matters
                 The Department proposes to remove the table at the end of Sec. 5.5
                related to the display of OMB control numbers. This table aids in
                fulfilling the requirements of the Paperwork Reduction Act; however,
                the Department maintains an inventory of OMB control numbers on https://www.reginfo.gov under ``Information Collection Review.'' This website
                is updated regularly and interested persons are encouraged to consult
                this website for the most up-to-date information.
                (A) 29 CFR 5.5(a)(1)
                 The Department proposes to add language to Sec. 5.5(a)(1) to state
                that the conformance process may not be used to split or subdivide
                classifications listed in the wage determination, and that conformance
                is appropriate only where the work which a laborer or mechanic performs
                under the contract is not within the scope of any classification listed
                on the wage determination, regardless of job title. This language
                reflects the principle that conformance is not appropriate when the
                work of the proposed classification is already performed by a
                classification on the wage determination. See 29 CFR
                5.5(a)(1)(ii)(A)(1). Even if workers perform only some of the duties of
                a classification, they are still performing work that is covered by the
                classification, and conformance of a new classification thus would be
                inappropriate. See, e.g., Fry Bros. Corp., 1977 WL 24823, at *6
                (contractor could not divide carpentry work between carpenters and
                carpenter tenders in order to pay a lower wage rate for a portion of
                the work; under the DBA it is not permissible to divide the work of a
                classification into several parts according to the contractor's
                assessment of each worker's skill and to pay for such division of the
                work at less than the specified rate for the classification). The
                proposed regulatory language is also in line with the principle that
                WHD must base its conformance decisions on the work to be performed by
                the proposed classification, not on the contractor's own classification
                or perception of the workers' skill. See 29 CFR 5.5(a)(1)(i) (``Such
                laborers and mechanics shall be paid the appropriate wage rate and
                fringe benefits . . . for the classification of work actually
                performed, without regard to skill . . . .''); see also, e.g., Tele-
                Sentry Sec., Inc., WAB No. 87-43, 1987 WL 247062, at *7 (Sept. 11,
                1987) (workers who performed duties falling within the electrician
                classification must be paid the electrician rate regardless of the
                employer's classification of workers as laborers). The Department
                welcomes any comments on this proposal.
                 The Department also proposes to make non-substantive revisions to
                current Sec. 5.5(a)(1)(ii)(B) and (C) to more clearly describe the
                conformance request process, including by providing that contracting
                officers should submit the required conformance request information to
                WHD via email using a specified WHD email address.
                 The Department has also proposed changes relating to the
                publication of rates for frequently conformed classifications. The
                Department's proposed changes to this subsection are discussed above in
                part III.B.1.xii (``Frequently conformed rates''), together with
                proposed changes to Sec. 1.3.
                 The Department also proposes to add language to the contract
                clauses at Sec. 5.5(a)(1)(vi), (a)(6), and (b)(4) requiring the
                payment of interest on any underpayment of wages or monetary relief
                required by the contract. This language is consistent with and would be
                subject to the proposed discussion of interest in 29 CFR 5.10
                (Restitution, criminal action), which requires that calculations of
                interest be carried out at the rate specified by the Internal Revenue
                Code for underpayment of taxes and compounded daily.
                (B) 29 CFR 5.5(a)(3)
                 The Department proposes a number of revisions to Sec. 5.5(a)(3) to
                better effectuate compliance and enforcement by clarifying and
                supplementing existing recordkeeping requirements. Similar changes
                proposed in Sec. 5.5(c) are discussed here.
                 As an initial matter, all references to employment (e.g., employee,
                employed, employing, etc.) in Sec. 5.5(a)(3) and (c), as well as in
                Sec. 5.6 and various other sections, have been revised to refer
                instead to ``workers'' or ``laborers and mechanics.'' These changes are
                discussed in greater detail below in section xxii, ``Employment
                Relationship Not Required.''
                (1) 29 CFR 5.5(a)(3)(i)
                 The Department proposes to amend Sec. 5.5(a)(3)(i) to clarify its
                longstanding interpretation and enforcement of this recordkeeping
                regulation to require contractors to maintain and preserve basic
                records and information, as well as certified payrolls. The required
                basic records include but are not limited to regular payroll (sometimes
                referred to as ``in-house'' payroll) and additional records relating to
                fringe benefits and apprenticeship and training. The term regular
                payroll refers to any written or electronic records that the contractor
                uses to document workers' days and hours worked, rate and method of
                payment, compensation, contact information, and other similar
                information, which provide the basis for the contractor's subsequent
                submission of certified payroll.
                 The Department also proposes to amend Sec. 5.5(a)(3)(i) to clarify
                that regular payrolls and other basic records required by this section
                must be preserved for a period of at least 3 years after all the work
                on the prime contract is completed. In other words, even if a project
                takes more than 3 years to complete, contractors and subcontractors
                must keep payroll and basic records for at least 3 years after all the
                work on the prime contract has been completed. This revision expressly
                states the Department's longstanding interpretation and practice
                concerning the period of time that contractors and subcontractors must
                keep payroll and basic records required by Sec. 5.5(a)(3).
                 The Department also proposes a new requirement that records
                required by Sec. 5.5(a)(3) and (c) must include last known worker
                telephone numbers and email addresses. Updating the Davis-Bacon
                regulations to require this additional worker contact information would
                reflect more modern and efficient methods of communication between
                workers and contractors, subcontractors, contracting agencies, and the
                Department's authorized representatives.
                 Another proposed revision in this section, as well as in Sec.
                5.5(c), clarifies the Department's longstanding interpretation of these
                regulatory provisions that contractors and subcontractors must maintain
                records of each worker's correct classification or classifications of
                work actually performed and the hours worked in each classification.
                See, e.g., Pythagoras Gen. Contracting Corp., ARB Nos. 08-107, 09-007,
                2011 WL 1247207, at *7 (Mar. 1, 2011) (``If workers perform labor in
                more than one job classification, they are entitled to compensation at
                the appropriate wage rate for each classification according to the time
                spent in that classification, which time the employer's payroll records
                must accurately reflect.''), aff'd sub nom. Pythagoras Gen. Contracting
                Corp. v. U.S. Dep't of Lab., 926 F. Supp. 2d 490 (S.D.N.Y. 2013).
                Current regulations permit contractors and subcontractors to pay
                ``[l]aborers or mechanics performing work in more than one
                classification . . . at the rate specified for each classification for
                the
                [[Page 15736]]
                time actually worked therein,'' but only if ``the employer's payroll
                records accurately set forth the time spent in each classification in
                which work is performed.'' 29 CFR 5.5(a)(1)(i). The proposed revisions
                similarly recognize that laborers or mechanics may perform work in more
                than one classification and more expressly provide that, in such cases,
                it is the obligation of contractors and subcontractors to accurately
                record information required by this section for each separate
                classification of work performed.
                 By revising the language in Sec. 5.5(a)(3)(i) and (c) to require
                records of the ``correct classification(s) of work actually
                performed,'' the Department intends to clarify its longstanding
                interpretation that contractors and subcontractors must keep records of
                (and include on certified payrolls) hours worked segregated by each
                separate classification of work performed. It would continue to be the
                case that if a contractor or subcontractor fails to maintain such
                records of actual daily and weekly hours worked and correct
                classifications, then it must pay workers the rates of the
                classification of work performed with the highest prevailing wage and
                fringe benefits due.
                 It is implicit--and expressly stated in various parts of current
                Sec. 5.5--that records that contractors and subcontractors are
                required to maintain must be accurate and complete. See also 40 U.S.C.
                3145(b). The Department proposes to put contractors and subcontractors
                on further notice of their statutory, regulatory, and contractual
                obligations to keep accurate, correct, and complete records by adding
                the term ``actually'' in Sec. 5.5(a)(3)(i) and (c) to modify ``hours
                worked'' and ``work performed.'' The current regulations require
                maintenance of records containing ``correct classifications'' and
                ``actual wages paid,'' and this proposed revision is not intended to
                make any substantive change to the longstanding requirement that
                contractors and subcontractors keep accurate, correct, and complete
                records of all the information required in these sections.
                (2) 29 CFR 5.5(a)(3)(ii)-(iii)
                 The Department proposes to revise the language in Sec.
                5.5(a)(3)(ii) and (iii) to expressly apply to all entities that might
                be responsible for maintaining the payrolls and basic records a
                contractor is required to submit weekly when a Federal agency is not a
                party to the contract. Currently, the specified records must be
                submitted to the ``applicant, sponsor, or owner'' if a Federal agency
                is not a party to the contract. The proposed revision would add the
                language ``or other entity, as the case may be, that maintains such
                records'' to clarify that this requirement applies regardless of the
                role or title of the recipient of Federal assistance (through grants,
                loans, loan guarantees or insurance, or otherwise) under any of the
                statutes referenced by Sec. 5.1.
                 The Department proposes to revise Sec. 5.5(a)(3)(ii) by replacing
                the phrase ``or audit of compliance with prevailing wage requirements''
                with ``or other compliance action.'' This revision clarifies that
                compliance actions may be accomplished by various means, not solely by
                an investigation or audit of compliance. A similar change is proposed
                in Sec. 5.6. Compliance actions include, without limitation, full
                investigations, limited investigations, office audits, self-audits, and
                conciliations. This proposed revision expressly sets forth the
                Department's longstanding practice and interpretation of this current
                regulatory language to encompass all types of Davis-Bacon compliance
                actions currently used by the Department, as well as any additional
                types that the Department may use in the future. This revision does not
                impose any new or additional requirements upon Federal agencies,
                applicants, sponsors, owners, or other entities, or on the Department,
                contractors, or subcontractors.
                 The Department also proposes to add language to Sec.
                5.5(a)(3)(ii)(A) to codify the Department's longstanding policy that
                contracting agencies and prime contractors can permit or require
                contractors to submit their certified payrolls through an electronic
                system, provided that the electronic submission system requires a
                legally valid electronic signature, as discussed below, and the
                contracting agency or prime contractor permits other methods of payroll
                submission in situations where the contractor is unable or limited in
                its ability to use or access the electronic system. See generally PWRB,
                DBA/DBRA Compliance Principles, at 26. The Department encourages all
                contracting agencies to permit submission of certified payrolls
                electronically, so long as all of the required information and
                certification requirements are met. Nevertheless, contracting agencies
                determine which, if any, electronic submissions systems they will use,
                as certified payrolls are submitted directly to the contracting
                agencies. Electronic submission systems can reduce the recordkeeping
                burden and costs of record maintenance, and many such systems include
                compliance monitoring tools that may streamline the review of such
                payrolls.\88\
                ---------------------------------------------------------------------------
                 \88\ The Department does not endorse or approve the use of any
                electronic submission system or monitoring tool(s). Although
                electronic monitoring tools can be a useful aid to compliance,
                successful submission of certified payrolls to an electronic
                submission system with such tools does not guarantee that a
                contractor is in compliance, particularly since not all violations
                can be detected through electronic monitoring tools. Contractors
                that use electronic submission systems remain responsible for
                ensuring compliance with Davis-Bacon labor standards provisions.
                ---------------------------------------------------------------------------
                 However, under the proposal, agencies that require the use of an
                electronic submission system would be required to allow contractors to
                submit certified payrolls by alternative methods when contractors are
                not able to use the agency's electronic submission system due to
                limitations on the contractor's ability to access the system. For
                example, if a contractor does not have internet access or is unable to
                access the electronic submission system due to a disability, the
                contracting agency would be required to allow such a contractor to
                submit certified payrolls in a manner that accommodates these
                circumstances.
                 The Department also proposes a new sub-paragraph, Sec.
                5.5(a)(3)(ii)(D), to reiterate the Department's longstanding policy
                that, to be valid, the contractor's signature on the certified payroll
                must either be an original handwritten signature or a legally valid
                electronic signature. Both of these methods are sufficient for
                compliance with the Copeland Act. See WHD Ruling Letter (Nov. 12, 2004)
                (``Current law establishes that the proper use of electronic signatures
                on certified payrolls . . . satisfies the requirements of the Copeland
                Act and its implementing regulations.'').\89\ Valid electronic
                signatures include any electronic process that indicates acceptance of
                the certified payroll record and includes an electronic method of
                verifying the signer's identity. Valid electronic signatures do not
                include a scan or photocopy of a written signature. The Department
                recognizes that electronic submission of certified payroll expands the
                ability of contractors and contracting agencies to comply with the
                requirements of the Davis-Bacon and Copeland Acts. As a matter of
                longstanding policy, the Department considers an original signature to
                be legally binding evidence of the intention of a person with regard to
                a document, record, or transaction. Modern technologies and evolving
                business practices are rendering the
                [[Page 15737]]
                distinction between original paper and electronic signatures nearly
                obsolete.
                ---------------------------------------------------------------------------
                 \89\ https://www.fhwa.dot.gov/construction/cqit/111204dol.cfm.
                ---------------------------------------------------------------------------
                 The Department proposes to add paragraph (a)(3)(iii) to Sec. 5.5
                to require all contractors, subcontractors, and recipients of Federal
                assistance to maintain and preserve Davis-Bacon contracts,
                subcontracts, and related documents for 3 years after all the work on
                the prime contract is completed. These related documents include,
                without limitation, contractors' and subcontractors' bids and
                proposals, as well as amendments, modifications, and extensions to
                contracts, subcontracts, or agreements.
                 WHD routinely requests these contract documents in its DBRA
                investigations. In the Department's experience, contractors and
                subcontractors that comply with the Davis-Bacon labor standards
                requirements usually, as a good business practice, maintain these
                contracts and related documents. It is also the Department's experience
                that Davis-Bacon contractors and subcontractors that do not keep their
                contracts, agreements, and related legally binding documents are more
                likely to disregard their obligations to workers and subcontractors.
                Adding an express regulatory requirement that contractors and
                subcontractors maintain and provide these records to WHD would bolster
                enforcement of the labor standards provisions of the statutes
                referenced by Sec. 5.1. This requirement would not relieve contractors
                or subcontractors from complying with any more stringent record
                retention requirements (e.g., longer record retention periods).
                 This proposed revision also could help level the playing field for
                contractors and subcontractors that comply with Davis-Bacon labor
                standards. Like the current recordkeeping requirements, non-compliance
                with this new proposed requirement may result in the suspension of any
                further payment, advance, or guarantee of funds and may also be grounds
                for debarment action pursuant to 29 CFR 5.12.
                 The Department proposes to renumber current Sec. 5.5(a)(3)(iii) as
                Sec. 5.5(a)(3)(iv). In addition, the Department proposes to revise
                this re-numbered paragraph to clarify the records contractors and
                subcontractors are required to make available to the Federal agency (or
                applicant, sponsor, owner, or other entity, as the case may be) or the
                Department upon request. Specifically, the proposed revisions to Sec.
                5.5(a)(3)(ii) and (iv), and the proposed new Sec. 5.5(a)(3)(iii),
                expand and clarify the records contractors and subcontractors are
                required to make available for inspection, copying, or transcription by
                authorized representatives specified in this section. The Department
                also proposes adding a requirement that contractors and subcontractors
                must make available any other documents deemed necessary to determine
                compliance with the labor standards provisions of any of the statutes
                referenced by Sec. 5.1.
                 Current Sec. 5.5(a)(3)(iii) requires contractors and
                subcontractors to make available the records set forth in Sec.
                5.5(a)(3)(i) (Payrolls and basic records). The proposed revisions to
                re-numbered Sec. 5.5(a)(3)(iv) ensure that contractors and
                subcontractors are aware that they are required to make available not
                only payrolls and basic records, but also the payrolls actually
                submitted to the contracting agency (or applicant, sponsor, owner, or
                other entity, as the case may be) pursuant to Sec. 5.5(a)(3)(ii),
                including the Statement of Compliance, as well as any contracts and
                related documents required by the proposed Sec. 5.5(a)(3)(iii). These
                records help WHD determine whether contractors are in compliance with
                the labor standards provisions of any of the statutes referenced by
                Sec. 5.1, and what the appropriate back wages and other remedies, if
                any, should be. The Department believes that these clarifications will
                remove doubt or uncertainty as to whether contractors are required to
                make such records available to the Federal agency (or applicant,
                sponsor, owner, or other entity, as the case may be) or the Department
                upon request. These revisions make explicit the Department's
                longstanding practice and do not impose any new or additional
                requirements upon a Federal agency (or applicant, sponsor, owner, or
                other entity, as the case may be).
                 The new or additional recordkeeping requirements in the proposed
                revisions to Sec. 5.5(a)(3) likely do not impose an undue burden on
                contractors or subcontractors, as they likely already maintain worker
                telephone numbers and email addresses and may already be required by
                contracting agencies to keep contracts and related documents. These
                revisions also enhance the Department's ability to provide education,
                outreach and compliance assistance to contractors and subcontractors
                awarded contracts subject to the Davis-Bacon labor standards
                provisions.
                 Finally, the Department in re-numbered Sec. 5.5(a)(3)(iv)(B)
                proposes to add a sanction for contractors and other persons that fail
                to submit the required records in Sec. 5.5(a)(3) or make those records
                available to WHD within the time WHD requests that the records be
                produced. Specifically, the Department proposes that contractors that
                fail to comply with WHD record requests will be precluded from
                introducing as evidence in an administrative proceeding under 29 CFR
                part 6 any of the required records that were not provided or made
                available to WHD. The Department proposes this sanction to enhance
                enforcement of recordkeeping requirements and encourage cooperation
                with its investigations and other compliance actions. The proposal
                provides that WHD will take into consideration a reasonable request
                from the contractor or person for an extension of the time for
                submission of records. WHD will determine the reasonableness of the
                request and may consider, among other things, the location of the
                records and the volume of production.
                (C) 29 CFR 5.5(a)(4) Apprentices
                 The Department proposes to reorganize Sec. 5.5(a)(4)(i) so that
                each of the four apprentice-related topics it addresses--rate of pay,
                fringe benefits, apprenticeship ratios, and reciprocity--are more
                clearly and distinctly addressed. These proposed revisions are not
                substantive. In addition, the Department proposes to revise the
                subsection of Sec. 5.5(a)(4)(i) regarding reciprocity to better align
                with the purpose of the DBA and the Department's Employment and
                Training Administration (ETA) regulation at 29 CFR 29.13(b)(7)
                regarding the applicable apprenticeship ratios and wage rates when work
                is performed by apprentices in a different State than the State in
                which the apprenticeship program was originally registered.
                 Section 5.5(a)(4)(i) provides that apprentices may be paid less
                than the prevailing rate for the work they perform if they are employed
                pursuant to, and individually registered in, a bona fide apprenticeship
                program registered with ETA's Office of Apprenticeship (OA) or with a
                State Apprenticeship Agency (SAA) recognized by the OA. In other words,
                in order to employ apprentices on a Davis-Bacon project at lower rates
                than the prevailing wage rates applicable to journeyworkers,
                contractors must ensure that the apprentices are participants in a
                federally registered apprenticeship program or a State apprenticeship
                program registered by a recognized SAA. Any worker listed on a payroll
                at an apprentice wage rate who is not employed pursuant to and
                individually registered in such a bona fide apprenticeship program must
                be paid the full prevailing wage listed on
                [[Page 15738]]
                the applicable wage determination for the classification of work
                performed. Additionally, any apprentice performing work on the site of
                the work in excess of the ratio permitted under the registered program
                must be paid not less than the full wage rate listed on the applicable
                wage determination for the classification of work performed.
                 In its current form, Sec. 5.5(a)(4)(i) further provides that when
                a contractor performs construction on a project in a locality other
                than the one in which its program is registered, the ratios and wage
                rates (expressed in percentages of the journeyworker's hourly rate)
                specified in the contractor's or subcontractor's registered program
                will be observed. Under this provision, the ratios and wage rates
                specified in a contractor's or subcontractor's registered program are
                ``portable,'' such that they apply not only when the contractor
                performs work in the locality in which it was originally registered
                (sometimes referred to as the contractor's ``home State'') but also
                when a contractor performs work on a project located in a different
                State (sometimes referred to as the ``host State''). In contrast, as
                part of a 1979 NPRM, the Department proposed essentially the opposite
                approach, i.e., that apprentice ratios and wage rates would not be
                portable and that, instead, when a contractor performs construction on
                a project in a locality other than the one in which its program is
                registered, ``the ratios and wage rates (expressed in percentages of
                the journeyman's hourly rate) specified in plan(s) registered for that
                locality shall be observed.'' \90\
                ---------------------------------------------------------------------------
                 \90\ Proposed Rule, Labor Standards Provisions Applicable to
                Contracts Covering Federally Financed and Assisted Construction, 44
                FR 77080, 77085 (Dec. 28, 1979).
                ---------------------------------------------------------------------------
                 In adopting the current approach in a final rule issued in 1981,
                the Department noted that several commenters had objected to the
                proposal to apply the apprentice ratios and wage rates in the location
                where construction is performed, rather than the ratios and wage rates
                applicable in the location in which the program is registered.\91\ The
                Department explained that, in light of these comments, ``[u]pon
                reconsideration, we decided that to impose different plans on
                contractors, many of which work in several locations where there could
                be differing apprenticeship standards, would be adding needless burdens
                to their business activities.'' \92\
                ---------------------------------------------------------------------------
                 \91\ Final Rule, Labor Standards Provisions Applicable to
                Contracts Covering Federally Financed and Assisted Construction, 46
                FR 4380, 4383 (Jan. 16, 1981).
                 \92\ Id. The 1981 final rule was suspended, but the
                apprenticeship portability provision in Sec. 5.5 was ultimately
                proposed and issued unchanged by a final rule issued in 1982. See
                Final Rule, Labor Standards Provisions Applicable to Contracts
                Covering Federally Financed and Assisted Construction, 47 FR 23658,
                23669 (May 28, 1982).
                ---------------------------------------------------------------------------
                 In 2008, ETA amended its apprenticeship regulations in a manner
                that is seemingly in tension with the 1981 final rule's approach to
                Davis-Bacon apprenticeship ``portability.'' Specifically, in December
                2007, ETA issued an NPRM to revise the agency's labor standards for the
                registration of apprenticeship programs regulations.\93\ One of the
                NPRM proposals was to expand the provisions of then-existing 29 CFR
                29.13(b)(8), which at that time provided that in order to be recognized
                by ETA, an SAA must grant reciprocal recognition to apprenticeship
                programs and standards registered in other States--except for
                apprenticeship programs in the building and construction trades.\94\
                ETA proposed to move the provision to 29 CFR 29.13(b)(7) and to remove
                the exception for the building and construction trades.\95\ In the
                preamble to the final rule issued on October 29, 2008, ETA noted that
                several commenters had expressed concern that it was ``unfair and
                economically disruptive to allow trades from one State to use the pay
                scale from their own State to bid on work in other States, particularly
                for apprentices employed on projects subject to the Davis-Bacon Act.''
                \96\ The preamble explained that ETA ``agree[d] that the application of
                a home State's wage and hour and apprentice ratios in a host State
                could confer an unfair advantage to an out-of-state contractor bidding
                on a Federal public works project.'' \97\ Further, the preamble noted
                that, for this reason, ETA's negotiations of memoranda of understanding
                with States to arrange for reciprocal approval of apprenticeship
                programs in the building and construction trades have consistently
                required application of the host State's wage and hour and
                apprenticeship ratio requirements. Accordingly, the final rule added a
                sentence to 29 CFR 29.13(b)(7) to clarify that the program sponsor
                seeking reciprocal approval must comply with the host State's wage and
                hour and apprentice ratio standards.\98\
                ---------------------------------------------------------------------------
                 \93\ See Apprenticeship Programs, Labor Standards for
                Registration, Amendment of Regulations Notice of Proposed
                Rulemaking, 72 FR 71020 (Dec. 13, 2007).
                 \94\ Id. at 71026.
                 \95\ Id.
                 \96\ Final Rule, Apprenticeship Programs, Labor Standards for
                Registration, Amendment of Regulations, 73 FR 64402, 64419 (Oct. 29,
                2008).
                 \97\ Id.
                 \98\ Id. at 64420. See 29 CFR 29.13(b)(7).
                ---------------------------------------------------------------------------
                 In order to better harmonize the Davis-Bacon regulations and ETA's
                apprenticeship regulations, the Department proposes to revise Sec.
                5.5(a)(4)(i) to reflect that contractors employing apprentices to work
                on a DBRA project in a locality other than the one in which the
                apprenticeship program was originally registered must adhere to the
                apprentice wage rate and ratio standards of the project locality. As
                noted above, the general rule in Sec. 5.5(a)(4)(i) is that contractors
                may pay less than the prevailing wage rate for the work performed by an
                apprentice employed pursuant to and individually registered in a bona
                fide apprenticeship program registered with ETA or an OA-recognized
                SAA. Under ETA's regulation at 29 CFR 29.13(b)(7), if a contractor has
                an apprenticeship program registered for one State but wishes to employ
                apprentices to work on a project in a different State with an SAA, the
                contractor must seek and obtain reciprocal approval from the project
                State SAA and adhere to the wage rate and ratio standards approved by
                the project State SAA. Accordingly, upon receiving reciprocal approval,
                the apprentices in such a scenario would be considered to be employed
                pursuant to and individually registered in the program in the project
                State, and the terms of that reciprocal approval would apply for
                purposes of the DBRA. The Department's proposed revision requiring
                contractors to apply the ratio and wage rate requirements from the
                relevant apprenticeship program for the locality where the laborers and
                mechanics are working therefore better aligns with ETA's regulations on
                recognition of SAAs and is meant to eliminate potential confusion that
                could result for Davis-Bacon contractors subject to both ETA and WHD
                rules regarding apprentices. The proposed revision also better comports
                with the DBA's statutory purpose to eliminate the unfair competitive
                advantage conferred on contractors from outside of a geographic area
                bidding on a Federal construction contract based on lower wage rates
                (and, in the case of apprentices, differing ratios of apprentices paid
                a percentage of the journeyworker rate for the work performed) than
                those that prevail in the location of the project.
                 The Department notes that multiple apprenticeship programs may be
                registered in the same State, and that such programs may cover
                different localities of that State and require
                [[Page 15739]]
                different apprenticeship wage rates and ratios within those separate
                localities. If apprentices registered in a program covering one State
                locality will be doing apprentice work in a different locality of the
                same State, and different apprentice wage and ratio standards apply to
                the two different localities, the proposed rule would require
                compliance with the apprentice wage and ratio standards applicable to
                the locality where the work will be performed. The Department welcomes
                comments as to whether adoption of a consistent rule, applicable
                regardless of whether the project work is performed in the same State
                as the registered apprenticeship program, best aligns with the
                statutory purpose of the DBA and would likely be less confusing to
                apply.
                 Lastly, the Department proposes to remove the regulatory provisions
                regarding trainees currently set out in Sec. Sec. 5.2(n)(2) and
                5.5(a)(4)(ii), and to remove the references to trainees and training
                programs throughout parts 1 and 5. Current Sec. 5.5(a)(4)(ii) permits
                ``trainees'' to work at less than the predetermined rate for the work
                performed, and Sec. 5.2(n)(2) defines a trainee as a person registered
                and receiving on-the-job training in a construction occupation under a
                program approved and certified in advance by ETA as meeting its
                standards for on-the-job training programs. Sections 5.2(n)(2) and
                5.5(a)(4)(ii) were originally added to the regulations over 50 years
                ago.\99\ However, ETA no longer reviews or approves on-the-job training
                programs and, relatedly, WHD has found that Sec. 5.5(a)(4)(ii) is
                seldom if ever applicable to DBRA contracts. The Department therefore
                proposes to remove the language currently in Sec. Sec. 5.2(n)(2) and
                5.5(a)(4)(ii), and to retitle Sec. 5.5(a)(4) ``Apprentices.'' The
                Department also proposes a minor revision to proposed Sec.
                5.5(a)(4)(ii) to align with the gender-neutral term of
                ``journeyworker'' used by ETA in its apprenticeship regulations. The
                Department also proposes to rescind and reserve Sec. Sec. 5.16 and
                5.17, as well as delete references to such trainees and training
                programs in Sec. Sec. 1.7, 5.2, 5.5, 5.6, and 5.15. The Department
                encourages comments on this proposal, including any relevant
                information about the use of training programs in the construction
                industry.
                ---------------------------------------------------------------------------
                 \99\ See Final Rule, Labor Standards Applicable to Contracts
                Covering Federally Financed and Assisted Construction, 36 FR 19304
                (Oct. 2, 1971) (defining trainees as individuals working under a
                training program certified by ETA's predecessor agency, the Manpower
                Administration's Bureau of Apprenticeship and Training).
                ---------------------------------------------------------------------------
                (D) Flow-Down Requirements in Sec. Sec. 5.5(a)(6) and 5.5(b)(4)
                 The Department proposes to add clarifying language to the DBRA- and
                CWHSSA-specific contract clause provisions at Sec. 5.5(a)(6) and
                (b)(4), respectively. Currently, these contract clauses 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.'' 29 CFR 5.5(a)(6) and
                (b)(4). The Department's proposed rule would affect these contract
                clauses in several ways.
                (1) Flow-Down of Wage Determinations
                 The Department proposes adding clarifying language to Sec.
                5.5(a)(6) that the flow-down requirement also requires the inclusion in
                such subcontracts of the appropriate wage determination(s).
                (2) Application of the Definition of ``Prime Contractor''
                 As noted above in the discussion of Sec. 5.2, the Department is
                proposing to codify a definition of ``prime contractor'' in Sec. 5.2
                that would include controlling shareholders or members, joint venturers
                or partners, and general contractors or others to whom all or
                substantially all of the construction or Davis-Bacon labor standards
                compliance duties have been delegated under the prime contract. These
                entities would therefore also be ``responsible'' under Sec. 5.5(a)(6)
                and (b)(4) for the same violations as the legal entity that signed the
                prime contract. The proposed change is intended to ensure that
                contractors do not interpose single-purpose corporate entities as the
                nominal ``prime contractor'' in order to escape liability or
                responsibility for the contractors' Davis-Bacon labor standards
                compliance duties.
                (3) Responsibility for the Payment of Unpaid Wages
                 The proposal includes new language underscoring that being
                ``responsible for . . . compliance'' means the prime contractor has the
                contractual obligation to cover any unpaid wages or other liability for
                contractor or subcontractor violations of the contract clauses. This is
                consistent with the Department's longstanding interpretation of this
                provision. See M.A. Bongiovanni, Inc., WAB No. 91-08, 1991 WL 494751,
                at *1 (Apr. 19, 1991); see also All Phase Elec. Co., WAB No. 85-18,
                1986 WL 193105, at *1-2 (June 18, 1986) (withholding contract payments
                from the prime contractor for subcontractor employees even though the
                labor standards had not been flowed down into the subcontract).\100\
                Because such liability for prime contractors is contractual, it
                represents strict liability and does not require that the prime
                contractor knew of or should have known of the subcontractors'
                violations. Bongiovanni, 1991 WL 494751, at *1. As the WAB explained in
                Bongiovanni, this rule ``serves two vital functions.'' Id. First, ``it
                requires the general contractor to monitor the performance of the
                subcontractor and thereby effectuates the Congressional intent embodied
                in the Davis-Bacon and Related Acts to an extent unattainable by
                Department of Labor compliance efforts.'' Id. Second, ``it requires the
                general contractor to exercise a high level of care in the initial
                selection of its business associates.'' Id.
                ---------------------------------------------------------------------------
                 \100\ The new language also clarifies that, consistent with the
                proposed language in Sec. 5.10, such responsibility also extends to
                any interest assessed on backwages or other monetary relief.
                ---------------------------------------------------------------------------
                (4) Potential for Debarment for Disregard of Responsibility
                 The proposed new language clarifies that underpayments of a
                subcontractor's workers may in certain circumstances subject the prime
                contractor itself to debarment for violating the responsibility
                provision. Under the existing regulations, there is no reference in the
                Sec. 5.5(a)(6) or (b)(4) responsibility clauses to a potential for
                debarment. However, the existing Sec. 5.5(a)(7) does currently explain
                that ``[a] breach of the contract clauses in 29 CFR 5.5''--which thus
                includes the responsibility clause at Sec. 5.5(a)(6)--``may be grounds
                . . . for debarment[.]'' 29 CFR 5.5(a)(7). The proposed new language
                would provide more explicit notice (in Sec. 5.5(a)(6) and (b)(4)
                themselves) of this potential that a prime contractor may be debarred
                where there are violations on the contract (including violations
                perpetrated by a subcontractor) and the prime contractor has failed to
                take responsibility for compliance.
                 In providing this additional notice of the potential for debarment,
                the Department does not intend to change the core standard for when a
                prime contractor or upper tier subcontractor may be debarred for the
                violations of a lower tier subcontractor. The potential for debarment
                for a violation of the responsibility requirement, unlike the
                responsibility for back wages, is not currently subject to a strict
                liability
                [[Page 15740]]
                standard. Rather, in the cases in which prime contractors have been
                debarred for the underpayments of subcontractors' workers, they were
                found to have some level of intent that reflected a disregard of their
                own obligations. See, e.g., H.P. Connor & Co., WAB No. 88-12, 1991 WL
                494691, at *2 (Feb. 26, 1991) (affirming ALJ's recommendation to debar
                prime contractor for ``run[ning] afoul'' of 29 CFR 5.5(a)(6) because of
                its ``knowing or grossly negligent participation in the underpayment''
                of the workers of its subcontractors).\101\
                ---------------------------------------------------------------------------
                 \101\ See also Martell Constr. Co., ALJ No. 86-DBA-32, 1986 WL
                193129, at *9 (DOL OALJ Aug. 7, 1986), aff'd, WAB No. 86-26, 1987 WL
                247045 (July 10, 1987). In Martell, the prime contractor had failed
                to flow down the required contract clauses and investigate or
                question irregular payroll records submitted by subcontractors. The
                ALJ explained that the responsibility clause in Sec. 5.5(a)(6)
                places a burden on the prime contractor ``to act on or investigate
                irregular or suspicious situations as necessary to assure that its
                subcontractors are in compliance with the applicable sections of the
                regulations.'' 1986 WL 193129, at *9.
                ---------------------------------------------------------------------------
                (5) The Department Does Not Intend To Change This Standard.
                Responsibility and Liability of Upper-Tier Subcontractors
                 The proposed language in Sec. 5.5(a)(6) and (b)(4) would also
                eliminate confusion regarding the responsibility and liability of
                upper-tier subcontractors. The existing language in Sec. 5.5(a)(6) and
                (b)(4) creates express contractual responsibility of upper-tier
                subcontractors to flow down the required contract clauses to bind their
                lower-tier subcontractors. See Sec. 5.5(a)(6) (stating that the prime
                contractor ``or subcontractor'' must insert the required clauses in
                ``any subcontracts''); Sec. 5.5(b)(4) (stating that the flow-down
                clause must ``requir[e] the subcontractors to include these clauses in
                any lower tier subcontracts''). The Department has long recognized that
                with this responsibility comes the potential for sanctions against
                upper-tier subcontractors that fail to properly flow down the contract
                clauses. See AAM 69 (DB-51), at 2 (July 29, 1966).\102\
                ---------------------------------------------------------------------------
                 \102\ In AAM 69, the Department noted that ``the failure of the
                prime contractor or a subcontractor to incorporate the labor
                standards provisions in its subcontracts may, under certain
                circumstances, be a serious violation of the contract requirements
                which would warrant the imposition of sanctions under either the
                Davis-Bacon Act or our Regulations.''
                ---------------------------------------------------------------------------
                 The current contract clauses in Sec. 5.5(a)(6) and (b)(4) do not
                expressly identify further contractual responsibility or liability of
                upper-tier subcontractors for violations that are committed against the
                employees of their lower-tier subcontractors. However, although the
                Department has not had written guidance to this effect, it has in many
                circumstances held upper-tier subcontractors responsible for the
                failure by their own lower-tier subcontractors to pay required
                prevailing wages. See, e.g., Ray Wilson Co., ARB No. 02-086, 2004 WL
                384729, at *6 (Feb. 27, 2004); Norsaire Sys., Inc., WAB No. 94-06, 1995
                WL 90009, at *1 (Feb. 28, 1995)
                 In Ray Wilson Co., for example, the ARB upheld the debarment of an
                upper-tier subcontractor because of its lower-tier subcontractor's
                misclassification of workers. As the ARB held, the higher-tier
                subcontractor had an ``obligation[ ] to be aware of DBA requirements
                and to ensure that its lower-tier subcontractor . . . properly complied
                with the wage payment and record keeping requirements on the project.''
                2004 WL 384729, at *10. The Department sought debarment because the
                upper-tier subcontractor had discussed the misclassification scheme
                with the lower-tier subcontractor and thus ``knowingly countenanced''
                the violations. Id. at *8.
                 The Department proposes in this rulemaking to clarify that upper-
                tier subcontractors (in addition to prime contractors) may be
                responsible for the violations committed against the employees of
                lower-tier subcontractors. The proposal would clarify that this
                responsibility would require upper-tier subcontractors to pay back
                wages on behalf of their lower-tier subcontractors and subject upper-
                tier subcontractors to debarment in appropriate circumstances (i.e.,
                where the lower-tier subcontractor's violation reflects a disregard of
                obligations by the upper-tier subcontractor to workers of their
                subcontractors). The proposal would include, in the Sec. 5.5(a)(6) and
                (b)(4) contract clauses, language adding that ``any subcontractor[ ]
                responsible'' for the violations is also liable for back wages and
                potentially subject to debarment. This language is intended to place
                liability not only on the lower-tier subcontractor that is directly
                employing the worker who does not receive required wages, but also on
                the upper-tier subcontractors that may also have disregarded their
                obligations to be responsible for compliance.
                 With this proposal, the Department does not intend to place the
                same strict liability responsibility on all upper-tier subcontractors
                as, discussed above, the existing language already places on prime
                contractors for lower-tier subcontractors' back wages. Rather, the new
                proposed language is intended to clarify that, in appropriate
                circumstances, as in Ray Wilson Co., upper-tier subcontractors may be
                held responsible--both subjecting them to possible debarment and
                requiring them to pay back wages jointly and severally with the prime
                contractor and the lower-tier subcontractor that directly failed to pay
                the prevailing wages.
                 A key principle in enacting regulatory requirements is that
                liability should, to the extent possible, be placed on the entity that
                best can control whether or not a violation occurs. See Bongiovanni,
                1991 WL 494751, at *1.\103\ For this reason, the Department proposes
                language assigning liability to upper-tier subcontractors, who have the
                ability to choose the lower-tier subcontractors they hire, notify
                lower-tier subcontractors of the prevailing wage requirements of the
                contract, and take action if they have any reason to believe there may
                be compliance issues. By clarifying that upper-tier subcontractors may
                be liable under appropriate circumstances--but are not strictly liable
                as are prime contractors--the Department believes that it has struck an
                appropriate balance that is consistent with historical interpretation,
                the statutory language of the DBA, and the feasibility and efficiency
                of future enforcement.
                ---------------------------------------------------------------------------
                 \103\ Cf. Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp.,
                456 U.S. 556, 572-73 (1982) (``[A] rule that imposes liability on
                the standard-setting organization--which is best situated to prevent
                antitrust violations through the abuse of its reputation--is most
                faithful to the congressional intent that the private right of
                action deter antitrust violations.''). The same principle supports
                the Department's proposed codification of the definition of ``prime
                contractor.'' Where the nominal prime contractor is a single-purpose
                entity with few actual workers, and it contracts with a general
                contractor for all relevant aspects of construction and monitoring
                of subcontractors, the most reasonable enforcement structure would
                place liability on both the nominal prime contractor and the general
                contractor that actually has the staffing, experience, and mandate
                to assure compliance on the job site.
                ---------------------------------------------------------------------------
                (E) 29 CFR 5.5(d)--Incorporation by Reference
                 Proposed new section 5.5(d) clarifies that, notwithstanding the
                continued requirement that agencies incorporate contract clauses and
                wage determinations ``in full'' into a covered contract, the clauses
                and wage determinations are equally effective if they are incorporated
                by reference. The Department's proposal for this subsection is
                discussed further below in part III.B.3.xx (``Post-award determinations
                and operation-of-law''), together with proposed changes to Sec. Sec.
                1.6(f), 5.5(e), and 5.6.
                (F) 29 CFR 5.5(e)--Operation of Law
                 In a new section at Sec. 5.5(e), the Department proposes language
                making effective by operation of law a contract
                [[Page 15741]]
                clause or wage determination that was wrongly omitted from the
                contract. The Department's proposal for this subsection is discussed
                below in part III.B.3.xx (``Post-award determinations and operation-of-
                law''), together with proposed changes to Sec. Sec. 1.6(f), 5.5(d),
                and 5.6.
                iv. Section 5.6 Enforcement
                (A) 29 CFR 5.6(a)(1)
                 The Department proposes to revise Sec. 5.6(a)(1) by renumbering
                the existing regulatory text Sec. 5.6(a)(1)(i), and adding an
                additional sub-section, Sec. 5.6(a)(1)(ii), to include a provision
                clarifying that where a contract is awarded without the incorporation
                of the required Davis-Bacon labor standards clauses required by Sec.
                5.5, the Federal agency must incorporate the clauses or require their
                incorporation. The Department's proposal for this subsection is
                discussed further below in part III.B.3.xx (``Post-award determinations
                and operation-of-law''), together with proposed changes to Sec. Sec.
                1.6(f) and 5.5(e).
                (B) 29 CFR 5.6(a)(2)
                 The Department proposes to amend Sec. 5.6(a)(2) to reflect the
                Department's longstanding practice and interpretation that certified
                payrolls required pursuant to Sec. 5.5(a)(3)(ii) may be requested--and
                Federal agencies must produce such certified payrolls--regardless of
                whether the Department has initiated an investigation or other
                compliance action. The term ``compliance action'' includes, without
                limitation, full investigations, limited investigations, office audits,
                self-audits, and conciliations.\104\ The Department further proposes
                revising this paragraph to clarify that, in those instances in which a
                Federal agency does not itself maintain such certified payrolls, it is
                the responsibility of the Federal agency to ensure that those records
                are provided to the Department upon request, either by obtaining and
                providing the certified payrolls to the Department, or by requiring the
                entity maintaining those certified payrolls to provide the records
                directly to the Department.
                ---------------------------------------------------------------------------
                 \104\ See 2020 GAO Report, note 12, supra, at 6 tbl.1, for
                descriptions of WHD Compliance Actions.
                ---------------------------------------------------------------------------
                 The Department also proposes to replace the phrase ``payrolls and
                statements of compliance'' with ``certified payrolls'' to continue to
                more clearly distinguish between certified payrolls and regular payroll
                and other basic records and information that the contractor is also
                required to maintain under Sec. 5.5(a)(3), as discussed above.
                 First, the proposed revisions are intended to clarify that an
                investigation or other compliance action is not a prerequisite to the
                Department's ability to obtain from the Federal agency certified
                payrolls submitted pursuant to Sec. 5.5(a)(3)(ii). Second, the
                proposed revisions are intended to remove any doubt or uncertainty that
                the Federal agency has an obligation to produce such certified
                payrolls, even in those circumstances in which it may not be the entity
                actually maintaining the requested certified payrolls. These revisions
                would make explicit the Department's longstanding practice and
                interpretation of this provision.
                 These proposed revisions would not place any new or additional
                requirements or recordkeeping burdens on contracting agencies, as they
                are already required to maintain these certified payrolls and provide
                them to the Department upon request.
                 These proposed revisions enhance the Department's ability to
                provide compliance assistance to various stakeholders, including
                Federal agencies, contractors, subcontractors, sponsors, applicants,
                owners, or other entities awarded contracts subject to the provisions
                of the DBRA. Specifically, these proposed revisions would facilitate
                the Department's review of certified payrolls on covered contracts
                where the Department has not initiated any specific compliance action.
                Conducting such reviews promotes the proper administration of the DBRA
                because, in the Department's experience, such reviews often enable the
                Department to identify compliance issues and circumstances in which
                additional outreach and education would be beneficial.
                (C) 29 CFR 5.6(a)(3)-(5), 5.6(b)
                 The Department proposes revisions to Sec. 5.6(a)(3) and (5) and
                (b), similar to the above-mentioned proposed changes to Sec.
                5.6(a)(2), to clarify that an investigation is only one method of
                assuring compliance with the labor standards clauses required by Sec.
                5.5 and the applicable statutes referenced in Sec. 5.1. The Department
                proposes to supplement the term ``investigation,'' where appropriate,
                with the phrase ``or other compliance actions.'' The proposed revisions
                align with all the types of compliance actions currently used by the
                Department, as well as any additional categories that the Department
                may use in the future. These revisions make explicit the Department's
                longstanding practice and interpretation of these provisions and do not
                impose any new or additional requirements upon a Federal agency.
                 Proposed revisions to Sec. 5.6(a)(3) clarify the records and
                information that contracting agencies should include in their DBRA
                investigations. These proposed changes conform to proposed changes in
                Sec. 5.5(a)(3).
                 The Department also proposes updating current Sec. 5.6(a)(5) to
                reflect its practice of redacting portions of confidential statements
                of workers or other informants that would tend to reveal those
                informants' identities. Finally, the Department proposes renumbering
                current Sec. 5.6(a)(5) as a stand-alone new paragraph Sec. 5.6(c).
                This proposed change is made to emphasize--without making substantive
                changes--that this regulatory provision mandating protection of
                information that identifies or would tend to identity confidential
                sources, or constitute an unwarranted invasion of personal privacy,
                applies to both the Department's and other agencies' confidential
                statements and other related documents.
                v. Section 5.10 Restitution, Criminal Action
                 To correspond with proposed language in the underlying contract
                clauses, the Department proposes to add references to monetary relief
                and interest to the description of restitution in Sec. 5.10, as well
                as an explanation of the method of computation of interest applicable
                generally to any circumstance in which there has been an underpayment
                of wages under a covered contract.
                 The Department has proposed new anti-retaliation contract clauses
                at Sec. 5.5(a)(11) and (b)(5), along with a related section of the
                regulations at Sec. 5.18. Those clauses and section provide for the
                provision of monetary relief that would include, but not be limited to,
                back wages. Reference to this relief in Sec. 5.10 is proposed to
                correspond to those proposed new clauses and section. For further
                discussion of those proposals, see part III.B.3.xix (``Anti-
                Retaliation'').
                 The reference to interest in Sec. 5.10 is similarly intended to
                correspond to proposed new language requiring the payment of interest
                on any underpayment of wages in the contract clauses at Sec.
                5.5(a)(1)(vi), (a)(2) and (6), and (b)(2) through (4), and on any other
                monetary relief for violations of the proposed anti-retaliation
                clauses. The existing Davis-Bacon regulations and contract clauses do
                not specifically provide for the payment of interest on back wages. The
                ARB and the Department's administrative law judges, however, have held
                that interest calculated to the date of the underpayment or loss is
                generally appropriate where back wages are due
                [[Page 15742]]
                under other similar remedial employee protection statutes enforced by
                the Department. See, e.g., Lawn Restoration Serv. Corp., No. 2002-SCA-
                00006, slip op. at 74 (OALJ Dec. 2, 2003) (awarding prejudgment
                interest under the SCA).\105\ Under the DBRA, as in the INA and SCA and
                other similar statutes, an assessment of interest on back wages and
                other monetary relief will ensure that the workers Congress intended to
                protect from substandard wages will receive the full compensation that
                they were owed under the contract.\106\
                ---------------------------------------------------------------------------
                 \105\ See also Greater Mo. Med. Pro-care Providers, Inc., ARB
                No. 12-015, 2014 WL 469269, at *18 (Jan. 29, 2014) (approving of
                pre-judgment and post-judgment interest on back pay award for H-1B
                visa cases under the Immigration and Nationality Act (INA)), aff'd
                sub nom. Greater Mo. Med. Pro-care Providers, Inc. v. Perez, No.
                3:14-CV-05028, 2014 WL 5438293 (W.D. Mo. Oct. 24, 2014), rev`d on
                other grounds, 812 F.3d 1132 (8th Cir. 2015).
                 \106\ The Department does not propose any requirement of
                interest on assessments of liquidated damages under the CWHSSA
                clause at Sec. 5.5(b)(2). Under CHWSSA, unlike the FLSA, there is
                no requirement that liquidated damages be provided to affected
                workers. Contracting agencies can provide liquidated damages that
                they recover to employees, but they are also allowed to retain
                liquidated damages to compensate themselves for the costs of
                enforcement or otherwise for their own benefit. See 40 U.S.C.
                3702(b)(2)(B), 3703(b)(2)(A).
                ---------------------------------------------------------------------------
                 The proposed language establishes that interest will be calculated
                from the date of the underpayment or loss, using the interest rate
                applicable to underpayment of taxes under 26 U.S.C. 6621, and will be
                compounded daily. Various OSHA whistleblower regulations use the tax
                underpayment rate and daily compounding because that accounting best
                achieves the make-whole purpose of a back-pay award. See Procedures for
                the Handling of Retaliation Complaints Under Section 806 of the
                Sarbanes-Oxley Act of 2002, as Amended, Final Rule, 80 FR 11865, 11872
                (Mar. 5, 2015).
                vi. Section 5.11 Disputes Concerning Payment of Wages
                 The Department proposes minor revisions to Sec. 5.11(b)(1) and
                (c)(1), to clarify that where there is a dispute of fact or law
                concerning payment of prevailing wage rates, overtime pay, or proper
                classification, the Administrator may notify the affected contractors
                and subcontractors, if any, of the investigation findings by means
                other than registered or certified mail, so long as those other means
                would normally assure delivery. Examples of such other means include,
                but are not limited to, email to the last known email address, delivery
                to the last known address by commercial courier and express delivery
                services, or by personal service to the last known address. As has been
                recently highlighted during the COVID-19 pandemic, while registered or
                certified mail may generally be a reliable means of delivery, in some
                circumstances other delivery methods may be just as reliable or even
                more successful at assuring delivery. These revisions allow the
                Department to choose methods to ensure that the necessary notifications
                are delivered to the affected contractors and subcontractors.
                 In addition, the Department proposes similar changes to allow
                contractors and subcontractors to also provide their response, if any,
                to the Administrator's notification of the investigative findings by
                any means that would normally assure delivery. The Department also
                proposes replacing the term ``letter'' with the term ``notification''
                in this section, since the notification of investigation findings may
                be delivered by letter or other means, such as email. Similarly, the
                Department proposes to replace the term ``postmarked'' with ``sent'' to
                reflect that other methods of delivery may be confirmed by other means,
                such as by the date stamp on an email or the delivery confirmation
                provided by a commercial delivery service.
                 For additional discussion related to Sec. 5.11, see part
                III.B.3.xxi (``Debarment'').
                vii. Section 5.12. Debarment Proceedings
                 The Department proposes minor revisions to Sec. 5.12(b)(1) and
                (d)(2)(iv)(A), to clarify that the Administrator may notify the
                affected contractors and subcontractors, if any, of the investigation
                findings by means other than registered or certified mail, so long as
                those other means would normally assure delivery. As discussed above in
                reference to identical changes proposed to Sec. 5.11, these proposed
                revisions will allow the Department to choose the most appropriate
                method to confirm that the necessary notifications reach their
                recipients. The Department proposes similar changes to allow the
                affected contractors or subcontractors to use any means that would
                normally assure delivery when making their response, if any, to the
                Administrator's notification.
                 The Department also proposes a slight change to Sec. 5.12(b)(2),
                to state that the Administrator's findings will be final if no hearing
                is requested within 30 days of the date of the Administrator's
                notification, as opposed to the current language, which states that the
                Administrator's findings shall be final if no hearing is requested
                within 30 days of receipt of the Administrator's notification. This
                proposed change would align the time period available for requesting a
                hearing in Sec. 5.12(b)(2) with similar requirements in Sec. 5.11 and
                other paragraphs in Sec. 5.12, which state that such requests must be
                made within 30 days of the date of the Administrator's notification.
                 For additional discussion related to Sec. 5.12, see part
                III.B.3.xxi (``Debarment'').
                viii. Section 5.16 Training Plans Approved or Recognized by the
                Department of Labor Prior to August 20, 1975
                 As noted above (see part III.B.3.iii(C) ``29 CFR 5.5(a)(4)
                Apprentices.''), the Department proposes to rescind and reserve Sec.
                5.16. Originally published along with Sec. 5.5(a)(4)(ii) in a 1975
                final rule, Sec. 5.16 is essentially a grandfather clause permitting
                contractors, in connection with certain training programs established
                prior to August 20, 1975, to continue using trainees on Federal and
                federally assisted construction projects without having to seek
                additional approval from the Department pursuant to Sec.
                5.5(a)(4)(ii). See 40 FR 30480. Since Sec. 5.16 appears to be obsolete
                more than four decades after its issuance, the Department proposes to
                rescind and reserve the section. The Department also proposes several
                technical edits to Sec. 5.5(a)(4)(ii) to remove references to Sec.
                5.16.
                ix. Section 5.17 Withdrawal of Approval of a Training Program
                 As discussed in detail above, the Department proposes to remove
                references to trainees and training programs throughout parts 1 and 5
                (see section iii(C) ``29 CFR 5.5(a)(4) Apprentices.'') as well as
                rescind and reserve Sec. 5.16 (see section viii ``Section 5.16
                Training plans approved or recognized by the Department of Labor prior
                to August 20, 1975.''). Accordingly, the Department also proposes to
                rescind and reserve Sec. 5.17.
                x. Section 5.20 Scope and Significance of This Subpart
                 The Department proposes two technical corrections to Sec. 5.20.
                First, the Department proposes to correct a typographical error in the
                citation to the Portal-to-Portal Act of 1947 to reflect that the
                relevant section of the Portal-to-Portal Act is codified at 29 U.S.C.
                259, not 29 U.S.C. 359. Second, the last sentence of Sec. 5.20
                currently states, ``Questions on matters not fully covered by this
                subpart may be referred to the Secretary for interpretation as provided
                in Sec. 5.12.'' However, the regulatory provision titled ``Rulings and
                Interpretations,'' which this section is
                [[Page 15743]]
                meant to reference, is currently located at Sec. 5.13. The Department
                therefore proposes to replace the incorrect reference to Sec. 5.12
                with the correct reference to Sec. 5.13.
                xi. Section 5.23 The Statutory Provisions
                 The Department proposes to make technical, non-substantive changes
                to Sec. 5.23. The existing text of Sec. 5.23 primarily consists of a
                lengthy quotation of a particular fringe benefit provision of the 1964
                amendments to the DBA. The Department proposes to replace this text
                with a summary of the statutory provision at issue for two reasons.
                First, due to a statutory amendment, the quotation set forth in
                existing Sec. 5.23 no longer accurately reflects the statutory
                language. Specifically, on August 21, 2002, Congress enacted
                legislation which made several non-substantive revisions to the
                relevant 1964 DBA amendment provisions and recodified those provisions
                from 40 U.S.C. 276a(b) to 40 U.S.C. 3141.\107\ The Department proposes
                to update Sec. 5.23 to include a citation to 40 U.S.C. 3141(2).
                Second, the Office of the Federal Register disfavors lengthy block
                quotations of statutory text.\108\ In light of this drafting
                convention, and because the existing quotation in Sec. 5.23 no longer
                accurately reflects the statutory language, the Department is proposing
                to revise Sec. 5.23 so that it paraphrases the statutory language set
                forth at 40 U.S.C. 3141(2).
                ---------------------------------------------------------------------------
                 \107\ See Revision of Title 40, U.S.C., ``Public Buildings,
                Property, and Works,'' Public Law 107-217, 3141, 116 Stat. 1062,
                1150 (Aug. 21, 2002).
                 \108\ See Office of the Federal Register, Document Drafting
                Handbook Sec. 3.6 (Aug. 2018 ed., rev. Mar. 24, 2021), available at
                https://www.archives.gov/files/Federal-register/write/handbook/ddh.pdf.
                ---------------------------------------------------------------------------
                xii. Section 5.25 Rate of Contribution or Cost for Fringe Benefits
                 The Department proposes to add new paragraph (c) to existing Sec.
                5.25 to codify the principle of annualization used to calculate the
                amount of Davis-Bacon credit that a contractor may receive for
                contributions to a fringe benefit plan when the contractor's workers
                also work on private projects. While existing guidance generally
                requires the use of annualization to compute the hourly equivalent of
                fringe benefits, annualization is not currently addressed in the
                regulations. The Department's proposal would require annualization of
                fringe benefits unless a contractor is approved for an exception and
                provide guidance on how to properly annualize fringe benefits. The
                proposed revision also creates a new administrative process that
                contractors must follow to obtain approval by the Administrator for an
                exception from the annualization requirement.
                 Consistent with the Secretary's authority to set the prevailing
                wage, WHD has long concluded that a contractor generally may not
                calculate Davis-Bacon credit for all its contributions to a fringe
                benefit plan in a given time period based solely upon the workers'
                hours on a Davis-Bacon project when the contractor's workers also work
                on private projects for the contractor in that same time period. See,
                e.g., Miree Constr. Corp. v. Dole, 930 F.2d 1536, 1545-46 (11th Cir.
                1991); see also, e.g., WHD Opinion Letter DBRA-72 (June 5, 1978); WHD
                Opinion Letter DBRA-134 (June 6, 1985); WHD Opinion Letter DBRA-68 (May
                22, 1984); FOH 15f11(b). WHD's guidance explains that contributions
                made to a fringe benefit plan for government work generally may not be
                used to fund the plan for periods of non-government work, and a
                contractor typically must convert its total annual contributions to the
                fringe benefit plan to an hourly cash equivalent by dividing the cost
                of the fringe benefit by the total number of working hours (DBRA and
                non-covered) to determine the amount creditable towards meeting its
                obligation to pay the prevailing wage under the DBRA. See FOH 15f11(b),
                15f12(b).
                 This principle, which is referred to as ``annualization,'' thus
                generally compels a contractor performing work on a Davis-Bacon covered
                project to divide its contributions to a fringe benefit plan for a
                worker by that worker's total hours of work on both Davis-Bacon and
                private projects for the employer in that year, rather than attribute
                those contributions solely to the worker's work on Davis-Bacon covered
                projects. Annualization effectively prohibits contractors from using
                fringe benefit plan contributions attributable to work on private jobs
                to meet their prevailing wage obligation for DBRA-covered work. See,
                e.g., Miree Constr., 930 F.2d at 1545 (annualization ensures receipt of
                the prevailing wage by ``prevent[ing] employers from receiving Davis-
                Bacon credit for fringe benefits actually paid to employees during non-
                Davis-Bacon work''). Annualization is intended to prevent the use of
                DBRA work as the disproportionate or exclusive source of funding for
                benefits that are continuous in nature and that constitute compensation
                for all the worker's work, both Davis-Bacon covered and private.
                Despite the longstanding nature of this policy, however, the concept of
                annualization is not expressly referred to in the Davis-Bacon
                regulations.
                 For many years, WHD has required contractors to annualize
                contributions for most types of fringe benefit plans, including health
                insurance plans, apprenticeship training plans, vacation plans, and
                sick leave plans. WHD's rationale for requiring annualization is that
                such contributions finance benefits that: (1) Are continuous in nature,
                and (2) reflect compensation for all of the work performed by a laborer
                or mechanic, including work on both DBA-covered and private projects.
                One notable exception to this general rule compelling the annualization
                of fringe benefit plan contributions, however, is that WHD has not
                required annualization for defined contribution pension plans (DCPPs)
                that provide for immediate participation and essentially immediate
                vesting (e.g., 100 percent vesting after a worker works 500 or fewer
                hours). See WHD Opinion Letter DBRA-134 (June 6, 1985); see also FOH
                15f14(f)(1). The rationale for such exclusion is that DCPPs are not
                continuous in nature, as the benefits are not available until a
                worker's retirement, and that they ensure that the vast majority of
                workers will receive the full amount of contributions made on their
                behalf. However, WHD does not currently have any public guidance
                explaining the extent to which other plans may also share those
                characteristics and warrant an exception from the annualization
                principle.
                 To clarify when an exception to the general annualization principle
                may be appropriate, the Department proposes language stating that a
                fringe benefit plan may only qualify for such an exception when three
                criteria are satisfied: (1) The benefit provided is not continuous in
                nature; (2) the benefit does not provide compensation for both public
                and private work; and (3) the plan provides for immediate participation
                and essentially immediate vesting. In accordance with the Department's
                longstanding guidance, a plan will generally be considered to have
                essentially immediate vesting if the benefits vest after a worker works
                500 or fewer hours. These criteria are not necessarily limited to
                DCPPs. However, to ensure that the criteria are applied correctly and
                that workers' Davis-Bacon wages are not disproportionately used to fund
                benefits during periods of private work, such an exception can only
                apply when the plan in question has been submitted to the Department
                for review and approval. Such requests may be submitted by plan
                administrators, contractors, or their representatives. However, to
                avoid any disruption to the provision of worker benefits, the
                Department also proposes that any plan that does not require
                [[Page 15744]]
                annualization under the Department's existing guidance, such as DCPPs,
                may continue to use such an exception until the plan has either
                requested and received a review of its exception status under this
                process, or until 18 months have passed from the effective date of this
                rule, whichever comes first.
                 By requiring annualization, the proposed paragraph (c) furthers the
                above policy goal of protecting workers' fringe benefits from dilution
                by preventing contractors from taking credit for fringe benefits
                attributable to work on non-governmental projects against fringe
                benefits required on DBA-covered work. The proposed exception also
                provides the flexibility for plans that do not dilute workers' fringe
                benefits to avoid the annualization requirement if they meet the
                proposed criteria, which are based on the Department's existing
                guidance with which stakeholders are already familiar. In this way, the
                Department hopes to strike a balance between protecting workers and
                preserving access to the types of plans that have traditionally been
                considered exempt from the annualization requirement.
                xiii. Section 5.26 `` * * * Contribution Irrevocably Made * * * to a
                Trustee or to a Third Person''
                 The Department proposes several non-substantive technical
                corrections to Sec. 5.26 to improve clarity and readability.
                xiv. Section 5.28 Unfunded Plans
                 The Department proposes several revisions to this section. First,
                the Department proposes a technical correction to the citation to the
                DBA to reflect the codification of the relevant provision at 40 U.S.C.
                3141(2)(B)(ii), as well as a number of non-substantive revisions.
                 Additionally, the Department proposes adding a new paragraph (b)(5)
                to this section, explicitly stating that unfunded benefit plans or
                programs must be approved by the Secretary in order to qualify as bona
                fide fringe benefits, and a new paragraph (c) explaining the process
                contractors and subcontractors must use to request such approval. To
                accommodate these proposed additions, the text currently located in
                paragraph (c) of this section would be moved to new paragraph (d).
                 As other regulatory sections make clear, if a contractor provides
                its workers with fringe benefits through an unfunded plan instead of by
                making irrevocable payments to a trustee or other third person, the
                contractor may only take credit for any costs reasonably anticipated in
                providing such fringe benefits if it has submitted a request in writing
                to the Department and the Secretary has determined that the applicable
                standards of the DBA have been met. See 29 CFR 5.5(a)(1)(iv), 5.29(e).
                However, Sec. 5.28 does not mention this approval requirement, even
                though it is the section that most specifically discusses requirements
                for unfunded plans. Incorporating this requirement and a description of
                the approval process into Sec. 5.28 would therefore help improve
                regulatory clarity. Accordingly, the Department proposes to revise
                Sec. 5.28 to clarify that, for payments under an unfunded plan or
                program to be credited as fringe benefits, contractors and
                subcontractors must submit a written request, including sufficient
                documentation, for the Secretary to consider in determining whether the
                plan or program, and the benefits proposed to be provided thereunder,
                are ``bona fide,'' meet the factors set forth in Sec. 5.28(b)(1)-(4),
                and are otherwise consistent with the Act. The Department also proposes
                to add language to explain that such requests must be submitted by mail
                to WHD's Division of Government Contracts Enforcement, via email to
                [email protected] or any successor address, or via any other means
                directed by the Administrator.
                 The proposed revised regulation provides that a request for
                approval of an unfunded plan must include sufficient documentation to
                enable the Department to evaluate whether the plan satisfies the
                regulatory criteria. To provide flexibility, the proposed revised
                regulation does not itself specify the documentation that must be
                submitted with the request. However, current paragraph (c) of this
                section, and proposed paragraph (d), explain that the words
                ``reasonably anticipated'' contemplate a plan that can ``withstand a
                test'' of ``actuarial soundness.'' While WHD's determination whether or
                not an unfunded plan meets the statutory and regulatory requirements
                will be based on the totality of the circumstances, the type of
                information WHD will require from contractors or subcontractors in
                order to make such a determination will typically include: (1)
                Identification of the benefit(s) to be provided; (2) an explanation of
                the funding/contribution formula; (3) an explanation of the financial
                analysis methodology used to estimate the costs of the plan or program
                benefits and how the contractor has budgeted for those costs; (4) a
                specification of how frequently the contractor either sets aside funds
                in accordance with the cost calculations to meet claims as they arise,
                or otherwise budgets, allocates, or tracks such funds to ensure that
                they will be available to meet claims; (5) an explanation of whether
                employer contribution amounts are different for Davis-Bacon and non-
                prevailing wage work; (6) identification of the administrator of the
                plan or program and the source of the funds the administrator uses to
                pay the benefits provided by the plan or program; (7) specification of
                the Employee Retirement Income Security Act of 1974 (ERISA) status of
                the plan or program; and (8) an explanation of how the plan or program
                is communicated to laborers or mechanics.
                xv. Section 5.29 Specific Fringe Benefits
                 The Department proposes to revise Sec. 5.29 to add a new paragraph
                (g) that addresses how contractors may claim a fringe benefit credit
                for the costs of an apprenticeship program. While Sec. 5.29(a) states
                that fringe benefits may be used for the defrayment of the costs of
                apprenticeship programs, the regulations do not presently address how
                to properly credit such contributions against a contractor's fringe
                benefit obligations. The proposed revision would codify the
                Department's longstanding practice and interpretation. See WHD Opinion
                Letters DBRA-116 (May 17, 1978), DBRA-18 (Sept. 7, 1983), DBRA-16 (July
                28, 1987), DBRA-160 (March 10, 1990); see also FOH 15f17. The proposed
                revision also reflects relevant case law. See Miree Constr. Corp., WAB
                No. 87-13, 1989 WL 407466 (Feb. 17, 1989); Miree Constr. Corp. v. Dole,
                730 F. Supp. 385 (N.D. Ala. 1990); Miree Constr. Corp. v. Dole, 930
                F.2d at 1537.
                 Proposed paragraph (g) clarifies when a contractor may take credit
                for contributions made to an apprenticeship program and how to
                calculate the credit a contractor may take against its fringe benefit
                obligation. First, the proposed paragraph states that for a contractor
                or subcontractor to take credit for the costs of an apprenticeship
                program, the program, in addition to meeting all other requirements for
                fringe benefits, must be registered with the Department of Labor's
                Employment and Training Administration, Office of Apprenticeship (OA),
                or with a State Apprenticeship Agency recognized by the OA.
                Additionally, the proposed paragraph explains that contractors may take
                credit for the actual costs of the apprenticeship program, such as
                tuition, books, and materials, but may not take credit for additional
                contributions that are beyond the costs actually incurred for the
                apprenticeship program. It also reiterates the Department's position
                that the contractor may only claim credit
                [[Page 15745]]
                towards its prevailing wage obligations for the classification of
                laborer or mechanic that is the subject of the apprenticeship program.
                For example, if a contractor has apprentices registered in a bona fide
                apprenticeship program for carpenters, the contractor could claim a
                credit for the costs of the apprenticeship program towards the
                prevailing wages due to the carpenters on a Davis-Bacon project, but
                could not apply that credit towards the prevailing wages due to the
                electricians or laborers on the project. Likewise, the proposed
                paragraph explains that, when applying the annualization principle
                discussed above, the workers whose total working hours are used to
                calculate the hourly contribution amount are limited to those workers
                in the same classification as the apprentice, and that this hourly
                amount may only be applied toward the wage obligations for such
                workers.
                 The Department also proposes a minor technical revision to
                subsection (e) to include a citation to Sec. 5.28, which provides
                additional guidance on unfunded plans.
                xvi. Section 5.30 Types of Wage Determinations
                 The Department proposes several non-substantive revisions to Sec.
                5.30. In particular, the Department proposes to update the
                illustrations in Sec. 5.30(c) to more closely resemble the current
                format of wage determinations issued under the DBA. The current
                illustrations in Sec. 5.30(c) list separate rates for various
                categories of fringe benefits, including ``Health and welfare,''
                ``Pensions,'' ``Vacations,'' ``Apprenticeship program,'' and
                ``Others.'' However, current Davis-Bacon wage determinations typically
                contain a single combined fringe benefit rate per classification,
                rather than separately listing rates for different categories of fringe
                benefits. To avoid confusion, the Department proposes to update the
                illustrations to reflect the way in which fringe benefits are typically
                listed on wage determinations. The Department has also proposed several
                non-substantive revisions to Sec. 5.30(a) and (b), including revisions
                pertaining to the updated illustrations in Sec. 5.30(c).
                xvii. Section 5.31 Meeting Wage Determination Obligations
                 The Department has proposed to update the illustrations in Sec.
                5.30(c) to more closely resemble the current format of wage
                determinations under the DBRA. The Department therefore proposes to
                make technical, non-substantive changes to Sec. 5.31 to reflect the
                updated illustration in Sec. 5.30(c).
                xviii. Section 5.33 Administrative Expense of a Contractor or
                Subcontractor
                 The Department proposes to add a new Sec. 5.33 to codify existing
                WHD policy under which a contractor or subcontractor may not take
                Davis-Bacon credit for its own administrative expenses incurred in
                connection with the administration of a fringe benefit plan. See WHD
                Opinion Letter DBRA-72 (June 5, 1978); see also FOH 15f18. This is
                consistent with Department case law under the DBA, under which such
                payments are viewed as ``part of [an employer's] general overhead
                expenses of doing business and should not serve to decrease the direct
                benefit going to the employee.'' Collinson Constr. Co., WAB No. 76-09,
                1977 WL 24826, at *2 (Apr. 20, 1977) (also noting that the DBA's
                inclusion of ``costs'' in the provision currently codified at 40 U.S.C.
                3141(2)(B)(ii) refers to ``the costs of benefits under an unfunded
                plan'') (emphasis in original); see also Cody-Zeigler, Inc., ARB Nos.
                01-014, 01-015, 2003 WL 23114278, at *20 (Dec. 19, 2003) (applying
                Collinson and concluding that a contractor improperly claimed its
                administrative costs for ``bank fees, payments to clerical workers for
                preparing paper work and dealing with insurance companies'' as a fringe
                benefit). This is also consistent with the Department's regulations and
                guidance under the SCA. See 29 CFR 4.172; FOH 14j00(a)(1).
                 The Department also seeks public comment regarding whether it
                should clarify this principle further with respect to third-party
                administrative costs. Under both the DBA and SCA, fringe benefits
                include items such as health insurance, which necessarily involves both
                the payment of benefits and administration of benefit claims. 40 U.S.C.
                3141(2)(B); 41 U.S.C. 6703(2). Accordingly, reasonable costs incurred
                by a third-party fiduciary in its administration and delivery of fringe
                benefits to employees are creditable under the SCA. See WHD Opinion
                Letter SCA-93 (Jan. 27, 1994) (noting, in a circumstance in which an
                SCA contractor contributed to a pension plan on behalf of its
                employees, that ``the plan itself may recoup [its] administrative
                costs''). For example, a contractor may take credit for the premiums it
                pays to a health insurance carrier, and the insurance carrier may use
                those premium payments both to pay for workers' medical expenses and to
                pay the reasonable costs of tasks related to the administration and
                delivery of benefits, such as evaluating benefit claims, deciding
                whether they should be paid, and approving referrals to specialists.
                See FOH 14j00(a)(2). The Department applies a similar standard under
                the DBA.
                 However, whether fees charged by a third party are creditable
                depends on the facts and circumstances. As noted above, a contractor's
                own administrative costs incurred in connection with the provision of
                fringe benefits are not creditable, as they are considered the
                contractor's business expenses. See Collinson, 1977 WL 24826, at *2; 29
                CFR 4.172. As such, WHD has previously advised that if a third party is
                merely performing on the contractor's behalf administrative functions
                associated with providing fringe benefits to employees, rather than
                actually administering claims and paying benefits, the contractor's
                payments to such a third party are not creditable because they
                substitute for the contractor's own administrative costs. Such
                functions include, for example, tracking the amount of the contractor's
                fringe benefit contributions, making sure those contributions cover the
                fringe benefit credit claimed by the contractor, tracking and paying
                invoices from third-party administrators, and sending lists of new
                hires to the plan administrators. Essentially, the principle explained
                in 29 CFR 4.172, FOH 14j00(a)(1), FOH 15f18, and proposed Sec. 5.33
                that a contractor may not take credit for its own administrative
                expenses applies regardless of whether a contractor uses its own
                employees to perform this sort of administrative work or engages
                another company to handle these tasks.
                 The Department has received an increasing number of inquiries in
                recent years regarding the extent to which fees charged by third
                parties for performing such administrative tasks are or are not
                creditable. As such, while not proposing specific regulatory text, the
                Department proposes to clarify this matter in a final rule. The
                Department seeks comment on whether it should incorporate the above-
                described policies, or other policies regarding third-party entities,
                into its regulations. In addition, the Department seeks comment on
                examples of the administrative duties performed by third parties that
                do not themselves pay benefits or administer benefit claims.
                 The Department also seeks comment on the extent to which third-
                party entities both (1) perform administrative functions associated
                with providing fringe benefits to employees, such as tracking a
                contractor's fringe benefit contributions, and (2) actually administer
                and deliver benefits, such as evaluating and paying out medical
                [[Page 15746]]
                claims, and on how the Department should treat payments to any such
                entities. For instance, should the Department consider the cost of the
                administrative functions in (1) non-creditable business expenses, and
                the cost of actual benefits administration and payment in (2) to be
                creditable as fringe benefit contributions? Alternatively, should the
                creditability of payments to such an entity depend on what the third-
                party entity's primary function is? Should the answer to these
                questions depend on whether the third-party entity is an employee
                welfare plan within the meaning of ERISA, 29 U.S.C. 1002(1)?
                xix. Anti-Retaliation
                 The Department proposes to add anti-retaliation provisions to
                enhance enforcement of the DBRA, and their implementing regulations in
                29 CFR parts 1, 3, and 5. The proposed new anti-retaliation provisions
                are intended to discourage contractors, responsible officers, and any
                other persons from engaging in--or causing others to engage in--
                unscrupulous business practices that may chill worker participation in
                WHD investigations or other compliance actions and enable prevailing
                wage violations to go undetected. The proposed anti-retaliation
                regulations are also intended to provide make-whole relief for any
                worker who has been discriminated against in any manner for taking, or
                being perceived to have taken, certain actions concerning the labor
                standards provisions of the DBA, CWHSSA and other Related Acts, and the
                regulations in parts 1, 3, and 5.
                 In most WHD DBRA investigations or other compliance actions,
                effective enforcement requires worker cooperation. Information from
                workers about their actual hours worked and their pay is often
                essential to uncover violations such as falsification of certified
                payrolls or wage underpayments by contractors or subcontractors who
                fail to keep any pay or time records, or whose records are inaccurate
                or incomplete. Workers are often reluctant to come forward with
                information about potential violations of the laws WHD enforces because
                they fear losing their jobs or suffering other adverse consequences.
                Workers are similarly reluctant to raise these issues with their
                supervisors. Such reluctance to inquire or complain internally may
                result in lost opportunities for early correction of violations by
                contractors.
                 The current Davis-Bacon regulations protect the identity of
                confidential worker-informants in large part to prevent retribution by
                contractors for whom they work. See 29 CFR 5.6(a)(5), 6.5. This
                protection helps combat the ``possibility of reprisals'' by
                ``vindictive employers'' against workers who speak out about wage and
                hour violations, but does not eliminate it. Cosmic Constr. Co., WAB No.
                79-19, 1980 WL 95656, at *5 (Sept. 2, 1980).
                 When contractors retaliate against workers who cooperate or are
                suspected of cooperating with WHD or who make internal complaints,
                neither worker confidentiality nor the Davis-Bacon remedial measures of
                back wages or debarment can make workers whole. The Department's
                proposed anti-retaliation provisions aim to remedy such situations by
                providing make-whole relief to workers who are retaliated against, as
                well as by deterring or correcting interference with Davis-Bacon worker
                protections.
                 The Department's authority to promulgate the anti-retaliation
                provisions stems from 40 U.S.C. 3145 and Reorganization Plan No. 14 of
                1950. In transmitting the Reorganization Plan to Congress, President
                Truman noted that ``the principal objective of the plan is more
                effective enforcement of labor standards,'' and that the plan ``will
                provide more uniform and more adequate protection for workers through
                the expenditures made for the enforcement of the existing
                legislation.'' Special Message to the Congress Transmitting
                Reorganization Plan No. 14 of 1950, reprinted in 5 U.S.C. app. 1 (Mar.
                13, 1950) (1950 Special Message to Congress).
                 It is well settled that the Department has regulatory authority to
                debar Related Act contractors even though the Related Acts do not
                expressly provide for debarment. See Janik Paving & Constr., Inc. v.
                Brock, 828 F.2d 84, 90, 91 (2d Cir. 1987) (upholding debarment for
                CWHSSA violations even though that statute ``specifically provided
                civil and criminal sanctions for violations of overtime work
                requirements but failed to mention debarment''). In 1951 the Department
                added a new part 5 to the DBRA regulations, including the Related Act
                debarment regulation. See 16 FR 4430. The Department explained it was
                doing so in compliance with the directive of Reorganization Plan No. 14
                of 1950 to ``assure coordination of administration and consistency of
                enforcement of the labor standards provisions'' of the DBRA. Id. Just
                as regulatory debarment is a permissible exercise of the Department's
                ``implied powers of administrative enforcement,'' Janik, 828 F.2d at
                91, so too are the proposed anti-retaliation provisions--as well as the
                revised Related Act debarment provisions discussed below in part
                III.B.3.xxi (``Debarment''). The Department believes that it would be
                both efficient and consistent with the remedial purpose of the DBRA to
                investigate and adjudicate complaints of retaliation as part of WHD's
                enforcement of the DBRA. These proposed measures will help achieve more
                effective enforcement of the Davis-Bacon labor standards.
                 Currently, debarment is the primary mechanism under the DBRA civil
                enforcement scheme for remedying retribution against workers who assert
                their right to prevailing wages. Debarment is also the main tool for
                addressing less tangible discrimination such as interfering with
                investigations by intimidating or threatening workers. Such
                unscrupulous behavior may be both a ``disregard of obligations'' to
                workers under the DBA and ``aggravated or willful'' violations under
                the current Related Act regulations that warrant debarment. See 40
                U.S.C. 3144(b)(1); 29 CFR 5.12(a)(1), (a)(2), (b)(1).
                 Both the ARB and ALJs have debarred contractors in part because of
                their retaliatory conduct or interference with WHD investigations. See,
                e.g., Pythagoras Gen. Contracting Corp., 2011 WL 1247207, at *13
                (affirming debarment of contractor and its principal in a DBRA case in
                part because of the ``attempt [by principal and other officials of the
                contractor] at witness coercion or intimidation'' when they visited
                former employees to talk about their upcoming hearing testimony); R.J.
                Sanders, Inc., WAB No. 90-25, 1991 WL 494734, at *1-2 (Jan. 31, 1991)
                (affirming ALJ's finding that employer's retaliatory firing of an
                employee who reported to a Navy inspector being paid less than the
                prevailing wage was ``persuasive evidence of a willful violation of the
                [DBA]''); Early & Sons, Inc., ALJ No. 85-DBA-140, 1986 WL 193128, at *8
                (OALJ Aug. 5, 1986) (willful and aggravated DBRA violations evidenced
                in part where worker who ``insisted on [receiving the mandated wage] .
                . . was told, in effect, to be quiet or risk losing his job''), rev'd
                on other grounds, WAB No. 86-25, 1987 WL 247044, at *2 (Jan. 29, 1987);
                Enviro & Demo Masters, Inc., ALJ No. 2011-DBA-00002, Decision and
                Order, slip op. at 9-10, 15, 59, 62-64 (OALJ Apr. 23, 2014) (Enviro
                D&O) (debarring subcontractor, its owner, and a supervisor because of
                ``aggravated and willful avoidance of paying the required prevailing
                wages'' which included firing an employee who refused to sign a
                declaration repudiating his DBRA rights, and instructing workers to lie
                about their pay and underreport their hours if questioned by
                investigators).
                [[Page 15747]]
                 There are also criminal sanctions for certain coercive conduct by
                DBRA contractors. The Copeland Anti-Kickback Act makes it a crime to
                induce DBRA-covered construction workers to give up any part of
                compensation due ``by force, intimidation, or threat of procuring
                dismissal from employment, or by any other manner whatsoever.'' 18
                U.S.C. 874; cf. 29 CFR 5.10(b) (discussing criminal referrals for DBRA
                violations). Such prevailing wage kickback schemes are also willful or
                aggravated violations of the civil Copeland Act (a Related Act) that
                warrant debarment. See 40 U.S.C. 3145; see, e.g., Killeen Elec. Co.,
                WAB No. 87-49, 1991 WL 494685, at *5 (Mar. 21, 1991).
                 Interference with WHD investigations or other compliance actions
                may also warrant criminal prosecution. For example, in addition to
                owing 37 workers $656,646 in back wages in the DBRA civil
                administrative proceeding, see Enviro D&O at 66, both the owner of
                Enviro & Demo Masters and his father, the supervisor, were convicted of
                Federal crimes including witness tampering and conspiracy to commit
                witness tampering. These officials instructed workers at the jobsite to
                hide from and ``lie to investigators about their working hours and
                wages,'' and they fired workers who spoke to investigators or refused
                to sign false documents. Naranjo v. United States, No. 17-CV-9573, 2021
                WL 1063442, at *1-2 (S.D.N.Y. Feb. 26, 2021), report and recommendation
                adopted by 2021 WL 1317232 (S.D.N.Y. Apr. 8, 2021); see also Naranjo,
                Sr. v. United States, No. 16 Civ. 7386, 2019 WL 7568186, at *1
                (S.D.N.Y. Dec. 16, 2019), report and recommendation adopted by 2020 WL
                174072, at *1 (S.D.N.Y. Jan. 13, 2020).
                 Though contractors, subcontractors, and their responsible officers
                may be debarred--and even criminally prosecuted--for retaliatory
                conduct, laborers and mechanics who have been discriminated against for
                speaking up, or for having been perceived as speaking up, currently
                have no redress under the Department's regulations implementing the DBA
                or Related Acts to the extent that back wages do not make them whole.
                For example, WHD currently may not order reinstatement of workers fired
                for their cooperation with investigators or as a result of an internal
                complaint to their supervisor. Nor may the Department award back pay
                for the period after a worker is fired. Similarly, WHD cannot require
                contractors to compensate workers for the difference in pay resulting
                from retaliatory demotions or reductions in hours. The addition of
                anti-retaliation provisions is a logical extension of the DBA and
                Related Acts debarment remedial measure. It would supplement debarment
                as an enforcement tool to more effectively prevent retaliation and
                interference or any other such discriminatory behavior. An anti-
                retaliation mechanism would also build on existing back-wage remedies
                by extending compensation to a fuller range of harms.
                 The Department therefore proposes to add two new regulatory
                provisions concerning anti-retaliation, as well as to update several
                other regulations to reflect the new anti-retaliation provisions.
                (A) Proposed New Sec. 5.5(a)(11) and (b)(5)
                 The Department proposes to implement anti-retaliation in part by
                adding a new anti-retaliation provision to all contracts subject to the
                DBA or Related Acts. Proposed contract clauses provided for in Sec.
                5.5(a)(11) and (b)(5) state that it is unlawful for any person to
                discharge, demote, intimidate, threaten, restrain, coerce, blacklist,
                harass, or in any other manner discriminate, or to cause any person to
                do the same, against any worker for engaging in a number of protected
                activities. The protected activities include notifying any contractor
                of any conduct which the worker reasonably believes constitutes a
                violation; filing any complaints, initiating or causing to be initiated
                any proceeding, or otherwise asserting any right or protection;
                cooperating in an investigation or other compliance action, or
                testifying in any proceeding; or informing any other person about their
                rights under the DBA, Related Acts, or the regulations in 29 CFR parts
                1, 3, or 5, for proposed Sec. 5.5(a)(11), or the CWHSSA or its
                implementing regulations in 29 CFR part 5, for proposed Sec.
                5.5(b)(5).
                 The scope of these anti-retaliation provisions is intended to be
                broad in order to better effectuate the remedial purpose of the DBRA to
                protect workers and ensure that they are not paid substandard wages.
                Workers must feel free to speak openly--with contractors for whom they
                work and contractors' responsible officers and agents, with the
                Department, and with co-workers--about conduct that they reasonably
                believe to be a violation of the prevailing wage requirements or other
                Davis-Bacon labor standards. These proposed anti-retaliation provisions
                recognize that worker cooperation is critical to enforcement of the
                DBRA. They also incentivize compliance and seek to eliminate any
                competitive disadvantage borne by government contractors and
                subcontractors that follow the rules.
                 In line with those remedial goals, the Department intends the
                proposed anti-retaliation provisions to protect internal complaints, or
                other assertions of workers' Davis-Bacon or CWHSSA labor standards
                protections set forth in Sec. 5.5(a)(11) and (b)(5), as well as
                interference that may not have an adverse monetary impact on the
                affected workers. Similarly, the Department intends the anti-
                retaliation provisions to also apply in situations where there is no
                current work or employment relationship between the parties; for
                example, it would prohibit retaliation by a prospective or former
                employer or contractor (or both). Finally, the Department's proposed
                rule seeks to protect workers who make oral as well as written
                complaints, notifications, or other assertions of their rights
                protected under Sec. 5.5(a)(11) and (b)(5).
                (B) Proposed New Sec. 5.18
                 The Department proposes remedies to assist in enforcement of the
                DBRA labor standards provisions. Section 5.18 sets forth the proposed
                remedies for violations of the new anti-retaliation provisions. This
                proposed section also includes the process for notifying contractors
                and other persons found to have violated the anti-retaliation
                provisions of the Administrator's investigative findings, as well as
                for Administrator directives to remedy such violations and provide
                make-whole relief.
                 Make-whole relief and remedial actions under this provision are
                intended to restore the worker subjected to the violation to the
                position, both economically and in terms of work or employment status
                (e.g., seniority, leave balances, health insurance coverage, 401(k)
                contributions, etc.), that the worker would have occupied had the
                violation never taken place. Available remedies include, but are not
                limited to, any back pay and benefits denied or lost by reason of the
                violation; other actual monetary losses sustained as a direct result of
                the violation; interest on back pay or other monetary relief from the
                date of the loss; and appropriate equitable or other relief such as
                reinstatement or promotion; expungement of warnings, reprimands, or
                derogatory references; the provision of a neutral employment reference;
                and posting of notices that the contractor or subcontractor agrees to
                comply with the DBRA anti-retaliation requirements.
                 In addition, proposed Sec. 5.18 specifies that when contractors,
                subcontractors, responsible officers, or other persons dispute findings
                of violations of
                [[Page 15748]]
                Sec. 5.5(a)(11) or (b)(5), the procedures in 29 CFR 5.11 or 5.12 will
                apply.
                 Conforming revisions are being proposed to the withholding
                provisions at Sec. Sec. 5.5(a)(2) and (b)(3) and 5.9 to indicate that
                withholding includes monetary relief for violations of the anti-
                retaliation provisions, Sec. 5.5(a)(11) and (b)(5), in addition to
                withholding of back wages for DBRA prevailing wage violations and
                CWHSSA overtime violations.
                 Similarly, conforming changes are being proposed to Sec. Sec.
                5.6(a)(4) and 5.10(a). Computations of monetary relief for violations
                of the anti-retaliation provisions have been added to the limited
                investigatory material that may be disclosed without the permission and
                views of the Department under Sec. 5.6(a)(4). In proposed Sec.
                5.10(a), monetary violations of anti-retaliation provisions have been
                added as a type of restitution.
                 As explained above, contractors, subcontractors, and their
                responsible officers have long been subject to debarment for their
                retaliatory actions. This rulemaking updates DBRA enforcement
                mechanisms by ensuring that workers may cooperate with WHD or complain
                internally about perceived prevailing wage violations without fear of
                reprisal. This proposed rule is a reasonable extension of the
                Department's broad regulatory authority to enforce and administer the
                DBRA. Further, adding anti-retaliation would amplify existing back wage
                and debarment remedies by making workers whole who suffer the effects
                of retaliatory firings, demotions, and other actions that reduce their
                earnings. This important new tool will help carry out the DBRA's
                remedial purposes by bolstering WHD's enforcement.
                xx. Post-Award Determinations and Operation-of-Law
                 The Department proposes several revisions throughout parts 1 and 5
                to update and codify the administrative procedure for enforcing Davis-
                Bacon labor standards requirements when the contract clauses and/or
                appropriate wage determination(s) have been wrongly omitted from a
                covered contract.
                (A) Current Regulations
                 The current regulations require the insertion of the relevant
                contract clauses and wage determination(s) in covered contracts. 29 CFR
                5.5. Section 5.5(a) requires that the appropriate contract clauses are
                inserted ``in full'' into any covered contracts, and the contract
                clause language at Sec. 5.5(a)(1) states that the wage
                determination(s) are ``attached'' to the contract.
                 The existing regulations at Sec. 1.6(f) provide instruction for
                how the Department and contracting agencies must act when a wage
                determination has been wrongly omitted from a contract. Those
                regulations provide a procedure through which the Administrator makes a
                finding that a wage determination should have been included in the
                contract. After the finding by the Administrator, the contracting
                agency must either terminate and resolicit the contract with the valid
                wage determination, or incorporate the wage determination retroactively
                by supplemental agreement or change order. The same procedure applies
                where the Administrator finds that the wrong wage determination was
                incorporated into the contract. The existing regulations at Sec.
                1.6(f) specify that the contractor must be compensated for any
                increases in wages resulting from any supplemental agreement or change
                order issued in accordance with the procedure.
                 Under the current regulations, WHD has faced multiple longstanding
                enforcement challenges. First, the language of Sec. 1.6(f) explicitly
                refers only to omitted wage determinations and does not expressly
                address the situation where a contracting agency has mistakenly omitted
                the contract clauses from the contract. Although WHD has historically
                relied on Sec. 1.6(f) to address this situation, the ambiguity in the
                regulations has caused confusion in communications between WHD and
                contracting agencies and delay in resolving conflicts. See, e.g., WHD
                Opinion Letters DBRA-167 (Aug. 29, 1990); DBRA-131 (Apr. 18, 1985).
                 Second, under the existing regulations, affected workers have
                suffered from significant delays while contracting agencies determine
                the appropriate course of action. At a minimum, such delays cause
                problems for workers who must endure long waits to receive their back
                wages. At worst, the delay can result in no back wages recovered at all
                where witnesses are lost or there are no longer any contract payments
                to withhold when a contract is finally modified or terminated. In all
                cases, the identification of the appropriate mechanism for contract
                termination or modification can be difficult and burdensome on Federal
                agencies--in particular during later stages of a contract or after a
                contract has ended.
                 The process provided in the current Sec. 1.6(f) is particularly
                problematic where a contracting agency has questions about whether an
                existing contract can be modified without violating another non-DBRA
                statute or regulation. This problem has arisen in particular in the
                context of multiple award schedule (MAS) contracts, blanket purchase
                agreements (BPAs), and other similar schedule contracts negotiated by
                GSA.\109\ Contracting agencies that have issued task orders under GSA
                schedule contracts have been reluctant to modify those task orders to
                include labor standards provisions where the governing Federal schedule
                contract does not contain the provisions. Under those circumstances,
                contracting agencies have argued that such a modification could render
                that task order ``out of scope'' and therefore arguably unlawful.
                ---------------------------------------------------------------------------
                 \109\ Sales on the GSA Multiple Award Schedule (MAS), for
                example, have increased dramatically in recent decades--from $4
                billion in 1992 to $36.6 billion in 2020. Gov't Accountability
                Office, High Risk Series: An Update, GAO-05-207 (Jan. 2005), at 25
                (Figure 1) (noting these types of contracting vehicles ``contribute
                to a much more complex environment in which accountability has not
                always been clearly established''), available at https://www.gao.gov/assets/gao-05-207.pdf; Gen. Servs. Admin., GSA FY 2020
                Annual Performance Report, at 11, available at: https://www.gsa.gov/cdnstatic/GSA%20FY%202020%20Annual%20Performance%20Report%20v2.pdf.
                ---------------------------------------------------------------------------
                 Although the Department believes it is incorrect that a contract
                modification to incorporate required labor standards clauses or wage
                determinations could render a contract or task order out of scope,\110\
                concerns about this issue have interfered with the Department's
                enforcement of the labor standards. If a contracting agency believes it
                cannot modify a contract consistent with applicable procurement law, it
                may instead decide to terminate the contract without retroactively
                including the required clauses or wage determinations. In those
                circumstances, the regulations currently provide no clear mechanism
                that would allow the Department or contracting agencies to seek to
                recover the back wages that the workers should have been paid on the
                terminated contract.
                ---------------------------------------------------------------------------
                 \110\ This argument tends to conflate the change associated with
                incorporating a missing contract clause or wage determination with
                any unexpected changes by the contracting agency to the actual work
                to be performed under the task order or contract. As a general
                matter, a Competition in Contracting Act (CICA) challenge based
                solely on the incorporation of missing labor standards clauses or
                appropriate wage determinations is without merit. See Booz Allen
                Hamilton Eng'g Servs., LLC, B-411065 (May 1, 2015), available at
                https://www.gao.gov/products/b-411065.
                ---------------------------------------------------------------------------
                (B) Proposed Regulatory Revisions
                 To address these longstanding enforcement challenges, the
                Department proposes to exercise its authority under Reorganization Plan
                No. 14 of 1950 and
                [[Page 15749]]
                40 U.S.C. 3145 to adopt several changes to Sec. Sec. 1.6, 5.5, and
                5.6.
                (1) Sec. 5.5(e) Proposed Operation-of-Law Language
                 The Department proposes to include language in a new paragraph at
                Sec. 5.5(e) to provide that the labor standards contract clauses and
                appropriate wage determinations are effective ``by operation of law''
                in circumstances where they have been wrongly omitted from a covered
                contract. This proposed language would assure that, in all cases, a
                mechanism exists to enforce Congress's mandate that workers on covered
                contracts receive prevailing wages--notwithstanding any mistake by an
                executive branch official in an initial coverage decision or in an
                accidental omission of the labor standards contract clauses. It would
                also ensure that workers receive the correct prevailing wages if the
                correct wage determination was not attached to the original contract or
                was not incorporated during the exercise of an option. In addition, as
                discussed below, the Department is proposing language in other
                regulatory provisions to reflect this change and to provide safeguards
                for both contractors and contracting agencies.
                 Under the proposed language in Sec. 5.5(e), erroneously omitted
                contract clauses and appropriate wage determinations would be effective
                by operation of law and therefore enforceable retroactive to the
                beginning of the contract or construction. The proposed language
                provides that all of the contract clauses set forth in Sec. 5.5--the
                contract clauses at Sec. 5.5(a) and the CWHSSA contract clauses at
                Sec. 5.5(b)--are considered to be a part of every covered contract,
                whether or not they are physically incorporated into the contract. This
                includes the contract clauses requiring the payment of prevailing wages
                and overtime at Sec. 5.5(a)(1) and (b)(1), respectively; the
                withholding clauses at Sec. 5.5(a)(2) and (b)(3); and the labor-
                standards disputes clause at Sec. 5.5(a)(9).
                 The operation-of-law proposal is intended to complement the
                existing requirements in Sec. 1.6(f) and would not entirely replace
                them. Thus, the contracting agency would still be required to take
                action as appropriate to terminate or modify the contract. Under the
                new proposed procedure, however, the Administrator would not need to
                await a contract modification to assess back wages and seek
                withholding, because the wage requirements and withholding clauses
                would be read into the contract as a matter of law.\111\ The
                application of the clauses and the correct wage determination as a
                matter of law would also provide the Administrator with a tool to
                enforce the labor standards on any contract that a contracting agency
                decides it must terminate instead of modify.
                ---------------------------------------------------------------------------
                 \111\ The Department proposes parallel language in 29 CFR 5.9
                (Suspension of funds) to clarify that funds may be withheld under
                the contract clauses and appropriate wage determinations whether
                they have been incorporated into the contract physically, by
                reference, or by operation of law.
                ---------------------------------------------------------------------------
                 Under the proposal, when the contract clause or wage determination
                is incorporated into the prime contract by operation of law, prime
                contractors would be responsible for the payment of applicable
                prevailing wages to all workers under the contract--including the
                workers of their subcontractors-- retroactive to the contract award or
                beginning of construction, whichever occurs first. This is consistent
                with the current Davis-Bacon regulations and case law. See 29 CFR
                5.5(a)(6); All Phase Elec. Co., WAB No. 85-18 (June 18, 1986)
                (withholding contract payments from the prime for subcontractor
                employees even though the labor standards had not been flowed down into
                the subcontract). This responsibility, however, would be offset by
                proposed language in Sec. 5.5(e) adding a compensation provision that
                would require that the prime contractor be compensated for any
                increases in wages resulting from a post-award incorporation of a
                contract clause or wage determination by operation of law under Sec.
                5.5(e). This proposed language is modeled after similar language that
                has been included in Sec. 1.6(f) since 1983.\112\
                ---------------------------------------------------------------------------
                 \112\ See 46 FR 4306, 4313 (Jan. 16, 1981); 47 FR 23644, 23654
                (May 28, 1982) (implemented by 48 FR 19532 (Apr. 29, 1983)).
                ---------------------------------------------------------------------------
                 The Department recognizes that post-award coverage or correction
                determinations can cause difficulty for contracting agencies.
                Contracting agencies avoid such difficulty by proactively incorporating
                the Davis-Bacon labor standards clauses and applicable wage
                determinations into contracts or using the existing process for
                requesting a coverage ruling or interpretation from the Administrator
                prior to contract award. See 29 CFR 5.13.\113\ In addition, the new
                language provides that a contracting agency will continue to be able to
                request that the Administrator grant an exemption from retroactive
                enforcement of wage determinations and contract clauses (or, where
                permissible, an exemption from prospective application) under the same
                conditions currently applicable to post-award determinations. See 29
                CFR 1.6(f); 29 CFR 5.14; City of Ellsworth, ARB No. 14-042, 2016 WL
                4238460, at *6-*8 (June 6, 2016).\114\
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                 \113\ A ruling of the Administrator under Sec. 5.13 that Davis-
                Bacon labor standards do not apply to the contract is authoritative
                and prevents a different post-award determination unless the
                Administrator determines that the pre-award ruling was based on a
                factual description provided by the contracting agency that was
                incomplete or inaccurate at the time, or that no longer is accurate
                after unanticipated changes were made to the scope of the
                contractor's work.
                 \114\ Factors that the Administrator considers in making a
                determination regarding retroactive application are discussed in the
                ARB's ruling in City of Ellsworth, ARB No. 14-042, at *6-*10. Among
                the non-exclusive list of potential factors are ``the reasonableness
                or good faith of the contracting agency's coverage decision'' and
                ``the status of the procurement (i.e. to what extent the
                construction work has been completed).'' Id. at *10. In considering
                the status of the procurement, the Administrator will consider the
                status of construction at the time that the coverage or correction
                issue is first raised with the Administrator.
                ---------------------------------------------------------------------------
                 The operation-of-law provision in proposed Sec. 5.5(e) is similar
                to the Department's existing regulations enacting Executive Order
                11246--Equal Employment Opportunity. See 41 CFR 60-1.4(e); United
                States v. Miss. Power & Light Co., 638 F.2d 899, 905-06 (5th Cir. 1981)
                (finding 41 CFR 60-1.4(e) to be valid and have force of law). The
                operation-of-law provision at 41 CFR 60-1.4(e), like the proposed
                language in Sec. 5.5(e), operates in addition to and complements the
                other provisions in the Executive Order's regulations that require the
                equal opportunity contract clause to be inserted in full into the
                contract. See 41 CFR 60-1.4(a).
                 Unlike 41 CFR 60-1.4(e), the Department's proposed language in the
                new Sec. 5.5(e) would apply the ``operation of law'' provision only to
                prime contracts and not to subcontracts. The reason for this difference
                is that, as noted above, the Davis-Bacon regulations and case law
                provide that the prime contractor is responsible for the payment of
                applicable wages on all subcontracts. If the prime contract contains
                the labor standards as a matter of law, then the prime contractor is
                required to ensure that all employees on the contract--including
                subcontractors' employees--receive all applicable prevailing wages.
                Accordingly, the Department does not believe that extending the
                operation-of-law provision itself to subcontracts is necessary to
                enforce the Congressional mandate that all covered workers under the
                contract are paid the applicable prevailing wages.
                 The proposed operation-of-law provision is also similar in many,
                but not all, respects to the judicially-
                [[Page 15750]]
                developed Christian doctrine, named for the 1963 Court of Claims
                decision, G.L. Christian & Assocs. v. United States, 312 F.2d 418 (Ct.
                Cl.), reh'g denied, 320 F.2d 345 (Ct. Cl. 1963). Under the doctrine,
                courts and administrative tribunals have held that required contractual
                provisions may be effective by operation of law in Federal government
                contracts, even if they were not in fact included in the contract. The
                doctrine applies even when there is no specific ``operation of law''
                regulation as proposed here.
                 The Christian doctrine flows from the basic concept in all contract
                law that ``the parties to a contract . . . are presumed or deemed to
                have contracted with reference to existing principles of law.'' 11
                Williston on Contracts Sec. 30:19 (4th ed. 2021); see Ogden v.
                Saunders, 25 U.S. 213 (1827). Thus, those who contract with the
                government are charged with having ``knowledge of published
                regulations.'' PCA Health Plans of Texas, Inc. v. LaChance, 191 F.3d
                1353, 1356 (Fed. Cir. 1999) (citation omitted).
                 Under the Christian doctrine, a court can find a contract clause
                effective by operation of law if that clause ``is required under
                applicable [F]ederal administrative regulations'' and ``it expresses a
                significant or deeply ingrained strand of public procurement policy.''
                K-Con, Inc. v. Sec'y of Army, 908 F.3d 719, 724 (Fed. Cir. 2018). Where
                these prerequisites are satisfied, it does not matter if the contract
                clause at issue was wrongly omitted from a contract. A court will find
                that a Federal contractor had constructive knowledge of the regulation
                and that the required contract clause applies regardless of whether it
                was included in the contract.
                 The recent decision of the Federal Circuit in K-Con is helpful to
                understanding why it is appropriate to provide that the DBA labor
                standards clauses are effective by operation of law. In K-Con, the
                Federal Circuit held that the Christian doctrine applies to the 1935
                Miller Act. 908 F.3d at 724-26. The Miller Act contains mandatory
                coverage provisions that are similar to those in the DBA, though with
                different threshold contract amounts. The Miller Act requires that
                contractors furnish payment and performance bonds before a contract is
                awarded for ``the construction, alteration, or repair of any public
                building or public work.'' 40 U.S.C. 3131(b). The DBA, as amended,
                requires that the prevailing wage stipulations be included in bid
                specifications ``for construction, alteration, or repair, including
                painting and decorating, of public buildings and public works.'' 40
                U.S.C. 3142(a).
                 Like the Miller Act, the 90-year old Davis-Bacon Act also expresses
                a significant and deeply ingrained strand of public procurement policy.
                The Miller Act and the Davis-Bacon Act are of similar vintage. The DBA
                was enacted in 1931. The DBA amendments were enacted in 1935, almost
                simultaneously with the Miller Act. Through both statutes, Congress
                aimed to protect participants on government contracts from nonpayment
                by prime contractors and subcontractors. Thus, the same factors that
                the Federal Circuit found sufficient to apply the Christian doctrine to
                the Miller Act also apply to the DBA and suggest that the proposed
                operation-of-law regulation would be appropriate.\115\
                ---------------------------------------------------------------------------
                 \115\ The Federal Circuit has also noted that the Christian
                doctrine applies to the SCA, which has a similar purpose as the DBA
                and dates only to 1965. See Call Henry, Inc. v. United States, 855
                F.3d 1348, 1351 & n.1 (Fed. Cir. 2017). Because the Davis-Bacon Act
                and Service Contract Act are similar statutes with the same basic
                purpose, the Department has long noted that court decisions relating
                to one of these acts have a direct bearing on the other. See WHD
                Opinion Letter SCA-3 (Dec. 7, 1973).
                ---------------------------------------------------------------------------
                 The Department's proposal, however, differs from the Christian
                doctrine in two critical respects. First, as noted above, the proposed
                language at Sec. 5.5(e) would be paired with a contractor compensation
                provision similar to the existing provision in Sec. 1.6(f). The
                Christian doctrine does not incorporate such protection for
                contractors, and as a result, can have the effect of shifting cost
                burdens from the government to the contractor. In K-Con, for example,
                the doctrine supported the government's defense against a claim for
                equitable adjustment by the contractor. 908 F.3d at 724-28.
                 Second, the Christian doctrine is effectively self-executing and
                renders contract clauses applicable by operation of law solely on the
                basis of the underlying requirement that they be inserted into covered
                contracts. The doctrine contains no specific mechanism through which
                the government can limit its application to avoid any unexpected or
                unjust results--other than simply deciding not to raise it as a defense
                or affirmative argument in litigation. The proposed provision here at
                Sec. 5.5(e), on the other hand, would pair the enactment of the
                operation-of-law language with the traditional authority of the
                Administrator to waive retroactive enforcement or grant a variance,
                tolerance, or exemption from the regulatory requirement under 29 CFR
                1.6(f) and 5.14, which the Department believes will foster a more
                orderly and predictable process and reduce the likelihood of any
                unintended consequences.
                 In proposing this new regulatory provision, the Department has
                considered the implications of Universities Research Ass'n, Inc. v.
                Coutu. In that case, the Supreme Court held that there was no implied
                private right of action for workers to sue under the Davis-Bacon Act--
                at least when the contract clauses were not included in the contract.
                Coutu, 450 U.S. at 768-69 & nn.17, 19. The Court also stated that the
                workers could not rely on the Christian doctrine to read the missing
                DBA contract clause into the contract. Id. at 784 & n.38. The
                Department has carefully considered the Coutu decision, and for the
                reasons discussed below, has determined that the proposed regulation is
                consistent with Coutu and that the distinctions between the proposed
                regulation and the Christian doctrine address the concerns that
                animated the Coutu Court in that case.
                 One of the Court's fundamental concerns in Coutu was that an
                implied private right of action could allow parties to evade the
                Department of Labor's review of whether a contract should be covered by
                the Act. The Court noted that there was at the time ``no administrative
                procedure that expressly provides review of a coverage determination
                after the contract has been let.'' 450 U.S. at 761 n.9.\116\ If an
                implied private right of action existed under those circumstances,
                private parties could effectively avoid raising any questions about
                coverage with the Department or with the contracting agency--and
                instead bring them directly to a Federal court to second-guess the
                administrative determinations. Id. at 783-84.
                ---------------------------------------------------------------------------
                 \116\ Subsection 1.6(f) did not go into effect until April 29,
                1983, nearly 2 years after the Coutu decision. See 48 FR 19532.
                Moreover, although the Department has used Sec. 1.6(f) to address
                post-award coverage determinations, as discussed above, the language
                of that subsection references wage determinations and does not
                explicitly address the omission of required contract clauses. The
                Department now seeks to remedy that ambiguity in Sec. 1.6(f) by
                adding similar language to Sec. 5.6, as discussed below, in
                addition to the proposed operation-of-law language at Sec. 5.5(e).
                ---------------------------------------------------------------------------
                 Another of the Court's concerns was that such an implied private
                right of action would undermine Federal contractors' reliance on the
                wage determinations that the Federal government had (or had not)
                incorporated into bid specifications. The Supreme Court noted that one
                of the purposes of the 1935 amendments to the DBA was to ensure that
                contractors could rely on the predetermination of wage rates that apply
                to each contract. 450 U.S. at 776. If, after a contract had
                [[Page 15751]]
                already been awarded, a court could find that a higher prevailing wage
                applied to that contract than had been previously determined, the
                contractor could lose money because of its mistaken reliance on the
                prior rates--all of which would undermine Congress's intent. Id. at
                776-77.
                 The Department's current proposed procedure would alleviate both of
                these concerns. As described above, the procedure differs from the
                Christian doctrine because--as under the existing regulation at Sec.
                1.6(f)--contractors will be compensated for any increase in costs
                caused by the government's failure to properly incorporate the clauses
                or wage determinations. The proposed procedure therefore will not
                undermine contractors' reliance on an initial determination by the
                contracting agency that the DBRA did not apply or that a wage
                determination with lower rates applied.
                 Nor does the proposal risk creating an end-run around the
                administrative procedures set up by contracting agencies and the
                Department pursuant to Reorganization Plan No. 14. Instead, the
                operation-of-law provision would function as part of an administrative
                structure implemented by the Administrator and subject to the
                Administrator's decision to grant a variance, tolerance, or exemption.
                Its enactment should not affect one way or another whether any implied
                private right of action exists under the statute. Executive Order 11246
                provides a helpful comparator. In 1968, the Department promulgated the
                regulation clarifying that the Executive Order's equal opportunity
                contract clause would be effective by ``operation of the Order''
                regardless of whether it is physically incorporated into the contract.
                41 CFR 60-1.4(e). That regulation was upheld, and the Christian
                doctrine was also found to apply to the required equal opportunity
                contract clause. See Miss. Power & Light, 638 F.2d at 905-06.
                Nonetheless, courts have widely held that E.O. 11246 does not convey an
                implied private right of action. See, e.g., Utley v. Varian Assocs.,
                Inc., 811 F.2d 1279, 1288 (9th Cir. 1987).
                 The Department has also considered whether the proposal would lead
                to an increase in bid protest litigation or expand the authority of the
                Court of Federal Claims or other contracting appeal tribunals to
                develop their own case law on the application of the DBRA without the
                input of the Department. In exploring this question, the Department
                considered proposing an alternative procedure in which the operation-
                of-law rule would only become effective after a determination by the
                Administrator or a contracting agency that a contract was in fact
                covered. The Department, however, does not believe that such an
                approach is necessary because both the GAO and the Federal Circuit
                maintain strict waiver rules that prohibit post-award bid protests
                based on errors or ambiguities in the solicitation. See NCS/EML JV,
                LLC, B-412277, 2016 WL 335854, at *8 n.10 (Comp. Gen. Jan. 14, 2016)
                (citing GAO decisions); Blue & Gold Fleet, L.P. v. United States, 492
                F.3d 1308, 1312-13 (Fed. Cir. 2007).\117\
                ---------------------------------------------------------------------------
                 \117\ In Blue & Gold, the National Park Service failed to
                include the SCA contract clauses in a contract that the Department
                of Labor later concluded was covered by the Act. The Federal Circuit
                denied the bid protest from a the losing bidder because ``a party
                who has the opportunity to object to the terms of a government
                solicitation containing a patent error and fails to do so prior to
                the close of the bidding process waives its ability to raise the
                same objection subsequently in a bid protest action in the Court of
                Federal Claims.'' 492 F.3d at 1313.
                ---------------------------------------------------------------------------
                 The proposal as currently drafted also would not affect the well-
                settled case law--developed after the Coutu decision--that only the
                Department of Labor has jurisdiction to resolve disputes arising out of
                the labor standards provisions of the contract. As part of the post-
                Coutu 1982 final rule, the Department enacted a provision at 29 CFR
                5.5(a)(9) that requires a disputes clause with that jurisdictional
                limitation to be included in all DBRA-covered contracts. See 47 FR
                23660-61 (final rule addressing comments received on the proposal). The
                labor standards disputes clause creates an exception to the Contract
                Disputes Act of 1974 and effectively bars the Court of Federal Claims
                from deciding substantive matters related to the Davis-Bacon Act and
                Related Acts. See, e.g., Emerald Maint., Inc. v. United States, 925
                F.2d 1425, 1428-29 (Fed. Cir. 1991). Under the Department's current
                operation-of-law proposal, the disputes clause at Sec. 5.5(a)(9) would
                continue to be effective even when it has been omitted from a contract
                because the Department's proposal applies the operation-of-law
                principle to all of the required contract clauses in Sec. 5.5(a)--
                including Sec. 5.5(a)(9). As a result, under the proposal, disputes
                regarding DBRA coverage or other related matters would continue to be
                heard only through the Department's administrative process prior to any
                judicial review, and there is no reason to believe that the
                implementation of the operation-of-law provision would lead to a
                parallel body of case law in the Court of Federal Claims.
                 Given all of these continued safeguards, the Department believes it
                is not necessary to expressly limit the proposed operation-of-law
                provision to be effective only after an administrative determination.
                However, in addition to input on the proposed regulatory text at Sec.
                5.5(e), the Department also seeks input from commenters regarding the
                alternative proposal to require such a determination. Under that
                alternative, the operation-of-law provision would only become effective
                after a determination by the Administrator or a contracting agency that
                the contract clauses or wage determination was wrongly omitted.
                 Regardless of whether the proposed operation-of-law language will
                be subject to a threshold requirement of an administrative
                determination, the provision would operate in tandem with the continued
                requirements that contracting agencies must insert the contract clause
                in full into any new contracts and into existing contracts by
                modification where the clause had been wrongly omitted. The Department
                proposes language to clarify that these parallel provisions are both
                effective, with proposed language in Sec. Sec. 1.6(f), 5.5(a)(1)(i),
                and 5.6(a)(1)(ii) that explains that contracting agencies continue to
                be required to insert the relevant clauses and wage determinations in
                full notwithstanding that the clauses and wage determinations are also
                effective by operation of law. As the clauses and applicable wage
                determination(s) will still be effective as a matter of law even if
                omitted from the contract, it will be advisable for contractors to
                promptly raise any such errors of omission with their contracting
                agencies. A contractor's failure to raise such issues will not relieve
                the contractor from any of their obligations under the Davis-Bacon
                labor standards. See, e.g., Coleman Construction Co., ARB No. 15-002,
                2016 WL 4238468, at *6 & n.40 (June 8, 2016) (holding that ``[t]he law
                is clear that, if a contract subject to Davis-Bacon lacks the wage
                determination, it is the employer's obligation . . . to get it''); 48
                CFR 52.222-52(c).
                 Similarly, proposed Sec. 5.5(d) also includes a parallel provision
                that clarifies that the clauses and wage determinations are equally
                effective if they are incorporated by reference, as a contract that
                contains a provision expressly incorporating the clauses and the
                applicable wage determination by reference may be tantamount to
                insertion in full under the FAR. See 48 CFR 52.107, 52.252-2. In
                addition, independent of the FAR, the terms of a document appropriately
                incorporated by reference into a contract effectively bind the parties
                to that contract. See 11 Williston on Contracts section 30:25
                [[Page 15752]]
                (4th ed.) (``Interpretation of several connected writings'').
                 These various proposed parallel regulatory provisions are
                consistent and work together. They require the best practice of
                physical insertion or modification of contract documents (or, where
                warranted, incorporation by reference), so as to provide effective
                notice to all interested parties, such as contract assignees,
                subcontractors, sureties, and employees and their representatives. At
                the same time, they create a safety net to ensure that where any
                mistakes are made in initial determinations, the prevailing wage
                required by statute will still be paid to the laborers and mechanics on
                covered projects.
                (2) Sec. 1.6(f) Post-Award Correction of Wage Determinations
                 In addition to the operation-of-law language at Sec. 5.5(e), the
                Department proposes to make several changes to the current regulation
                at Sec. 1.6(f) that contains the post-award procedure requiring
                contracting agencies to incorporate an omitted wage determination.
                First, as discussed above in section III.B.1.vi. of this NPRM (Section
                1.6 Use and effectiveness of wage determinations), the Department
                proposes adding titles for each subsection in Sec. 1.6 in order to
                improve readability of the section as a whole. The proposed title for
                Sec. 1.6(f) is ``Post-award determinations and procedures.'' The
                Department also proposes dividing Sec. 1.6(f) into multiple
                subsections to improve the organization and readability of the
                important rules it articulates.
                 At the beginning of the section, the Department proposes a new
                Sec. 1.6(f)(1), which explains generally that if a contract subject to
                the labor standards provisions of the Acts referenced by Sec. 5.1 is
                entered into without the correct wage determination(s), the relevant
                agency must incorporate the correct wage determination into the
                contract or require its incorporation. The Department proposes to add
                language to Sec. 1.6(f)(1) expressly providing for an agency to
                incorporate the correct wage determination post-award ``upon its own
                initiative'' as well as upon the request of the Administrator. The
                current version of Sec. 1.6(f) explicitly provides only for a
                determination by the Administrator that a correction must be made. Some
                contracting agencies had interpreted the existing language as
                precluding an action by a contracting agency alone--without action by
                the Administrator--to modify an existing contract to incorporate a
                correct wage determination. The Department now proposes the new
                language to clarify that the contracting agency can take such action
                alone. Where a contracting agency does intend to take such an action,
                proposed language at Sec. 1.6(f)(3)(iii) would require it to notify
                the Administrator of the proposed action.
                 In the proposed reorganization of Sec. 1.6(f), the Department
                would locate the discussion of the Administrator's determination that a
                correction is necessary in a new Sec. 1.6(f)(2). The only change to
                the language of that subsection is not substantive. The current text of
                Sec. 1.6(f) refers to the action that the Administrator may take as an
                action to ``issue a wage determination.'' However, in the majority of
                cases, where a wage determination was not included in the contract, the
                proper action by the Administrator will not be to issue a new or
                updated wage determination, as that term is used in Sec. 1.6(c), but
                to identify the appropriate existing wage determination that applies to
                the contract. Thus, to eliminate any confusion, the Department proposes
                to amend the language in this subsection to describe the
                Administrator's action as ``requir[ing] the agency to incorporate'' the
                appropriate wage determination. To the extent that, in an exceptional
                case, the Department would need to ``issue'' a new project wage
                determination to be incorporated into the contract, the proposed new
                language would require the contracting agency to incorporate or require
                the incorporation of that newly issued wage determination.
                 The Department also proposes to amend the language in Sec. 1.6(f)
                that describes the potential corrective actions that an agency may
                take. In a nonsubstantive change, the Department proposes to refer to
                the wage determinations that must be newly incorporated as ``correct''
                wage determinations instead of ``valid'' wage determinations. This is
                because the major problem addressed in Sec. 1.6(f)--in addition to the
                failure to include any wage determination at all--is the use of the
                wrong wage determinations. Even while wrong for one contract, a wage
                determination may be valid if used on a different contract to which it
                properly applies. It is therefore more precise to describe a misused
                wage determination as incorrect rather than invalid. The proposed
                amendment would also add to the reference in the current regulation at
                Sec. 1.6(f) to ``supplemental agreements'' or ``change orders'' as the
                methods for modifying contracts post-award to incorporate valid wage
                determinations. The Department, in a new Sec. 1.6(f)(3), would
                instruct that agencies make such modifications additionally through the
                exercise of ``any other authority that may be needed.'' This language
                parallels the Department's regulation at 29 CFR 4.5 for similar
                circumstances under the SCA.
                 The Department also proposes to make several changes to Sec.
                1.6(f) to clarify that the requirements apply equally to projects
                carried out with Federal financial assistance as they do to DBA
                projects. The proposed initial paragraph at Sec. 1.6(f)(1) contains
                new language that states expressly that where an agency is providing
                Federal financial assistance, ``the agency must ensure that the
                recipient or sub-recipient of the Federal assistance similarly
                incorporates the correct wage determination(s) into its contracts.''
                Similarly, the reference to agencies' responsibilities in proposed new
                Sec. 1.6(f)(3) requires an agency to terminate and resolicit the
                contract or to ``ensure'' the incorporation (in the alternative to
                ``incorporating'' the correct wage determination itself)--in
                recognition that this language applies equally to direct procurement
                where the agency is a party to a DBA-covered contract and Related Acts
                where the agency must ensure that the relevant State or local agency
                incorporates the corrected wage determination into the covered
                contract. Finally, the Department also proposes to amend the
                requirement that the incorporation should be ``in accordance with
                applicable procurement law'' to instead reference ``applicable law.''
                This change is intended to recognize that the requirements in Sec. 1.6
                apply also to projects executed with Federal financial assistance under
                the Related Acts, for which the Federal or State agency's authority may
                not be subject to Federal procurement law. None of these proposed
                changes represent substantive changes, as the Department has
                historically applied Sec. 1.6(f) equally to both DBA and Related Act
                projects. See, e.g., City of Ellsworth, ARB No. 14-042, at *6-8.
                 In the new Sec. 1.6(f)(3)(iv), the Department proposes to include
                the requirements from the existing regulations that contractors must be
                compensated for any change and that the incorporation must be
                retroactive to the beginning of the construction. That retroactivity
                requirement, however, is amended to include the qualification that the
                Administrator may direct otherwise. As noted above, the Administrator
                may make determinations of non-retroactivity on a case-by-case basis.
                In addition, consistent with the SCA regulation on post-award
                incorporation of wage determinations at
                [[Page 15753]]
                29 CFR 4.5(c), the Department proposes including language in a new
                Sec. 1.6(f)(3)(ii) to require that incorporation of the correct wage
                determination be accomplished within 30 days of the Administrator's
                request, unless the agency has obtained an extension.
                 The Department also proposes to include new language at Sec.
                1.6(f)(3)(v), applying to Related Acts, instructing that the agency
                must suspend further payments or guarantees if the recipient refuses to
                incorporate the specified wage determination and that the agency must
                promptly refer the dispute to the Administrator for further proceedings
                under Sec. 5.13. This language is a clarification and restatement of
                the existing enforcement regulation at Sec. 5.6(a)(1), which provides
                that no such payment or guarantee shall be made ``unless [the agency]
                ensures that the clauses required by Sec. 5.5 and the appropriate wage
                determination(s) are incorporated into such contracts.''
                 In proposed new language at Sec. 1.6(f)(3)(vi), the Department
                includes additional safeguards for the circumstances in which an agency
                does not retroactively incorporate the missing clauses or wage
                determinations and instead seeks to terminate the contract. The
                proposed language provides that before termination, the agency must
                withhold or cross-withhold sufficient funds to remedy any back wage
                liability or otherwise identify and obligate sufficient funds through a
                termination settlement agreement, bond, or other satisfactory
                mechanism. This language is consistent with the existing FAR provision
                at 48 CFR 49.112-2(c) that requires contracting officers to ascertain
                whether there are any outstanding labor violations and withhold
                sufficient funds if possible before forwarding the final payment
                voucher. It is also consistent with the language of the template
                termination settlement agreements at 48 CFR 49.602-1 and 49.603-3 that
                seek to assure that any termination settlement agreement does not
                undermine the government's ability to fully satisfy any outstanding
                contractor liabilities under the DBRA or other labor clauses.
                 Finally, the Department includes a proposed provision at Sec.
                1.6(f)(4) that clarifies that the specific requirements of Sec. 1.6(f)
                to physically incorporate the correct wage determination operate in
                addition to the proposed requirement in Sec. 5.5(e) that makes the
                correct wage determination applicable by operation of law. As discussed
                above, such amendment and physical incorporation (including
                incorporation by reference) is necessary in order to provide notice to
                all interested parties, such as contract assignees, subcontractors,
                sureties, and employees and their representatives.
                (3) Sec. 5.6(a)(1) Post-Award Incorporation of Contract Clauses
                 The Department proposes to revise Sec. 5.6(a)(1) to include
                language expressly providing a procedure for determining that the
                required contract clauses were wrongly omitted from a contract. As
                noted above, the Department has historically sought the retroactive
                incorporation of missing contract clauses by reference to the language
                regarding wage determinations in Sec. 1.6(f). The Department now
                proposes to eliminate any confusion by creating a separate procedure at
                Sec. 5.6(a)(1)(ii) that applies specifically to missing contract
                clauses in a similar manner as Sec. 1.6(f) continues to apply to
                missing or incorrect wage determinations.
                 The Department proposes to revise Sec. 5.6(a)(1) by renumbering
                the existing regulatory text Sec. 5.6(a)(1)(i), and adding an
                additional paragraph, (a)(1)(ii), to include the provision clarifying
                that where a contract is awarded without the incorporation of the
                required Davis-Bacon labor standards clauses required by Sec. 5.5, the
                agency must incorporate the clauses--or require their incorporation.
                This includes circumstances where the agency does not award a contract
                directly but instead provides funding assistance for such a contract;
                in such instances, the Federal agency, or other agency where
                appropriate, must ensure that the recipient or sub-recipient of the
                Federal assistance incorporates the required labor standards clauses
                retroactive to the date of contract award, or the start of construction
                if there is no award. The paragraph contains a similar set of
                provisions as Sec. 1.6(f), with its proposed amendments--including
                that the incorporation must be retroactive unless the Administrator
                directs otherwise; that retroactive incorporation is required by the
                request of the Administrator or upon the agency's own initiative; that
                incorporation must take place within 30 days of a request by the
                Administrator, unless an extension is granted; that the agency must
                withhold or otherwise obligate sufficient funds to satisfy back wages
                before any contract termination; and that the contractor should be
                compensated for any increase in costs resulting from any change
                required by the paragraph.
                 The Department also proposes to clarify the application of the
                current regulation at Sec. 5.6(a)(1), which states that no payment,
                advance, grant, loan, or guarantee of funds will be approved unless the
                Federal agency ensures that the funding recipient or sub-recipient has
                incorporated the required clauses into any contract receiving the
                funding. Similar to the proposed provision in Sec. 1.6(f)(3)(v), a new
                proposed provision at Sec. 5.6(a)(1)(ii)(C) would explain that such a
                required suspension also applies if the funding recipient refuses to
                retroactively incorporate the required clauses. In such circumstances,
                the issue must be referred promptly to the Administrator for
                resolution.
                 Similar to the proposed provision at Sec. 1.6(f)(4), the
                Department also proposes a provision at Sec. 5.6(a)(1)(ii)(E) that
                explains that the physical-incorporation requirements of Sec.
                5.6(a)(1)(ii) would operate in tandem with the proposed language at
                Sec. 5.5(e) making the contract clauses and wage determinations
                effective by operation of law.
                 The proposed changes to Sec. 5.6 do not impose any additional
                requirements on Federal agencies, as the existing regulation at Sec.
                5.6 clearly states that the Federal agency is responsible for
                incorporating the required clauses into its own contracts subject to
                the Davis-Bacon labor standards and for ensuring the incorporation of
                the required clauses into contracts subject to the Davis-Bacon labor
                standards entered into by the Federal agency's funding recipients.
                Moreover, as noted above, this additional language is analogous to the
                existing language at 29 CFR 1.6(f) under which the Department
                historically has requested the incorporation of missing contract
                clauses.
                 The proposed changes clarify that the requirement to incorporate
                the Davis-Bacon labor standards clauses is an ongoing responsibility
                that does not end upon contract award, and the changes expressly state
                the Department's longstanding practice of requiring the relevant agency
                to retroactively incorporate, or ensure retroactive incorporation of,
                the required clauses in such circumstances. As discussed above, such
                clarification is warranted because agencies occasionally have expressed
                confusion about--and even questioned whether they possess--the
                authority to incorporate, or ensure the incorporation of, the required
                contract clauses after a contract has been awarded or construction has
                started.
                 The Department's proposal similarly makes clear that while agencies
                must retroactively incorporate the required clauses upon the request of
                the Administrator, agencies also have the authority to make such
                changes on their own initiative when they discover that an error has
                been made. The proposed changes also eliminate any confusion of the
                recipients of Federal funding as to the extent of the Federal funding
                agency's authority to require such
                [[Page 15754]]
                retroactive incorporation in federally funded contracts subject to the
                Davis-Bacon labor standards. Finally, the proposed changes do not alter
                the provisions of 29 CFR 1.6(g), including its provisos.
                 Retroactive incorporation of the required contract clauses ensures
                that agencies take every available step to ensure that workers on
                covered contracts are paid the prevailing wages that Congress intended.
                The Department welcomes comments on all aspects of this proposal.
                xxi. Debarment
                 In accordance with the Department's goal of updating and
                modernizing the DBA and Related Act regulations, as well as enhancing
                the implementation of Reorganization Plan No. 14 of 1950, the
                Department proposes a number of revisions to the debarment regulations
                that are intended both to promote consistent enforcement of the Davis-
                Bacon labor standards provisions and to clarify the debarment standards
                and procedures for the regulated community, adjudicators,
                investigators, and other stakeholders.
                 The regulations implementing the DBA and the Related Acts currently
                reflect different standards for debarment. Since 1935, the DBA has
                mandated 3-year debarment ``of persons . . . found to have disregarded
                their obligations to employees and subcontractors.'' 40 U.S.C.
                3144(b)(1) and (b)(2) (emphasis added); see also 29 CFR 5.12(a)(1) and
                (2) (setting forth the DBA's ``disregard of obligations'' standard).
                Although the Related Acts themselves do not contain debarment
                provisions, since 1951, their implementing regulations have imposed a
                heightened standard for debarment for violations under the Related
                Acts, providing that ``any contractor or subcontractor . . . found . .
                . to be in aggravated or willful violation of the labor standards
                provisions'' of any DBRA will be debarred ``for a period not to exceed
                3 years.'' 29 CFR 5.12(a)(1) (emphasis added). The Department proposes
                to harmonize the DBA and the Related Act debarment-related regulations
                by applying the longstanding DBA debarment standard and related
                provisions to the Related Acts as well. Specifically, in order to
                create a uniform set of substantive and procedural requirements for
                debarment under the DBA and the Related Acts, the Department proposes
                five changes to the Related Act debarment regulations so that they
                mirror the provisions governing DBA debarment.
                 First, the Department proposes to adopt the DBA statutory debarment
                standard--disregard of obligations to employees or subcontractors--for
                all debarment cases and to eliminate the Related Acts' regulatory
                ``aggravated or willful'' debarment standard. Second, the Department
                proposes to adopt the DBA's mandatory 3-year debarment period for
                Related Act cases and to eliminate the process under the Related Acts
                regulations for early removal from the ineligible list (also known as
                the debarment list \118\). Third, the Department proposes to expressly
                permit debarment of ``responsible officers'' under the Related Acts.
                Fourth, the Department proposes to clarify that under the Related Acts
                as under the DBA, entities in which debarred entities or individuals
                have an ``interest'' may be debarred. Related Acts regulations
                currently require a ``substantial interest.'' Finally, the Department
                proposes to make the scope of debarment under the Related Acts
                consistent with the scope of debarment under the DBA by providing, in
                accordance with the current scope of debarment under the DBA, that
                Related Acts debarred persons and firms may not receive ``any contract
                or subcontract of the United States or the District of Columbia,'' as
                well as ``any contract or subcontract subject to the labor standards
                provisions of the statutes listed in Sec. 5.1.'' See 29 CFR 5.12(a)(1)
                and (2).
                ---------------------------------------------------------------------------
                 \118\ There are several terms referring to the same list (e.g.,
                ineligible list, debarment list, debarred bidders list) and the
                terms for this list may continue to change over time.
                ---------------------------------------------------------------------------
                (A) Relevant Legal Authority
                 The 1935 amendments to the DBA gave the Secretary authority to
                enforce--not just set--prevailing wages, including through the remedy
                of debarment. See Coutu, 450 U.S. at 758 & n.3, 759, 776; see also S.
                Rep. No. 74-332, pt. 3, at 11, 14-15 (1935). Since then, the DBA has
                required 3-year debarment of persons or firms that have been found to
                ``have disregarded their obligations to employees and subcontractors.''
                40 U.S.C. 3144(b) (formerly 40 U.S.C. 276a-2 and known as section 3(a)
                of the DBA). The DBA also mandates debarment of entities in which
                debarred persons or firms have an ``interest.'' 40 U.S.C. 3144(b)(2).
                 Approximately 15 years later, the Truman Administration developed
                and Congress accepted Reorganization Plan No. 14 of 1950, a
                comprehensive plan to improve Davis-Bacon enforcement and
                administration. The Reorganization Plan provided that ``[i]n order to
                assure coordination of administration and consistency of enforcement''
                of the DBRA by the agencies who are responsible for administering them,
                the Secretary of Labor was empowered to ``prescribe appropriate
                standards, regulations, and procedures, which shall be observed by
                these agencies.'' Reorganization Plan No. 14 of 1950, 5 U.S.C. app. 1.
                In transmitting the Reorganization Plan to Congress, President Truman
                observed that ``the principal objective of the plan is more effective
                enforcement of labor standards'' with ``more uniform and more adequate
                protection for workers through the expenditures made for the
                enforcement of the existing legislation.'' Id. (1950 Special Message to
                Congress).
                 Shortly after Reorganization Plan No. 14 of 1950 was adopted, the
                Department promulgated regulations adding ``a new Part 5,'' effective
                July 1, 1951. 16 FR 4430, 4430. These regulations added the
                ``aggravated or willful'' debarment standard for the Related Acts. Id.
                at 4431. The preamble to that final rule explained that adding the new
                part 5 was to comply with Reorganization Plan No. 14 of 1950's
                directive to prescribe standards, regulations, and procedures ``to
                assure coordination of administration and consistency of enforcement.''
                Id. at 4430. Since then, the two debarment standards--disregard of
                obligations in DBA cases and willful or aggravated violations in
                Related Acts cases--have co-existed, but with challenges along the way
                that the Department seeks to resolve through this proposal.
                (B) Proposed Regulatory Revisions
                (1) Debarment Standard
                a. Proposed Change to Debarment Standard
                 As noted previously, the DBA generally requires the payment of
                prevailing wages to laborers and mechanics working on contracts with
                the Federal Government or the District of Columbia for the construction
                of public buildings and public works. 40 U.S.C. 3142(a). In addition,
                Congress has included DBA prevailing wage provisions in numerous
                Related Acts under which Federal agencies assist construction projects
                through grants, loans, guarantees, insurance, and other methods. The
                same contract clauses are incorporated into DBA--and Related Act--
                covered contracts, and the laws apply the same labor standards
                protections (including the obligation to pay prevailing wages) to
                laborers and mechanics without regard to whether they are performing
                work on a project subject to the DBA or one of the Related Acts.
                Indeed, not only are some projects subject to the requirements of both
                the
                [[Page 15755]]
                DBA and one of the Related Acts due to the nature and source of Federal
                funding, but also the great majority of DBA-covered projects are also
                subject to CWHSSA, one of the Related Acts.
                 Against this backdrop, there is no apparent need for a different
                level of culpability for Related Acts debarment than for DBA debarment.
                The sanction for failing to compensate covered workers in accordance
                with applicable prevailing wage requirements should not turn on the
                source or form of Federal funding. Nor is there any principled reason
                that it should be easier for prime contractors, subcontractors, and
                their responsible officials to avoid debarment in Related Acts cases.
                Accordingly, the Department proposes to revise the governing
                regulations so that conduct that warrants debarment on DBA construction
                projects would also warrant debarment on Related Acts projects. This
                proposal fits within the Department's well-established authority to
                adopt regulations governing debarment of Related Acts contractors. See,
                e.g., Janik Paving & Constr., 828 F.2d at 91; Copper Plumbing & Heating
                Co. v. Campbell, 290 F.2d 368, 372-73 (D.C. Cir. 1961).
                 The potential benefits of adopting a single, uniform debarment
                standard outweigh any benefits of retaining the existing dual-standard
                framework. Other than debarment, contractors who violate the DBA and
                Related Acts run the risk only of having to pay back wages, often long
                after violations occurred. Even if these violations are discovered or
                disclosed through an investigation or other compliance action,
                contractors that violate the DBA or Related Acts can benefit from the
                use of workers' wages, an advantage which can allow such contractors to
                underbid more law-abiding contractors. If the violations never come to
                light, such contractors pocket wages that belong to workers.
                Strengthening the remedy of debarment encourages such unprincipled
                contractors to comply with Davis-Bacon prevailing wage requirements by
                expanding the reach of this remedy when they do not. Facchiano Constr.
                Co. v. U.S. Dep't of Labor, 987 F.2d 206, 214 (3d Cir. 1993) (observing
                that debarment ``may in fact `be the only realistic means of deterring
                contractors from engaging in willful [labor] violations based on a cold
                weighing of the costs and benefits of noncompliance' '' (quoting Janik
                Paving & Constr., 828 F.2d at 91)).
                 In proposing a unitary debarment standard, the Department intends
                that well-established case law applying the DBA ``disregard of
                obligations'' debarment standard would now also apply to Related Acts
                debarment determinations. Under this standard, as a 2016 ARB decision
                explained, ``DBA violations do not, by themselves, constitute a
                disregard of an employer's obligations,'' and, to support debarment,
                ``evidence must establish a level of culpability beyond negligence''
                and involve some degree of intent. Interstate Rock Prods., Inc., ARB
                No. 15-024, 2016 WL 5868562, at *4 (Sept. 27, 2016) (footnotes
                omitted). For example, the underpayment of prevailing wages, coupled
                with the falsification of certified payrolls, constitute a disregard of
                a contractor's obligations sufficient to establish the requisite level
                of ``intent'' under the DBA debarment provisions. See id. Bad faith and
                gross negligence regarding compliance have also been found to
                constitute a disregard of DBA obligations. See id.\119\ The
                Department's proposal to apply the DBA ``disregard of obligations''
                standard as the sole debarment standard would maintain safeguards for
                law-abiding contractors and responsible officers by retaining the
                bedrock principle that DBA violations, by themselves, generally do not
                constitute a sufficient predicate for debarment. Moreover, the
                determination of whether debarment is warranted will continue to be
                based on a consideration of the particular facts found in each
                investigation and to include the same procedures and review process
                that are currently in place to determine whether debarment is to be
                pursued.
                ---------------------------------------------------------------------------
                 \119\ For the same reason, except in unusual circumstances, it
                would generally not be appropriate to debar a contractor for
                violations in circumstances where the contracting agency omitted the
                contract clause and the clause was subsequently incorporated
                retroactively or found to be effective by operation of law.
                ---------------------------------------------------------------------------
                 For these reasons and those discussed in more detail below, the
                Department proposes to harmonize debarment standards by reorganizing
                Sec. 5.12. As proposed, paragraph (a)(1) sets forth the disregard of
                obligations debarment standard, which would apply to both DBA and
                Related Acts violations. The proposed changes accordingly remove the
                ``willful or aggravated'' language from Sec. 5.12, with conforming
                changes proposed in 29 CFR 5.6(b) and 5.7(a). Proposed paragraph (a)(2)
                combines the parts of current Sec. Sec. 5.12(a)(1) and (a)(2)
                concerning the different procedures for effectuating debarment under
                the DBA and Related Acts.
                b. Impacts of Proposed Debarment Standard Change
                 Because behavior that is willful or aggravated is also a disregard
                of obligations, in many instances the proposed harmonization of the
                debarment standards would apply to conduct that under the current
                regulations would already be debarrable under both the DBA and Related
                Acts. For example, falsification of certified payrolls to simulate
                compliance with Davis-Bacon labor standards has long warranted
                debarment under both the DBA and Related Acts. See, e.g., R.J. Sanders,
                Inc., WAB No. 90-25, 1991 WL 494734, at *1-2 (Jan. 31, 1991) (DBA);
                Coleman Constr. Co., ARB No. 15-002, 2016 WL 4238468, at *11 (Related
                Acts). Kickbacks also warrant debarment under the DBA and Related Acts.
                See, e.g., Killeen Elec. Co., Inc., WAB No. 87-49, 1991 WL 494685, at
                *5-6 (DBA and Related Act). In fact, any violation that meets the
                ``willful or aggravated'' standard would necessarily also be a
                disregard of obligations.
                 Under the proposed revisions, the subset of violations that would
                only have been debarrable under the DBA disregard of obligations
                standard now will be potentially subject to debarment under both the
                DBA and Related Acts. The ARB recently discussed one example of this
                type of violation, stating that intentional disregard of obligations
                ``may . . . include acts that are not willful attempts to avoid the
                requirements of the DBA'' since contractors may not avoid debarment
                ``by asserting that they did not intentionally violate the DBA because
                they were unaware of the Act's requirements.'' Interstate Rock Prods.,
                ARB No. 15-024, 2016 WL 5868562, at *4 (citations omitted). Similarly,
                ``failures to set up adequate procedures to ensure that their
                employees' labor was properly classified,'' which might not have been
                found to be willful or aggravated Related Act violations, were
                debarrable under the DBA disregard of obligations standard. Id. at *8.
                Under the Department's proposed revisions to Sec. 5.12, these types of
                violations could now result in debarment in Related Acts as well as DBA
                cases. Additionally, under the disregard of obligations standard, prime
                contractors and upper-tier subcontractors may be debarred if they fail
                to flow down the required contract clauses into their lower-tier
                subcontracts as required by Sec. 5.5(a)(6), or if they otherwise fail
                to ensure that their subcontractors are in compliance with the Davis-
                Bacon labor standards provisions. See 29 CFR 5.5(a)(6)-(a)(7). See Ray
                Wilson Co., ARB No. 02-086, 2004 WL 384729, at *10 (affirming debarment
                under DBA of upper-tier subcontractor and its principals because of
                subcontractor's ``abdication from--and, thus, its disregard of--its
                [[Page 15756]]
                obligations to employees of . . . its own lower-tier subcontractor'').
                c. Benefits of Proposed Debarment Standard Change
                i. Improved Compliance and Enforcement
                 Applying the DBA's disregard of obligations debarment standard in a
                uniform, consistent manner would advance the purpose of the DBA, `` `a
                minimum wage law designed for the benefit of construction workers.' ''
                Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1055 (D.C. Cir. 2007)
                (quoting Binghamton Const. Co., 347 U.S. at 178). Both the DBA
                statutory and the Related Acts regulatory debarment sanctions are
                intended to foster compliance with labor standards. Interstate Rock
                Products, ARB No. 15-024, 2016 WL 5868562, at *8 (``Debarment has
                consistently been found to be a remedial rather than punitive measure
                so as to encourage compliance and discourage employers from adopting
                business practices designed to maximize profits by underpaying
                employees in violation of the Act.'' (citations omitted)); Howell
                Constr., Inc., WAB No. 93-12, 1994 WL 269361, at *7 (May 31, 1994).
                Using the disregard of obligations debarment standard for all DBA and
                DBRA work would enhance enforcement of and compliance with Davis-Bacon
                labor standards in multiple ways.
                 First, it would better enlist the regulated community in Davis-
                Bacon enforcement by increasing their incentive to comply with DBA
                standards. See, e.g., Facchiano Constr., 987 F.2d at 214 (``Both Sec.
                5.12(a)(1) and Sec. 5.12(a)(2) are designed to ensure the cooperation
                of the employer, largely through self-enforcement.''); Brite Maint.
                Corp., WAB No. 87-07, 1989 WL 407462, at *2 (May 12, 1989) (debarment
                is a ``preventive tool to discourage violation[s]'').
                 Second, applying the disregard of obligations standard to Related
                Act cases will serve the important public policy of holding
                contractors' responsible officials accountable for non-compliance in a
                more consistent manner, regardless of whether they are performing on a
                Federal or federally funded project. Responsible officials currently
                may be debarred under both the DBA and the Related Acts. See, e.g.,
                P.B.M.C., Inc., WAB No. 87-57, 1991 WL 494688, at *7 (Feb. 8, 1991)
                (stating that ``Board precedent does not permit a responsible official
                to avoid debarment by claiming that the labor standards violations were
                committed by agents or employees of the firm'' in Related Act case);
                P.J. Stella Constr. Corp., WAB No. 80-13, 1984 WL 161738, at *3 (Mar.
                1, 1984) (affirming DBA debarment recommendation because ``an employer
                cannot take cover behind actions of his inexperienced agents or
                representatives or the employer's own inexperience in fulfilling the
                requirements of government construction contracts''); see also Howell
                Constr., Inc., WAB No. 93-12, 1994 WL 269361, at *7 (DBA case)
                (debarment could not foster compliance if ``corporate officials . . .
                are permitted to delegate . . . responsibilities . . . , [and] to
                delegate away any and all accountability for any wrong doing'').
                Applying a unitary debarment standard would further incentivize
                compliance by all contractors and responsible officers.
                ii. Greater Consistency and Clarity
                 The Department also believes that applying the DBA debarment and
                debarment-related standards to all Related Act prevailing wage cases
                would eliminate confusion, and attendant litigation, that have resulted
                from erroneous and inconsistent application of the two different
                standards. The incorrect debarment standard has been applied in various
                cases over the years, continuing to the present, notwithstanding the
                ARB's repeated clarification. See, e.g., J.D. Eckman, Inc., ARB No.
                2017-0023, 2019 WL 3780904, at *3 (July 9, 2019) (ALJ applied
                inapplicable DBA standard rather than applicable aggravated or willful
                standard; legal error of ALJ required remand for consideration of
                debarment under the correct standard); Coleman Constr. Co., ARB No. 15-
                002, 2016 WL 4238468, at *9-11 (noting that the ALJ had applied the
                wrong debarment standard but concluding that the ALJ's ``conflat[ion of
                the] two different legal standards'' was harmless error under the
                circumstances). Most recently, the ARB vacated and remanded an ALJ's
                decision to debar a subcontractor and its principal under the DBA,
                noting that, even though the Department had not argued that the DBA
                applied, the ALJ had applied the incorrect standard because ``the
                contract was for a construction project of a non-[F]ederal building
                that was funded by the U.S. Government but did not include the United
                States as a party.'' Jamek Eng'g Servs., Inc., ARB No. 2020-0043, 2021
                WL 2935807, at *8 (June 23, 2021).
                 Additionally, the ``aggravated or willful'' Related Acts standard
                has been interpreted inconsistently over the past decades. In some
                cases, the ARB has required actual knowledge of violations, while in
                others it has applied (or at least recited with approval) a less
                stringent standard that encompasses intentional disregard or plain
                indifference to the statutory requirements but does not require actual
                knowledge of the violations. Compare J.D. Eckman, Inc., ARB No. 2017-
                0023, 2019 WL 3780904, at *3 (requiring actual knowledge or awareness
                of the violation) and A. Vento Constr., WAB No. 87-51, 1990 WL 484312,
                at *3 (Oct. 17, 1990) (aggravated or willful violations are
                ``intentional, deliberate, knowing violations of the [Related Acts']
                labor standards provisions'') with Fontaine Bros., Inc., ARB No. 96-
                162, 1997 WL 578333, at *3 (Sept. 16, 1997) (stating in Related Act
                case that ``mere inadvertent or negligent conduct would not warrant
                debarment, [but] conduct which evidences an intent to evade or a
                purposeful lack of attention to, a statutory responsibility does'' and
                that ``[b]lissful ignorance is no defense to debarment''); see also
                Pythagoras Gen. Cont. Corp., ARB Nos. 08-107, 09-007, 2011 WL 1247207,
                at *12 (``[A] `willful' violation encompasses intentional disregard or
                plain indifference to the statutory requirements.''), aff'd sub. nom.
                on other grounds Pythagoras Gen. Cont. Corp. v. U.S. Dept. of Labor,
                926 F. Supp. 2d 490 (S.D.N.Y. 2013).
                 The Department believes that a single debarment standard would
                provide consistency for the regulated community. Under the proposed
                single ``disregard of obligations'' debarment standard, purposeful
                inattention and gross negligence with regard to Davis-Bacon labor
                standards obligations--as well as actual knowledge of or participation
                in violations--could warrant debarment. The Department would continue
                to carefully consider all of the facts involved in determining whether
                a particular contractor's actions meet the proposed single standard.
                (2) Length of Debarment Period
                 The Department also proposes to revise Sec. 5.12 (see proposed
                Sec. 5.12(a)(1) and (2)) to make 3-year debarment mandatory under both
                the DBA and Related Acts and to eliminate the regulatory provision
                permitting early removal from the debarment list under the Related
                Acts.
                 As noted above, since 1935, the DBA has mandated a 3-year debarment
                of contractors whose conduct has met the relevant standard. In 1964,
                the Department added two regulatory provisions that permit Related Acts
                debarment for less than 3 years as well as early removal from the
                debarment list. According to the final rule preamble, the Department
                added these provisions ``to improve the debarment
                [[Page 15757]]
                provisions under Reorganization Plan No. 14 of 1950 by providing for a
                flexible period of debarment up to three years and by providing for
                removal from the debarred bidders list upon a demonstration of current
                responsibility.'' 29 FR 95.
                 The Department's experience over the nearly 60 years since then has
                shown that those Related Act regulatory provisions that differ from the
                DBA standard have not improved the debarment process for any of its
                participants. Rather, they have added another element of confusion and
                inconsistency to the administration and enforcement of the DBA and
                Related Acts. For example, contractors and subcontractors have been
                confused about which provision applies. See, e.g., Bob's Constr. Co.,
                Inc., WAB No. 87-25, 1989 WL 407467, at *1 (May 11, 1989) (stating that
                ``[t]he [DBA] does not provide for less than a 3-year debarment'' in
                response to contractor's argument that ``if the Board cannot reverse
                the [ALJ's DBA] debarment order, it should consider reducing the 3-year
                debarment.'').
                 Requiring a uniform 3-year debarment period would reduce confusion.
                Although the regulations currently provide for an exception to 3-year
                debarment, debarment in Related Acts cases is usually, but not always,
                for 3 years. At times, the WAB has treated a 3-year debarment period as
                presumptive and therefore has reversed ALJ decisions imposing debarment
                for fewer than 3 years. See, e.g., Brite Maint. Corp., WAB No. 87-07,
                at *1, *3 (imposing a 3-year debarment instead of the 2-year debarment
                ordered by the ALJ); Early & Sons, Inc., WAB No. 86-25, at *1-2 (same);
                Warren E. Manter Co., Inc., WAB No. 84-20, 1985 WL 167228, at *2-3
                (June 21, 1985) (same). Under current case law, ``aggravated or
                willful'' violations of the Related Acts labor standards provisions
                warrant a three-year debarment period ``absent extraordinary
                circumstances.'' A. Vento Constr., WAB No. 87-51, 1990 WL 484312, at *6
                (emphasis added). ALJs have grappled with what constitutes
                ``extraordinary circumstances,'' and when to consider the factors
                outlined in the DBRA early removal process. Id.; see also current 29
                CFR 5.12(a)(1) and (c).\120\ The Department believes that setting a
                uniform 3-year debarment period would provide clarity and promote
                consistency.
                ---------------------------------------------------------------------------
                 \120\ See 29 CFR 5.12(a)(1) (``shall be ineligible for a period
                not to exceed 3 years (from the date of publication by the
                Comptroller General of the name or names of said contractor or
                subcontractor on the ineligible list'' (emphasis added)); 29 CFR
                5.12(c) (``Any person or firm debarred under paragraph (a)(1) of
                this section may in writing request removal from the debarment list
                after six months from the date of publication by the Comptroller
                General of such person or firm's name on the ineligible list.''
                (emphasis added)).
                ---------------------------------------------------------------------------
                 Further, the Department has concluded that in instances--usually
                decades ago--when debarment for a period of less than 3 years was
                warranted, it has not improved the debarment process or compliance.
                See, e.g., Rust Constr. Co., Inc., WAB No. 87-15, 1987 WL 247054, at *2
                (Oct. 2, 1987) (1-year debarment), aff'd sub nom. Rust Constr. Co.,
                Inc. v. Martin, 779 F. Supp. 1030, 1031-32 (E.D. Mo. 1992) (affirming
                WAB's imposition of 1-year debarment instead of no debarment, noting
                ``plaintiffs could have easily been debarred for three years.'');
                Progressive Design & Build Inc., WAB No. 87-31, 1990 WL 484308, at *3
                (Feb. 21, 1990) (18-month debarment); Morris Excavating Co., Inc., WAB
                No. 86-27, 1987 WL 247046, at *1 (Feb. 4, 1987) (6-month, instead of
                no, debarment).
                 For the above reasons, the Department proposes to modify the period
                of Related Acts debarment to mirror the DBA's mandatory 3-year
                debarment when contractors are found to have disregarded their
                obligations to workers or subcontractors.
                 The Department also proposes to eliminate the provision at 29 CFR
                5.12(c) that allows for Related Acts contractors and subcontractors the
                possibility of early removal from the debarment list. Just as Related
                Acts debarment for fewer than 3 years has rarely been permitted, early
                removal from the debarment list has seldom been requested, and has been
                granted even less often. The Department's experience has shown that the
                possibility of early removal from the debarment list has not improved
                the debarment process. Likewise, the ARB and WAB do not appear to have
                addressed early removal for decades. At that time, the ARB and WAB
                affirmed denials of early removal requests. See Atlantic Elec. Servs.,
                AES, Inc., ARB No. 96-191, 1997 WL 303981, at *1-2 (May 28, 1997); Fred
                A. Nemann, WAB No. 94-08, 1994 WL 574114, at *1, 3 (June 27, 1994).
                Around the same time, early removal was affirmed on the merits in only
                one case. See IBEW Loc. No. 103, ARB No. 96-123, 1996 WL 663205, at *4-
                6 (Nov. 12, 1996). Additionally, the early-removal provision has caused
                confusion among judges and the regulated community concerning the
                proper debarment standard. For example, an ALJ erroneously relied on
                the regulation for early relief from Related Acts debarment in
                recommending that a DBA contractor not be debarred. Jen-Beck Assocs.,
                Inc., WAB No. 87-02, 1987 WL 247051, at *1-2 (July 20, 1987) (remanding
                case to ALJ for a decision ``in accordance with the proper standard for
                debarment for violations of the [DBA]''). Accordingly, the Department
                proposes to amend Sec. 5.12 by deleting paragraph (c) and renumbering
                the remaining paragraph to accommodate this revision.
                (3) Debarment of Responsible Officers
                 The Department also proposes to revise 29 CFR 5.12 to expressly
                state that responsible officers of both DBA and Related Acts
                contractors and subcontractors may be debarred if they disregard
                obligations to workers or subcontractors. The purpose of debarring
                individuals along with the entities in which they are, for example,
                owners, officers, or managers is to close a loophole where such
                individuals could otherwise continue to receive Davis-Bacon contracts
                by forming or controlling another entity that was not debarred. The
                current regulations mention debarment of responsible officers only in
                the paragraph addressing the DBA debarment standard. See 29 CFR
                5.12(a)(2). But it is well-settled that they can be debarred under both
                the DBA and Related Acts. See Facchiano Constr. Co., 987 F.2d at 213-14
                (noting that debarment of responsible officers is ``reasonable in
                furthering the remedial goals of the Davis-Bacon Act and Related Acts''
                and that there is ``no rational reason for including debarment of
                responsible officers in one regulation, but not the other''); Hugo
                Reforestation, Inc., ARB No. 99-003, 2001 WL 487727, at *12 (Apr. 30,
                2001) (CWHSSA; citing Related Acts cases); see also Coleman Constr.
                Co., ARB No. 15-002, 2016 WL 4238468, at *12. Thus, by expressly
                stating that responsible officers may be debarred under both the DBA
                and Related Acts, this proposed revision is consistent with current
                law. The Department intends that Related Acts debarment of individuals
                will continue to be interpreted in the same way as debarment of DBA
                responsible officers has been interpreted.
                (4) Debarment of Other Entities
                 The Department proposes another revision so that the Related Acts
                regulations mirror the DBA regulations not only in practice, but also
                in letter. Specifically, the Department proposes to revise 29 CFR
                5.12(a)(1) (with conforming changes in 5.12 and elsewhere in part 5) to
                state that ``any firm, corporation, partnership, or association in
                which such contractor, subcontractor, or responsible officer has
                [[Page 15758]]
                an interest'' must be debarred under the Related Acts, as well as the
                DBA. The DBA states that ``No contract shall be awarded to persons
                appearing on the list or to any firm, corporation, partnership, or
                association in which the persons have an interest . . .'' 40 U.S.C.
                3144(b)(2) (emphasis added); see also 29 CFR 5.12(a)(2). In contrast,
                the current regulations for Related Acts require debarment of ``any
                firm, corporation, partnership, or association in which such contractor
                or subcontractor has a substantial interest.'' 29 CFR 5.12(a)(1)
                (emphasis added); see also 29 CFR 5.12(b)(1), (d).
                 The 1982 final rule preamble for these provisions indicates that
                the determination of ``interest'' (DBA) and ``substantial interest''
                (Related Acts) are intended to be the same: ``In both cases, the intent
                is to prohibit debarred persons or firms from evading the ineligibility
                sanctions by using another legal entity to obtain Government
                contracts.'' 47 FR 23658, 23661, implemented by 48 FR 19540. It is
                ``not intended to prohibit bidding by a potential contractor where a
                debarred person or firm holds only a nominal interest in the potential
                contractor's firm'' and ``[d]ecisions as to whether `an interest'
                exists will be made on a case-by-case basis considering all relevant
                factors.'' 47 FR 23658, 23661. The Department now proposes to eliminate
                any confusion by requiring the DBA ``interest'' standard to be the
                standard for both DBA and Related Acts debarment.
                (5) Debarment Scope
                 The Department proposes to revise the scope of Related Acts
                debarment so that it mirrors the scope of DBA debarment set out in
                current 29 CFR 5.12(a)(1). Currently, under the Related Acts,
                contractors are not generally debarred from being awarded any contracts
                or subcontracts of the United States or the District of Columbia, but
                rather are only barred from being awarded contracts subject to Davis-
                Bacon prevailing wage standards. As proposed in revised Sec.
                5.12(a)(1), in Related Acts as well as DBA cases, any debarred
                contractor, subcontractor, or responsible officer would be barred for 3
                years from ``[being] awarded any contract or subcontract of the United
                States or the District of Columbia and any contract or subcontract
                subject to the labor standards provisions of any of the statutes
                referenced by Sec. 5.1.''
                 The Department believes that there is no reasoned basis to prohibit
                debarred contractors or subcontractors whose violations have warranted
                debarment for Related Acts violations from receiving Related Acts
                contracts or subcontracts, but to permit them to continue to be awarded
                direct DBA contracts during the Related Acts debarment period. The
                proposed changes to Sec. 5.12(a)(1) would eliminate this anomalous
                situation, and apply debarment consistently to contractors,
                subcontractors, and their responsible officers who have disregarded
                their obligations to workers or subcontractors, regardless of the
                source of Federal funding or assistance for the work.
                xxii. Employment Relationship Not Required
                 The Department proposes a few changes to reinforce the well-
                established principle that Davis-Bacon labor standards requirements
                apply even when there is no employment relationship between a
                contractor and worker.
                 The DBA states that ``the contractor or subcontractor shall pay all
                mechanics and laborers employed directly on the site of the work,
                unconditionally and at least once a week, and without subsequent
                deduction or rebate on any account, the full amounts accrued at time of
                payment, computed at wage rates not less than those stated in the
                advertised specifications, regardless of any contractual relationship
                which may be alleged to exist between the contractor or subcontractor
                and the laborers and mechanics.'' 40 U.S.C. 3142(c)(1). The Department
                has interpreted this coverage to include ``[a]ll laborers and mechanics
                employed or working upon the site of the work,'' Sec. 5.5(a)(1)(i),
                and the definitions of ``employed'' in parts 3 and 5 similarly make it
                clear that the term includes all workers on the project and extends
                beyond the traditional common-law employment relationship. See
                Sec. Sec. 3.2(e) (``Every person paid by a contractor or subcontractor
                in any manner for his labor . . . is employed and receiving wages,
                regardless of any contractual relationship alleged to exist between him
                and the real employer.'' (emphasis in original)); 5.2(o) (``Every
                person performing the duties of a laborer or mechanic [on DBRA work] is
                employed regardless of any contractual relationship alleged to exist
                between the contractor and such person.'' (emphasis in original)); cf.
                41 U.S.C. 6701(3)(B) (defining ``service employee'' under the Service
                Contract Act to ``include[ ] an individual without regard to any
                contractual relationship alleged to exist between the individual and a
                contractor or subcontractor''); 29 CFR 4.155 (providing that whether a
                person is a ``service employee'' does not depend on any alleged
                contractual relationship).
                 The ARB and its predecessors have reached similar conclusions. See
                Star Brite Constr. Co., Inc., ARB No. 98-113, 2000 WL 960260, at *5
                (June 30, 2000) (``the fact that the workers [of a subcontractor] were
                engaged in construction of the . . . project triggered their coverage
                under the prevailing wage provisions of the [DBA]; lack of a
                traditional employee/employer relationship between [the prime
                contractor] and these workers did not absolve [the prime contractor]
                from the responsibility to insure that they were compensated in
                accordance with the requirements of the [DBA].''); Labor Servs., Inc.,
                WAB No. 90-14, 1991 WL 494728, at *2 (May 24, 1991) (stating that the
                predecessor to section 3142(c) `` `applies a functional rather than a
                formalistic test to determine coverage: If someone works on a project
                covered by the Act and performs tasks contemplated by the Act, that
                person is covered by the Act, regardless of any label or lack thereof,'
                '' and requiring a contractor to pay DBA prevailing wages to workers
                labeled as ``subcontractors''). This broad scope of covered workers
                also extends to CWHSSA, the Copeland Act, and other Related Acts. See
                40 U.S.C. 3703(e) (Reorganization Plan No. 14 of 1950 and 40 U.S.C.
                3145--the authority for the 29 CFR parts 3 and 5 regulations-- apply to
                CWHSSA); 29 CFR 3.2(e); see also, e.g., Ray Wilson Co., ARB No. 02-086,
                2004 WL 384729, at *6 (finding workers met the DBA's ``functional
                [rather than formalistic] test of employment'' and affirming ALJ's
                order of prevailing wages and overtime due workers of second-tier
                subcontractor); Joseph Morton Co., WAB No. 80-15, 1984 WL 161739, at
                *2-3 (July 23, 1984) (rejecting contractor's argument that workers were
                subcontractors not subject to DBA requirements and affirming ALJ
                finding that contractor owed prevailing wage and overtime back wages on
                contract subject to DBA and CWHSSA); cf. Charles Igwe, ARB No. 07-120,
                2009 WL 4324725, at *3-5 (Nov. 25, 2009) (rejecting contractors' claim
                that workers were independent contractors not subject to SCA wage
                requirements, and affirming finding that contractors ``violated both
                the SCA and the CWHSSA by failing to pay required wages, overtime,
                fringe benefits, and holiday pay, and failing to keep proper
                records'').
                 The Department proposes a few specific changes to the regulations
                in recognition of this principle. First, the Department proposes to
                amend Sec. Sec. 1.2 and 3.2 to include a definition of ``employed''
                that is substantively
                [[Page 15759]]
                identical to the definition in Sec. 5.2. This change would clarify
                that the DBA's expansive scope of ``employment'' also applies in the
                context of wage surveys and determinations under part 1 and certified
                payrolls under part 3. Second, references to employment (e.g.,
                employee, employed, employing, etc.) in Sec. 5.5(a)(3) and (c), as
                well as elsewhere in the regulations, have been revised to refer
                instead to ``workers,'' ``laborers and mechanics,'' or ``work.''
                Notwithstanding the broad scope of employment reflected in the existing
                and proposed definitions and in case law, the Department believes that
                this language, particularly in the contract clauses themselves, will
                clarify this principle and eliminate ambiguity. Consistent with the
                above, however, to the extent that the words ``employee,''
                ``employed,'' or ``employment'' are used in this preamble or in the
                regulations, the Department intends that those words be interpreted
                expansively to not limit coverage to workers in an employment
                relationship. Finally, the Department proposes to clarify in the
                definitions of ``employed'' in parts 1, 3, and 5 that the broad
                definition applies equally to ``public building[s] or public work[s]''
                and to ``building[s] or work[s] financed in whole or in part by
                assistance from the United States through loan, grant, loan guarantee
                or insurance, or otherwise.''
                xxiii. Withholding
                 The DBA, CWHSSA, and the regulations at 29 CFR part 5 authorize
                withholding from the contractor accrued payments or advances equal to
                the amount of unpaid wages due laborers and mechanics under the DBRA.
                See 40 U.S.C. 3142(c)(3), 3144(a)(1) (DBA withholding), 3702(d),
                3703(b)(2) (CWHSSA withholding); 29 CFR 5.5(a)(2) and (b)(3) and 5.9.
                Withholding helps to realize the goal of protecting workers by ensuring
                that money is available to pay them for the work they performed but for
                which they were undercompensated. Withholding plays an important role
                in the statutory schemes to ensure payment of prevailing wages and
                overtime to laborers and mechanics on Federal and federally assisted
                construction projects. The regulations currently require, among other
                things, that upon a request from the Department, contracting agencies
                must withhold so much of the contract funds as may be considered
                necessary to pay the full amount of wages required by the contract, and
                in the case of CWHSSA, liquidated damages. See 29 CFR 5.5(a)(2) and
                (b)(3) and 5.9. The Department proposes a number of regulatory
                revisions to reinforce the current withholding provisions.
                (A) Cross-Withholding
                 Cross-withholding is currently permitted and is a procedure through
                which agencies withhold contract monies due a contractor from contracts
                other than those on which the alleged violations occurred. Prior to the
                1981-1982 rulemaking, Federal agencies generally refrained from cross-
                withholding for DBRA liabilities because neither the DBA nor the CWHSSA
                regulations specifically provided for it. In 1982, however, the
                Department amended the contract clauses to specifically provide for
                cross-withholding. See 47 FR 23658, 23659-60 \121\ (cross-withholding
                permitted as stated in Sec. 5.5(a)(2) and (b)(3)); Group Dir., Claims
                Grp./GGD, B-225091 et al., 1987 WL 101454, at *2 (Comp. Gen. Feb. 20,
                1987) (the Department's 1983 Davis-Bacon regulatory revisions, e.g.,
                Sec. 5.5(a)(2), ``now provide that the contractor must consent to
                cross-withholding by an explicit clause in the contract'').
                ---------------------------------------------------------------------------
                 \121\ The May 28, 1982 final rule was implemented in part,
                including Sec. Sec. 5.5(a)(2) and 5.5(b)(3), in 1983. 48 FR 19540,
                19540, 19545-47 (Apr. 29, 1983).
                ---------------------------------------------------------------------------
                 The Department proposes additional amendments to the cross-
                withholding contract clause language at Sec. 5.5(a)(2) and (b)(3) to
                strengthen the Department's ability to cross-withhold when contractors
                use single-purpose entities, joint ventures or partnerships, or other
                similar vehicles to bid on and enter into DBRA-covered contracts. As
                noted above with reference to the proposed definition of prime
                contractor, the interposition of another entity between the agency and
                the general contractor is not a new phenomenon. In general, however,
                the use of single-purpose limited liability company (LLC) entities and
                similar joint ventures and teaming agreements in government contracting
                has been increasing in recent decades. See, e.g., John W. Chierichella
                & Anne Bluth Perry, Fed. Publ'ns LLC, Teaming Agreements and Advanced
                Subcontracting Issues, TAASI GLASS-CLE A at *1-6 (2007); A. Paul
                Ingrao, Joint Ventures: Their Use in Federal Government Contracting, 20
                Pub. Cont. L.J. 399 (1991).
                 In response to this increase in the use of such single-purpose
                legal entities or arrangements, Federal agencies have often required
                special provisions to assure that liability among joint venturers will
                be joint and several. See, e.g., Ingrao, supra, at 402-03 (``Joint and
                several liability special provisions vary with each procuring agency
                and range from a single statement to complex provisions regarding joint
                and several liability to the government or third parties.''). While the
                corporate form may be a way for joint venturers to attempt to insulate
                themselves from liability, commentators have noted that this
                ``advantage will rarely be available in a Government contracts context,
                because the Government will customarily demand financial and
                performance guarantees from the parent companies as a condition of its
                `responsibility' determination.'' Chierichella & Perry, supra, at *15-
                16.
                 Without amendment to the existing regulations, however, the
                Government is not able to effectively demand similar guarantees to
                secure performance of Davis-Bacon prevailing wage requirements. Unless
                the cross-withholding regulations are amended, the core DBRA remedy of
                cross-withholding may be of limited effectiveness as to joint ventures
                and other similar contracting vehicles such as single-purpose LLCs.
                This enforcement gap exists because, as a general matter, cross-
                withholding (referred to as ``offset'' under the common law) is not
                available unless there is a ``mutuality of debts'' in that the creditor
                and debtor involved are exactly the same person or legal entity. See
                R.P. Newsom, 39 Comp. Gen. 438, 439 (1959). That general rule, however,
                can be waived by agreement of the parties. See Lila Hannebrink, 48
                Comp. Gen. 365, 365 (1968) (allowing cross-withholding against a joint
                venture for debt of an individual joint venturer on a prior contract,
                where all parties agreed).
                 The structure of the Davis-Bacon Act, with its implementation in
                part through the mechanism of contract clauses, provides both the
                opportunity and the responsibility of the Government to ensure--by
                contract--that the use of the corporate form does not interfere with
                Congress's mandate that workers be paid the required prevailing wage
                and that withholding ensures the payment of any back wages owed. It is
                a cardinal rule of law that ``the interposition of a corporation will
                not be allowed to defeat a legislative policy, whether that was the aim
                or only the result of the arrangement.'' Anderson v. Abbott, 321 U.S.
                349, 363 (1944). This principle is generally applied to allow, in
                appropriate circumstances, for corporate forms to be disregarded by
                ``piercing of corporate veil.'' \122\ However, where a
                [[Page 15760]]
                policy is enacted by contract, it is inefficient and unnecessary to
                rely on post hoc veil-piercing to assure that the legislative policy is
                enacted. The Government can instead, by contract, assure that the use
                of single-purpose entities, subsidiaries, or joint ventures interposed
                as nominal ``prime contractors'' does not inhibit the application of
                the Congressional mandate to assure back wages are recovered through
                withholding.\123\
                ---------------------------------------------------------------------------
                 \122\ The Department has long applied corporate veil-piercing
                principles under the DBRA. See, e.g., Thomas J. Clements, Inc., ALJ
                No. 82-DBA-27, 1984 WL 161753, at *9 (June 14, 1984) (recognizing,
                in the context of a Davis-Bacon Act enforcement action, that a court
                may ``pierce the corporation veil where failure to do so will
                produce an unjust result''), aff'd, WAB No. 84-12, 1985 WL 167223,
                at *1 (Jan. 25, 1985) (adopting ALJ's decision as the Wage Appeals
                Board's own decision); Griffin v. Sec'y of Labor, ARB Nos. 00-032,
                00-033, 2003 WL 21269140, at *8, n.2 (May 30, 2003) (various
                contractors and their common owner, who ``made all decisions
                regarding operations of all of the companies,'' were one another's
                ``alter egos'' in Act debarment action).
                 \123\ Cf. Robert W. Hamilton, The Corporate Entity, 49 Tex. L.
                Rev. 979, 984 (1971) (noting the difference in application of
                ``piercing the veil'' concepts in contract law because ``the
                creditor more or less assumed the risk of loss when he dealt with a
                `shell'; if he was concerned, he should have insisted that some
                solvent third person guarantee the performance by the
                corporation'').
                ---------------------------------------------------------------------------
                 Accordingly, the Department proposes amending the withholding
                contract clauses at Sec. 5.5(a)(2) and (b)(3) to ensure that any
                entity that directly enters into a contract covered by the DBRA must
                agree to cross-withholding against it to cover any violations of
                specified affiliates under other covered contracts entered into by
                those affiliates. The covered affiliates are those entities included
                within the proposed definition of prime contractor in Sec. 5.2:
                Controlling shareholders or members, joint venturers or partners, and
                contractors (e.g., general contractors) that have been delegated
                significant construction and/or compliance responsibilities. Thus, for
                example, if a general contractor secures two prime contracts for two
                Related Act-covered housing projects through separate single-purpose
                entities that it controls, the new cross-withholding language would
                allow the Department to seek cross-withholding on either contract even
                though the contracts are nominally with separate legal entities. Or, if
                a general contractor is delegated all of the construction and
                compliance duties on a first contract held by an unrelated developer-
                owner, but the general contractor itself holds a prime contract on a
                separate second contract, the Department could seek cross-withholding
                from the general contractor on the second contract, which it holds
                directly, to remedy violations on the first contract.
                 The Department also proposes to add language to Sec. 5.5(a)(2) and
                (b)(3) to clarify that the Government may pursue cross-withholding
                regardless of whether the contract on which withholding is sought was
                awarded by, or received Federal assistance from, the same agency that
                awarded or assisted the prime contract on which the violations
                necessitating the withholding occurred. This revision is in accordance
                with the Department's longstanding policy, the current language of the
                withholding clauses, and case law on the use of setoff procedures in
                other contexts dating to 1946. See, e.g., United States v. Maxwell, 157
                F.3d 1099, 1102 (7th Cir. 1998) (``[T]he [F]ederal [G]overnment is
                considered to be a single-entity that is entitled to set off one
                agency's debt to a party against that party's debt to another
                agency.''); Cherry Cotton Mills v. United States, 327 U.S. 536, 539
                (1946) (same). However, because the current Davis-Bacon regulatory
                language does not explicitly state that funds may be withheld from
                contracts awarded by other agencies, some agencies have questioned
                whether cross-withholding is appropriate in such circumstances. This
                proposed addition would expressly dispel any such uncertainty or
                confusion. Conforming edits have also been proposed for Sec. 5.9.
                 The Department also proposes certain non-substantive changes to
                streamline the withholding clauses. The Department proposes to include
                in the withholding clause at Sec. 5.5(a)(2)(i) similar language as in
                the CWHSSA withholding clause at Sec. 5.5(b)(3) authorizing
                withholding necessary ``to satisfy the liabilities . . . for the full
                amount of wages . . .and monetary relief'' of the contractor or
                subcontractor under the contract--instead of the specific language
                currently in Sec. 5.5(a)(2) that re-states the lists of the types of
                covered employees already listed in Sec. 5.5(a)(1)(i). The Department
                also proposes using the same term ``so much of the accrued payments or
                advances'' in both Sec. 5.5(a)(2) and (b)(3), instead of simply
                ``sums'' as currently written in Sec. 5.5(b)(3). Finally, the
                Department also proposes to adopt in Sec. 5.5(b)(3) the use of the
                term ``considered,'' as used in Sec. 5.5(a)(2), instead of
                ``determined'' as currently used in Sec. 5.5(b)(3), to refer to the
                determination of the amount of funds to withhold, as this mechanism
                applies in the same manner under both clauses.
                 Conforming edits for each of the above changes to the withholding
                clauses at Sec. 5.5(a)(2) and (b)(3) have also been proposed for the
                explanatory section at Sec. 5.9. In addition, the Department proposes
                clarifying in a new paragraph (c) of Sec. 5.9 that cross-withholding
                from a contract held by a different legal entity is not appropriate
                unless the withholding provisions in that entity's contract were
                incorporated in full or by reference. Absent exceptional circumstances,
                cross-withholding would not be permitted from a contract held by a
                different legal entity where the labor standards were incorporated only
                by operation of law into that contract.
                (B) Suspension of Funds for Recordkeeping Violations
                 The Department also proposes to add language clarifying that, as
                proposed in Sec. 5.5(a)(3)(iv), funds may be suspended when a
                contractor has refused to submit certified payroll or provide the
                required records as set forth at Sec. 5.5(a)(3).
                (C) The Department's Priority To Withheld Funds
                 The Department proposes revising Sec. Sec. 5.5(a)(2) and (b)(3)
                and 5.9 to codify the Department's longstanding position that,
                consistent with the DBRA's remedial purpose to ensure that prevailing
                wages are fully paid to covered workers, the Department has priority to
                funds withheld (including funds that have been cross-withheld) for
                violations of Davis-Bacon prevailing wage requirements and CWHSSA
                overtime requirements. See also PWRB,\124\ DBA/DBRA/CWHSSA Withholding
                and Disbursement, at 4. In order to ensure that underpaid workers
                receive the monies to which they are entitled, contract funds that are
                withheld to reimburse workers owed Davis-Bacon or CWHSSA wages, or
                both, must be reserved for that purpose and may not be used or set
                aside for other purposes until such time as the prevailing wage and
                overtime issues are resolved.
                ---------------------------------------------------------------------------
                 \124\ See note 14, supra.
                ---------------------------------------------------------------------------
                 Affording the Department first priority to withheld funds, above
                competing claims, ``effectuate[s] the plain purpose of these Federal
                labor standards laws . . . [to] insure that every laborer and mechanic
                is paid the wages and fringe benefits to which [the DBA and DBRA]
                entitle them.'' Quincy Hous. Auth. LaClair Corp., WAB No. 87-32, 1989
                WL 407468, at *3 (Feb. 17, 1989) (holding that ``the Department of
                Labor has priority rights to all funds remaining to be paid on a
                [F]ederal or federally assisted contract, to the extent necessary to
                pay laborers and mechanics employed by contractors and subcontractors
                under such contract the full amount of wages required by [F]ederal
                labor standards laws and the contract . . .''). The proposed
                withholding priority serves an
                [[Page 15761]]
                important public policy of providing restitution for work that laborers
                and mechanics have already performed, but for which they were not paid
                the full DBA or DBRA wages they were owed in the first place.
                 Specifically, the Department proposes to set forth expressly that
                it has priority to funds withheld for DBA, CWHSSA, and other Related
                Act wage underpayments over competing claims to such withheld funds by:
                 (1) A contractor's surety(ies), including without limitation
                performance bond sureties, and payment bond sureties;
                 (2) A contracting agency for its reprocurement costs;
                 (3) A trustee(s) (either a court-appointed trustee or a U.S.
                trustee, or both) in bankruptcy of a contractor, or a contractor's
                bankruptcy estate;
                 (4) A contractor's assignee(s);
                 (5) A contractor's successor(s); or
                 (6) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
                3907.
                 To the extent that a contractor did not have rights to funds
                withheld for Davis-Bacon wage underpayments, nor do their sureties,
                assignees, successors, creditors (e.g., the U.S. Internal Revenue
                Service), or bankruptcy estates have greater rights than the
                contractor. See, e.g., Liberty Mut. Ins. Co., ARB No. 00-018, 2003 WL
                21499861, at *7-9 (DOL priority to DBA withheld funds where surety
                ``ha[d] not satisfied all of the bonded [and defaulted prime]
                contractor's obligations, including the obligation to ensure the
                payment of prevailing wages''); Unity Bank & Trust Co. v. United
                States, 5 Cl. Ct. 380, 384 (1984) (assignees acquire no greater rights
                than their assignors); Richard T. D'Ambrosia, 55 Comp. Gen. 744, 746
                (1976) (IRS tax levy cannot attach to money withheld for DBA
                underpayments in which contractor has no interest).
                 Withheld funds always should, for example, be used to satisfy DBA
                and DBRA wage claims before any reprocurement costs (e.g., following a
                contractor's default or termination from all or part of the covered
                work) are collected by the Government. See WHD Opinion Letter DBRA-132
                (May 8, 1985). The Department has explained that ``[t]o hold otherwise
                . . . would be inequitable and contrary to public policy since the
                affected employees already have performed work from which the
                Government has received the benefit and that to give contracting agency
                reprocurement claims priority in such instances would essentially
                require the employees to unfairly pay for the breach of contract
                between their employer and the Government.'' Id.; see also PWRB, DBA/
                DBRA/CWHSSA Withholding and Disbursement, at 4.\125\ This rationale
                applies with equal force in support of the Department's priority to
                withheld funds over the other types of competing claims listed in this
                proposed regulation.
                ---------------------------------------------------------------------------
                 \125\ See note 14, supra.
                ---------------------------------------------------------------------------
                 The Department's rights to withheld funds for unpaid earnings also
                are superior to performance and payment bond sureties of a DBA or DBRA
                contractor. See Westchester Fire Ins. Co. v. United States, 52 Fed. Cl.
                567, 581-82 (2002) (surety did not acquire rights that contractor
                itself did not have); Liberty Mut. Ins. Co., ARB No. 00-018, 2003 WL
                21499861 at *7-9 (ARB found that Administrator's claim to withheld
                contract funds for DBA wages took priority over performance (and
                payment) bond surety's claim); see also Quincy Hous. Auth. LaClair
                Corp., WAB No. 87-32, 1989 WL 407468, at *3. The Department can
                withhold unaccrued funds such as advances until ``sufficient funds are
                withheld to compensate employees for the wages to which they are
                entitled'' under the DBA. Liberty Mut. Ins. Co., ARB No. 00-018, 2003
                WL 21499861, at *6; see also 29 CFR 5.9.
                 Similarly, the Department has priority over assignees (e.g.,
                assignees under the Assignment Claims Act, see 31 U.S.C. 3727, 41
                U.S.C. 6305) to DBRA withheld funds. For example, in Unity Bank & Trust
                Co., 5 Cl. Ct. at 383, the employees' claim to withheld funds for a
                subcontractor's DBA wage underpayments had priority over a claim to
                those funds by the assignee--a bank that had lent money to the
                subcontractor to finance the work.
                 Nor are funds withheld pursuant to the DBRA for prevailing wage
                underpayments property of a contractor's (debtor's) bankruptcy estate.
                See In re Quinta Contractors, Inc., 34 B.R. 129 (Bankr. M.D. Pa. 1983);
                cf. Pearlman v. Reliance Ins. Co., 371 U.S. 132, 135-36 (1962)
                (concluding, in a case under the Miller Act, that ``the Bankruptcy Act
                simply does not authorize a trustee to distribute other people's
                property among a bankrupt's creditors''). When a contractor has
                violated its contract with the government--as well as the DBA or DBRA--
                by failing to pay required wages and fringe benefits, it has not earned
                its contractual payment. Therefore, withheld funds are not property of
                the contractor-debtor's bankruptcy estate. Cf. Professional Tech.
                Servs., Inc. v. IRS, No. 87-780C(2), 1987 WL 47833, at *2 (E.D. Mo.
                Oct. 15, 1987) (when DOL finds [an SCA] violation and issues a
                withholding letter, that act ``extinguishe[s]'' whatever property right
                the debtor (contractor) might otherwise have had to the withheld funds,
                subject to administrative review if the contractor chooses to pursue
                it); In re Frank Mossa Trucking, Inc., 65 B.R. 715, 7-18 (Bankr. D.
                Mass. 1985) (pre-petition and post-petition SCA withholding was not
                property of the contractor-debtor's bankruptcy estate).
                 Various Comptroller General decisions further underscore these
                principles. See, e.g., Carlson Plumbing & Heating, B-216549, 1984 WL
                47039 (Comp. Gen. Dec. 5, 1984) (DBA and CWHSSA withholding has first
                priority over IRS tax levy, payment bond surety, and trustee in
                bankruptcy); Watervliet Arsenal, B-214905, 1984 WL 44226, at *2 (Comp.
                Gen. May 15, 1984) (DBA and CWHSSA wage claims for the benefit of
                unpaid workers had first priority to retained contract funds, over IRS
                tax claim and claim of payment bond surety), aff'd sub nom on
                reconsideration Int'l Fidelity Ins. Co., B-214905, 1984 WL 46318 (Comp.
                Gen. July 10, 1984); Forest Serv. Request for Advance Decision, B-
                211539, 1983 WL 27408, at *1 (Comp. Gen. Sept. 26, 1983) (DOL's
                withholding claim for unpaid DBA wages prevailed over claims of payment
                bond surety and trustee in bankruptcy).
                 The Department proposes codifying its position that DBRA
                withholding has priority over claims under the Prompt Payment Act, 31
                U.S.C. 3901-3907. The basis for this proposed provision is that a
                contractor's right to prompt payment does not have priority over
                legitimate claims--such as withholding--arising from the contractor's
                failure to fully satisfy its obligations under the contract. See, e.g.,
                31 U.S.C. 3905(a) (concerning requirement that payments to prime
                contractors be for performance by such contractor that conforms to the
                specifications, terms, and conditions of its contract).
                 The Department welcomes comments on whether the listed priorities
                should be effectuated by different language in the contract clause,
                such as an agreement between the parties that a contractor forfeits any
                legal or equitable interest in withheld payments once it commits
                violations, subject to procedural requirements that allow the
                contractor to contest the violations.
                xxiv. Subpart C--Severability
                 The Department proposes to add a new subpart C, titled
                ``Severability'', which would contain a new Sec. 5.40, also titled
                ``Severability.'' The proposed severability provision explains that
                each provision is capable of operating independently from one another,
                and
                [[Page 15762]]
                that if any provision of part 5 is held to be invalid or unenforceable
                by its terms, or as applied to any person or circumstance, or stayed
                pending further agency action, the Department intends that the
                remaining provisions remain in effect.
                4. Non-Substantive Changes
                xxv. Plain Language
                 The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal
                agencies to write documents in a clear, concise, well-organized manner.
                The Department has written this document to be consistent with the
                Plain Writing Act as well as the Presidential Memorandum, ``Plain
                Language in Government Writing,'' published June 10, 1998 (63 FR
                31885). The Department requests comment on the proposed rule with
                respect to clarity and effectiveness of the language used.
                xxvi. Other Changes
                 The Department proposes to make non-substantive revisions
                throughout the regulations to address typographical and grammatical
                errors and to remove or update outdated or incorrect regulatory and
                statutory cross-references. The Department also proposes to adopt more
                inclusive language, including terminology that is gender-neutral, in
                the proposed regulations. These changes are consistent with general
                practice for Federal government publications; for example, guidance
                from the Office of the Federal Register advises agencies to avoid using
                gender-specific job titles (e.g., ``foremen'').\126\ These non-
                substantive revisions do not alter the substantive requirements of the
                regulations.
                ---------------------------------------------------------------------------
                 \126\ See Office of the Federal Register, Drafting Legal
                Documents: Principles of Clear Writing Sec. 18, available at
                https://www.archives.gov/Federal-register/write/legal-docs/clear-writing.html.
                ---------------------------------------------------------------------------
                IV. Paperwork Reduction Act
                 The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq.,
                and its attendant regulations, 5 CFR part 1320, require the Department
                to consider the agency's need for its information collections, their
                practical utility, as well as the impact of paperwork and other
                information collection burdens imposed on the public, and how to
                minimize those burdens. The PRA typically requires an agency to provide
                notice and seek public comments on any proposed collection of
                information contained in a proposed rule. See 44 U.S.C. 3506(c)(2)(B);
                5 CFR 1320.8.
                 This rulemaking would affect existing information collection
                requirements previously approved under OMB control number 1235-0008
                (Davis-Bacon Certified Payroll) and OMB control number 1235-0023
                (Requests to Approve Conformed Wage Classifications and Unconventional
                Fringe Benefit Plans Under the Davis-Bacon and Related Acts/Contract
                Work Hours and Safety Standards Act). As required by the PRA, the
                Department has submitted information collection revisions to OMB for
                review to reflect changes that will result from the proposed rule.
                 Summary: This rulemaking proposes to amend regulations issued under
                the Davis-Bacon and Related Acts that set forth rules for the
                administration and enforcement of the Davis-Bacon labor standards that
                apply to Federal and federally assisted construction projects. The
                Department proposes to add two new recordkeeping requirements
                (telephone number and email address) to the collection under 1235-0008;
                however, it does not propose that such data be added to the certified
                weekly payroll submission. The Department proposes to add paragraph
                (a)(3)(iii) to 29 CFR 5.5, which will require all contractors,
                subcontractors, and recipients of Federal assistance to maintain and
                preserve Davis-Bacon contracts, subcontracts, and related documents for
                3 years after all the work on the prime contract is completed. These
                related documents include contractor and subcontractor bids and
                proposals, amendments, modifications, and extensions to contracts,
                subcontracts, and agreements. The Department notes that it is a normal
                business practice to keep such documents and does not expect an
                increase in burden associated with this requirement. The Department
                requests public comment on its assumption that contractors and
                subcontractors already maintain these records as a matter of good
                business practice. Further, the Department adds proposed regulatory
                citations to the collection under 1235-0023, however there is no change
                in burden.
                 Purpose and use: This proposed rule continues the already existing
                requirements that contractors and subcontractors must certify their
                payrolls by attesting that persons performing work on DBRA covered
                contracts have received the proper payment of wages and fringe
                benefits. Contracting officials and WHD personnel use the records and
                certified payrolls to verify contractors pay the required rates for
                work performed.
                 Additionally, the Department reviews a proposed conformance action
                report to determine the appropriateness of a conformance action. Upon
                completion of review, the Department approves, modifies, or disapproves
                a conformance request and issues a determination. The Department also
                reviews requests for approval of unfunded fringe benefit plans to
                determine the propriety of the plans.
                 WHD obtains PRA clearance under control number 1235-0008 for an
                information collection covering the Davis-Bacon Certified Payroll and
                certain proposed new recordkeeping requirements. An Information
                Collection Request has been submitted to revise the approval to
                incorporate the regulatory citations in this proposed rule applicable
                to the proposed rule and adjust burden estimates to reflect a slight
                increase in burden associated with the proposed new recordkeeping
                requirements.
                 WHD obtains PRA clearance under OMB control number 1235-0023 for an
                information collection related to reporting requirements related to
                Conformance Reports and Unfunded Fringe Benefit Plans. This Information
                Collection Request is being submitted as the proposed rule proposes to
                revise the location within the regulatory text of certain requirements.
                An Information Collection Request has been submitted to OMB to revise
                the approval to incorporate the regulatory citations in this proposed
                rule.
                 Information and technology: There is no particular order or form of
                records prescribed by the proposed regulations. A respondent may meet
                the requirements of this proposed rule using paper or electronic means.
                 Public comments: The Department seeks comments on its analysis that
                this NPRM creates a slight increase in paperwork burden associated with
                ICR 1235-0008 and no increase in burden to ICR 1235-0023. Commenters
                may send their views on the Department's PRA analysis in the same way
                they send comments in response to the NPRM as a whole (e.g., through
                the www.regulations.gov website), including as part of a comment
                responding to the broader NPRM. While much of the information provided
                to OMB in support of the information collection request appears in the
                preamble, interested parties may obtain a copy of the full copy of the
                supporting statements by sending a written request to the mail address
                shown in the ADDRESSES section at the beginning of this preamble or by
                calling the number listed in the ADDRESSES section of this preamble.
                Alternatively, a copy of the ICR with applicable supporting
                documentation; including a description of the likely respondents,
                proposed frequency of response, and estimated
                [[Page 15763]]
                total burden may be obtained free of charge from the RegInfo.gov
                website on the day following publication of this notice or by visiting
                http://www.reginfo.gov/public/do/PRAMain website. In addition to having
                an opportunity to file comments with the Department, comments about the
                paperwork implications of the proposed regulations may be addressed to
                the OMB. Comments to the OMB should be directed to: Office of
                Information and Regulatory Affairs, Office of Management and Budget,
                Attention: Desk Officer for WHD, New Executive Office Building, Room
                10235, Washington, DC 20503. The OMB will consider all written comments
                that the agency receives during the comment period of this proposed
                rule. As previously indicated, written comments directed to the
                Department may be submitted during the comment period of this proposed
                rule.
                 The OMB and the Department are particularly interested in comments
                that:
                 Evaluate whether the proposed collections of information
                are necessary for the proper performance of the functions of the
                agency, including whether the information will have practical utility;
                 Evaluate the accuracy of the agency's estimate of the
                burden of the proposed collection of information, including the
                validity of the methodology and assumptions used;
                 Enhance the quality, utility, and clarity of the
                information to be collected; and
                 Minimize the burden of the collection of information on
                those who are to respond, including through the use of appropriate
                automated, electronic, mechanical, or other technological collection
                techniques or other forms of information technology, e.g., permitting
                electronic submission of responses.
                 Total burden for the subject information collections, including the
                burdens that will be unaffected by this proposed rule and any changes
                are summarized as follows:
                 Type of review: Revisions to currently approved information
                collections.
                 Agency: Wage and Hour Division, Department of Labor.
                 Title: Davis-Bacon Certified Payroll.
                 OMB Control Number: 1235-0008.
                 Affected public: Private sector, businesses or other for-profits
                and Individuals or Households.
                 Estimated number of respondents: 154,500 (0 from this rulemaking).
                 Estimated number of responses: 9,194,616 (1,200,000 from this
                rulemaking).
                 Frequency of response: On occasion.
                 Estimated annual burden hours: 7,464,975 (3,333 burden hours due to
                this NPRM).
                 Capital/Start-up costs: $0 ($0 from this rulemaking).
                 Title: Requests to Approve Conformed Wage Classifications and
                Unconventional Fringe Benefit Plans Under the Davis-Bacon and Related
                Acts and Contract Work Hours and Safety Standards Act.
                 OMB Control Number: 1235-0023.
                 Affected public: Private sector, businesses or other for-profits
                and Individuals or Households.
                 Estimated number of respondents: 8,518 (0 from this rulemaking).
                 Estimated number of responses: 8,518 (0 from this rulemaking).
                 Frequency of response: on occasion.
                 Estimated annual burden hours: 2,143 (0 from this rulemaking).
                 Estimated annual burden costs: 0.
                V. Executive Order 12866, Regulatory Planning and Review; Executive
                Order 13563, Improved Regulation and Regulatory Review
                 Under Executive Order 12866, OMB's Office of Information and
                Regulatory Affairs (OIRA) determines whether a regulatory action is
                significant and, therefore, subject to the requirements of the
                Executive Order and OMB review.\127\ Section 3(f) of Executive Order
                12866 defines a ``significant regulatory action'' as a regulatory
                action that is likely to result in a rule that may: (1) Have an annual
                effect on the economy of $100 million or more, or adversely affect in a
                material way a sector of the economy, productivity, competition, jobs,
                the environment, public health or safety, or State, local, or tribal
                governments or communities (also referred to as economically
                significant); (2) create serious inconsistency or otherwise interfere
                with an action taken or planned by another agency; (3) materially alter
                the budgetary impact of entitlements, grants, user fees or loan
                programs or the rights and obligations of recipients thereof; or (4)
                raise novel legal or policy issues arising out of legal mandates, the
                President's priorities, or the principles set forth in the Executive
                Order. OIRA has determined that this proposed rule is a ``significant
                regulatory action'' under section 3(f) of Executive Order 12866 and is
                economically significant. Although the Department has only quantified
                costs of $12.6 million in Year 1, there are multiple components of the
                rule that could not be quantified due to data limitations, so it is
                possible that the aggregate effect of the rule is larger.
                ---------------------------------------------------------------------------
                 \127\ See 58 FR 51735, 51741 (Oct. 4, 1993).
                ---------------------------------------------------------------------------
                 Executive Order 13563 directs agencies to, among other things,
                propose or adopt a regulation only upon a reasoned determination that
                its benefits justify its costs; that it is tailored to impose the least
                burden on society, consistent with obtaining the regulatory objectives;
                and that, in choosing among alternative regulatory approaches, the
                agency has selected those approaches that maximize net benefits.
                Executive Order 13563 recognizes that some costs and benefits are
                difficult to quantify and provides that, when appropriate and permitted
                by law, agencies may consider and discuss qualitatively values that are
                difficult or impossible to quantify, including equity, human dignity,
                fairness, and distributive impacts. The analysis below outlines the
                impacts that the Department anticipates may result from this proposed
                rule and was prepared pursuant to the above-mentioned executive orders.
                A. Introduction
                1. Background and Need for Rulemaking
                 In order to provide greater clarity and enhance their usefulness in
                the modern economy, the Department proposes to update and modernize the
                regulations that implement the Davis-Bacon and Related Acts. The Davis-
                Bacon Act (DBA), enacted in 1931, requires the payment of locally
                prevailing wages and fringe benefits on Federal contracts for
                construction. See 40 U.S.C. 3142. The law applies to workers on
                contracts awarded directly by Federal agencies and the District of
                Columbia that are in excess of $2,000 and for the construction,
                alteration, or repair of public buildings or public works. Congress
                subsequently incorporated DBA prevailing wage requirements into
                numerous statutes (referred to as Related Acts) under which Federal
                agencies assist construction projects through grants, loans,
                guarantees, insurance, and other methods.
                 The Department seeks to address a number of outstanding challenges
                in the program while also providing greater clarity in the DBA and
                Related Acts (collectively, the DBRA) regulations and enhancing their
                usefulness in the modern economy. In this rulemaking, the Department
                proposes to update and modernize the regulations implementing the DBRA
                at 29 CFR parts 1, 3, and 5. Among other proposals as discussed more
                fully earlier in this preamble, the Department proposes:
                 To return to the definition of ``prevailing wage'' in
                Sec. 1.2 that it used
                [[Page 15764]]
                from 1935 to 1983.\128\ Currently, a single wage rate may be identified
                as prevailing in the area only if it is paid to a majority of workers
                in a classification on the wage survey; otherwise a weighted average is
                used. The Department proposes to return instead to the ``three-step''
                method in effect before 1983. Under that method (also known as the 30-
                percent rule), in the absence of a wage rate paid to a majority of
                workers in a particular classification, a wage rate will be considered
                prevailing if was paid to at least 30 percent of such workers. Only if
                no single wage rate is paid to at least 30 percent of workers in a
                classification will an average rate be used.
                ---------------------------------------------------------------------------
                 \128\ The 1981-1982 rulemaking went into effect April 29, 1983.
                48 FR 19532.
                ---------------------------------------------------------------------------
                 To revise Sec. 1.6(c)(1) to provide a mechanism to
                regularly update certain non-collectively bargained prevailing wage
                rates based on the Bureau of Labor Statistics Employment Cost Index.
                The mechanism is intended to keep such rates more current between
                surveys so that they do not become out-of-date and fall behind
                prevailing wage rates in the area.
                 To expressly give the Administrator authority and
                discretion to adopt State or local wage determinations as the Davis-
                Bacon prevailing wage where certain specified criteria are satisfied.
                 To return to a prior policy made during the 1981-1982
                rulemaking related to the delineation of wage survey data submitted for
                ``metropolitan'' or ``rural'' counties in Sec. 1.7(b). Through this
                change, the Department seeks to more accurately reflect modern labor
                force realities, to allow more wage rates to be determined at smaller
                levels of geographical aggregation, and to increase the sufficiency of
                data at the statewide level.
                 To include provisions to reduce the need for the use of
                ``conformances'' where the Department has received insufficient data to
                publish a prevailing wage for a classification of worker--a process
                that currently is burdensome for contracting agencies, contractors, and
                the Department.
                 To strengthen enforcement, including by making effective
                by operation of law contract clauses or wage determinations that were
                wrongly omitted from contracts, and by codifying the principle of
                annualization used to calculate the amount of Davis-Bacon credit that a
                contractor may receive for contributions to a fringe benefit plan when
                the contractor's workers also work on private projects.
                 To clarify and strengthen the scope of coverage under the
                DBRA, including by revising the definition of ``site of the work'' to
                further encompass certain construction of significant portions of a
                building or work at secondary worksites, to better clarify when
                demolition and similar activities are covered by the Davis-Bacon labor
                standards, and to clarify that the regulatory definitions of ``building
                or work'' and ``public building or public work'' can be met even when
                the construction activity involves only a portion of an overall
                building, structure, or improvement.
                2. Summary of Affected Contractors, Workers, Costs, Transfers, and
                Benefits
                 The Department evaluates the impacts of two components of this
                proposed rule in this regulatory impact analysis:
                 The return to the ``three-step'' method for determining
                the prevailing wage and
                 The provision of a mechanism to regularly update certain
                non-collectively bargained prevailing wage rates based on the Bureau of
                Labor Statistics Employment Cost Index.
                 This proposed rule predominantly affects firms that hold federally
                funded or assisted construction contracts because of its impact on
                prevailing wage and fringe benefit rate determinations. The Department
                identified a range of potentially affected firms. The more narrowly
                defined population (those actively holding DBRA-covered contracts)
                includes 113,900 firms. The broader population (including those bidding
                on contracts but without active contracts, or those considering bidding
                in the future) includes 154,800 firms. Only a subset of potentially
                affected firms will be substantively affected and fewer may experience
                a change in payroll costs because some firms already pay above the
                prevailing wage rates that may result from this proposal. The
                Department estimated there are 1.2 million workers on DBRA covered
                contracts and therefore potentially affected by this proposed rule.
                Some of these workers will not be affected because they work in
                occupations not covered by DBRA or, if they are covered by DBRA,
                workers may not be affected by the prevailing wage updates of this
                proposed rule because they may already earn above the updated
                prevailing wage and fringe benefit rates.
                 The Department estimated both regulatory familiarization costs and
                implementation costs for affected firms. Year 1 costs are estimated to
                total $12.6 million. Average annualized costs across the first 10 years
                are estimated to be $3.9 million (using a 7 percent discount rate). The
                transfer analysis discussed in Section IV.D. draws on two illustrative
                analyses conducted by the Department. However, the Department does not
                definitively quantify annual transfer payments due to data limitations
                and uncertainty. Similarly, benefits are discussed qualitatively due to
                data limitations and uncertainty. See Table 1 for a summary of affected
                contractor firms, workers, and costs.
                 Table 1--Summary of Affected Contractor Firms, Workers, and Costs
                 [2020 dollars]
                ----------------------------------------------------------------------------------------------------------------
                 Future years Average annualized value
                 Year 1 ---------------------------------------------------------------
                 Year 2 Year 10 3% real rate 7% real rate
                ----------------------------------------------------------------------------------------------------------------
                Firms: Narrow Definition \a\.... 154,500 154,500 154,500 .............. ..............
                Firms: Broad Definition \b\..... 192,400 192,400 192,400 .............. ..............
                Potentially Affected Workers 1.2 1.2 1.2 .............. ..............
                 (millions).....................
                Direct employer costs (million). $12.6 $2.5 $2.5 $3.7 $3.9
                 Regulatory familiarization.. $10.1 $0.0 $0.0 1.2 1.4
                 Implementation.............. $2.5 $2.5 $2.5 2.5 2.5
                ----------------------------------------------------------------------------------------------------------------
                \a\ Firms actively holding DBRA-covered contracts.
                \b\ Firms who may be bidding on DBA contracts or considering bidding in the future.
                [[Page 15765]]
                B. Number of Potentially Affected Contractor Firms and Workers
                1. Number of Potentially Affected Contractor Firms
                 The Department identified a range of potentially affected firms.
                This includes both firms impacted by the DBA and firms impacted by the
                Related Acts. The more narrowly defined population (firms actively
                holding DBRA-covered contracts) includes 154,500 firms: 61,200 Impacted
                by DBA and 93,300 impacted by the Related Acts (Table 2). The broader
                population (including those bidding on DBA contracts but without active
                contracts, or those considering bidding in the future) includes 192,400
                firms: 99,100 Impacted by DBA and 93,300 impacted by the Related Acts.
                Additionally, only a subset of these firms will experience a change in
                payroll costs. Those firms that already pay above the new wage
                determination rates calculated under the 30-percent rule will not be
                substantively affected. Because there is no readily usable source of
                data on the earnings of workers of these affected firms, the Department
                cannot definitively identify the number of firms that will experience
                changes in payroll costs due to changes in prevailing wage rates.
                i. Firms Currently Holding DBA Contracts
                 USASpending.gov--the official source for spending data for the U.S.
                Government--contains Government award data from the Federal Procurement
                Data System Next Generation (FPDS-NG), which is the system of record
                for Federal procurement data. The Department used these data to
                identify the number of firms that currently hold DBA contracts.
                Although more recent data are available, the Department used data from
                2019 to avoid any shifts in the data associated with the COVID-19
                pandemic in 2020. Any long-run impacts of COVID-19 are speculative
                because this is an unprecedented situation, so using data from 2019 may
                be the best approximation the Department has for future impacts. The
                pandemic could cause structural changes to the economy, resulting in
                shifts in industry employment and wages. The Department welcomes
                comments and data on how the COVID-19 pandemic has impacted firms and
                workers on DBRA contracts, as well as the impact on construction and
                other affected industries as a whole.
                 The Department identified firms working on DBRA contracts as
                contracts with an assigned NAICS code of 23 or if the ``Construction
                Wage Rate Requirements'' element is ``Y,'' meaning that the contracting
                agency flagged that the contract is covered by DBRA.\129\ \130\ The
                Department also excluded (1) contracts for financial assistance such as
                direct payments, loans, and insurance; and (2) contracts performed
                outside the U.S. because DBA coverage is limited to the 50 states, the
                District of Columbia, and the U.S. territories.\131\
                ---------------------------------------------------------------------------
                 \129\ The North American Industry Classification System (NAICS)
                is a method by which Federal statistical agencies classify business
                establishments in order to collect, analyze, and publish data about
                certain industries. Each industry is categorized by a sequence of
                codes ranging from 2 digits (most aggregated level) to 6 digits
                (most granular level). https://www.census.gov/naics/.
                 \130\ The Department acknowledges that there may be affected
                firms that fall under other NAICS codes and for which the
                contracting agency did not flag in the FPDS-NG system that the
                contract is covered by DBRA. Including these additional NAICS codes
                could result in an overestimate because they would only be affected
                by this proposed rule if Davis-Bacon covered construction occurs.
                The data does not allow the Department to determine this.
                 \131\ The DBA only applies in the 50 states and the District of
                Columbia and does not apply in the territories. However, some
                Related Acts provided Federal funding of construction in the
                territories that, by virtue of the Related Act, is subject to DBA
                prevailing wage requirements. For example, the DBA does not apply in
                Guam, but a Related Act provides that base realignment construction
                in Guam is subject to DBA requirements.
                ---------------------------------------------------------------------------
                 In 2019, there were 14,000 unique prime contractors with active
                construction contracts in USASpending. However, subcontractors are also
                impacted by this proposed rule. The Department examined 5 years of
                USASpending data (2015 through 2019) and identified 47,200 unique
                subcontractors who did not hold contracts as primes in 2019. The
                Department used 5 years of data for the count of subcontractors to
                compensate for lower-tier subcontractors that may not be included in
                USASpending.gov. In total, the Department estimates 61,200 firms
                currently hold DBA contracts and are potentially affected by this
                rulemaking under the narrow definition; however, to the extent that any
                of these firms already pay above the prevailing wage rates as
                determined under this proposed rule they will not actually be impacted
                by the rule.
                ii. All Potentially Affected Contractors (DBA Only)
                 The Department also cast a wider net to identify other potentially
                affected contractors, both those directly affected (i.e., holding
                contracts) and those that plan to bid on DBA-covered contracts in the
                future. To determine the number of these firms, the Department
                identified construction firms registered in the General Services
                Administration's (GSA) System for Award Management (SAM) since all
                entities bidding on Federal procurement contracts or grants must
                register in SAM. The Department believes that firms registered in SAM
                represent those that may be affected if the proposed rulemaking impacts
                their decision to bid on contracts or their competitiveness in the
                bidding process. However, it is possible that some firms that are not
                already registered in SAM could decide to bid on DBA-covered contracts
                after this proposed rulemaking; these firms are not included in the
                Department's estimate. The proposed rule could also impact them if they
                are awarded a future contract.
                 Using May 2021 SAM data, the Department identified 51,900
                registered firms with construction listed as the primary NAICS
                code.\132\ The Department excluded firms with expired registrations,
                firms only applying for grants,\133\ government entities (such as city
                or county governments),\134\ foreign organizations, and companies that
                only sell products and do not provide services. SAM includes all prime
                contractors and some subcontractors (those who are also prime
                contractors or who have otherwise registered in SAM). However, the
                Department is unable to determine the number of subcontractors that are
                not in the SAM database. Therefore, the Department added the
                subcontractors identified in USASpending to this estimate. Adding these
                47,200 firms identified in USASpending to the number of firms in SAM,
                results in 99,100 potentially affected firms.
                ---------------------------------------------------------------------------
                 \132\ Data released in monthly files. Available at: https://www.sam.gov/SAM/pages/public/extracts/samPublicAccessData.jsf.
                 \133\ Entities registering in SAM are asked if they wish to bid
                on contracts. If the firm answers ``yes,'' then they are included as
                ``All Awards'' in the ``Purpose of Registration'' column in the SAM
                data. The Department included only firms with a value of ``Z2,''
                which denotes ``All Awards.''
                 \134\ The Department believes that there may be certain limited
                circumstances in which State and local governments may be
                contractors, but believes that this number would be minimal and
                including government entities would result in an inappropriate
                overestimation.
                ---------------------------------------------------------------------------
                iii. Firms Impacted by the Related Acts
                 USASpending does not adequately capture all work performed under
                the Related Acts. Additionally, there is not a central database, such
                as SAM, where contractors working on Related Acts contracts must
                register. Therefore, the Department used a different methodology to
                estimate the number of firms impacted by the Related Acts. The
                Department estimated 883,900 workers work on Related Acts contracts
                (see section V.B.2.iii.), then divided that number by the average
                number of workers per firm (9.5) in the
                [[Page 15766]]
                construction industry.\135\ This results in 93,300 firms. Some of these
                firms likely also perform work on DBA contracts. However, because the
                Department has no information on the size of this overlap, the
                Department has assumed all are unique firms. The Department welcomes
                comments and data on the number of firms working on Related Acts
                contracts.
                ---------------------------------------------------------------------------
                 \135\ 2018 Statistics of U.S. Businesses (SUSB). U.S., NAICS
                sectors, larger employment sizes up to 20,000+. https://www.census.gov/data/tables/2018/econ/susb/2018-susb-annual.html.
                 Table 2--Range of Number of Potentially Affected Firms
                ------------------------------------------------------------------------
                 Source Number
                ------------------------------------------------------------------------
                 Total Count (Davis-Bacon and Related Acts)
                ------------------------------------------------------------------------
                Narrow definition \a\................................... 154,500
                Broad definition \b\.................................... 192,400
                ------------------------------------------------------------------------
                 DBA (Narrow Definition)
                ------------------------------------------------------------------------
                Total................................................... 61,200
                 Prime contractors from USASpending.................. 14,000
                 Subcontractors from USASpending..................... 47,200
                ------------------------------------------------------------------------
                 DBA (Broad Definition)
                ------------------------------------------------------------------------
                Total................................................... 99,100
                 SAM................................................. 51,900
                 Subcontractors from USASpending..................... 47,200
                ------------------------------------------------------------------------
                 Related Acts
                ------------------------------------------------------------------------
                Total................................................... 93,300
                 Related Acts workers................................ 883,900
                 Employees per firm (SUSB)........................... 9.5
                ------------------------------------------------------------------------
                \a\ Firms actively holding DBRA-covered contracts.
                \b\ Firms who may be bidding on DBA contracts or considering bidding in
                 the future.
                2. Number of Potentially Affected Workers
                 There are no readily available government data on the number of
                workers working on DBA contracts; therefore, to estimate the number of
                these workers, the Department employed the approach used in the 2021
                final rule, ``Increasing the Minimum Wage for Federal Contractors,''
                which implements Executive Order 14026.\136\ That methodology is based
                on the 2016 rulemaking implementing Executive Order 13706's paid sick
                leave requirements, which contained an updated version of the
                methodology used in the 2014 rulemaking for Executive Order 13658.\137\
                Using this methodology, the Department estimated the number of workers
                who work on DBRA contracts, representing the number of ``potentially
                affected workers,'' is 1.2 million potentially affected workers. Some
                of these workers will not be affected because while they work on DBRA-
                covered contracts they are not in occupations covered by the DBRA
                prevailing wage determinations (e.g., laborers or mechanics).
                ---------------------------------------------------------------------------
                 \136\ See 86 FR 38816, 38816-38898.
                 \137\ See 81 FR 9591, 9591-9671 and 79 FR 60634-60733.
                ---------------------------------------------------------------------------
                 The Department estimated the number of potentially affected workers
                in three parts. First, the Department estimated employees and self-
                employed workers working on DBA contracts in the 50 States and the
                District of Columbia. Second, the Department estimated the number of
                workers and self-employed DBRA workers in the U.S. territories. Third,
                the Department estimated the number of potentially affected workers
                working on contracts covered by Davis-Bacon Related Acts.
                i. Workers on DBA Contracts in the 50 States and the District of
                Columbia
                 DBA contract employees were estimated by calculating the ratio of
                Federal contracting expenditures to total output in NAICS 23:
                Construction. Total output is the market value of the goods and
                services produced by an industry. This ratio is then applied to total
                private employment in that industry (Table 3).
                [GRAPHIC] [TIFF OMITTED] TP18MR22.036
                 The Department used Federal contracting expenditures from
                USASpending.gov data excluding (1) financial assistance such as direct
                payments, loans, and insurance; and (2) contracts performed outside the
                U.S.
                 To determine the share of all output associated with Federal
                Government contracts, the Department divided contracting expenditures
                by gross output in NAICS 23.\138\ This results in an estimated 3.27
                percent of output in
                [[Page 15767]]
                the construction industry covered by Federal Government contracts
                (Table 3). The Department then multiplied the ratio of covered-to-gross
                output by private sector employment in the construction industry (9.1
                million) to estimate the share of employees working on covered
                contracts. The Department's private sector employment number is
                primarily comprised of construction industry employment from the May
                2019 Occupational Employment and Wage Statistics (OEWS), formerly the
                Occupational Employment Statistics.\139\ However, the OEWS excludes
                unincorporated self-employed workers, so the Department supplemented
                OEWS data with data from the 2019 Current Population Survey Merged
                Outgoing Rotation Group (CPS MORG) to include unincorporated self-
                employed in the estimate of workers.
                ---------------------------------------------------------------------------
                 \138\ Bureau of Economic Analysis. (2020). Table 8. Gross Output
                by Industry Group. https://www.bea.gov/news/2020/gross-domestic-product-industry-fourth-quarter-and-year-2019. ``Gross output of an
                industry is the market value of the goods and services produced by
                an industry, including commodity taxes. The components of gross
                output include sales or receipts and other operating income,
                commodity taxes, plus inventory change. Gross output differs from
                value added, which measures the contribution of the industry's labor
                and capital to its gross output.''
                 \139\ Bureau of Labor Statistics. OEWS. May 2019. Available at:
                http://www.bls.gov/oes/.
                ---------------------------------------------------------------------------
                 According to this methodology, the Department estimated there are
                297,900 workers on DBA covered contracts in the 50 States and the
                District of Columbia. However, these laws only apply to wages for
                mechanics and laborers, so some of these workers would not be affected
                by these changes to DBA.
                 This methodology represents the number of year-round-equivalent
                potentially affected workers who work exclusively on DBA contracts.
                Thus, when the Department refers to potentially affected employees in
                this analysis, the Department is referring to this conceptual number of
                people working exclusively on covered contracts. The total number of
                potentially affected mechanics and laborers will likely exceed this
                number because affected workers likely do not work exclusively on DBA
                contracts.
                ii. Workers on DBRA Contracts in the U.S. Territories
                 The methodology to estimate potentially affected workers in the
                U.S. territories is similar to the methodology above for the 50 States
                and the District of Columbia. The primary difference is that data on
                gross output in the territories are not available, and so the
                Department had to make some additional assumptions. The Department
                approximated gross output in the territories by calculating the ratio
                of gross output to Gross Domestic Product (GDP) for the U.S. (1.8),
                then multiplying that ratio by GDP in each territory to estimate total
                gross output.\140\ To limit gross output to the construction industry,
                the Department multiplied it by the share of the territory's payroll in
                NAICS 23. For example, the Department estimated that Puerto Rico's
                gross output in the construction industry totaled $3.6 billion.\141\
                ---------------------------------------------------------------------------
                 \140\ GDP limited to personal consumption expenditures and gross
                private domestic investment.
                 \141\ In Puerto Rico, personal consumption expenditures plus
                gross private domestic investment equaled $71.2 billion. Therefore,
                Puerto Rico gross output was calculated as $71.2 billion x 1.8 x 2.7
                percent.
                ---------------------------------------------------------------------------
                 The rest of the methodology follows the methodology for the 50
                States and the District of Columbia. To determine the share of all
                output associated with Government contracts, the Department divided
                contract expenditures by gross output. Federal contracting expenditures
                from USASpending.gov data show that the Government spent $993.3 million
                on construction contracts in 2019 in American Samoa, the Commonwealth
                of the Northern Mariana Islands Guam, Puerto Rico, and the U.S. Virgin
                Islands. The Department then multiplied the ratio of covered contract
                spending to gross output by private sector employment to estimate the
                number of workers working on covered contracts (6,100).\142\
                ---------------------------------------------------------------------------
                 \142\ For the U.S. territories, the unincorporated self-employed
                are excluded because CPS data are not available on the number of
                unincorporated self-employed workers in U.S. territories.
                ---------------------------------------------------------------------------
                iii. Workers on Related Acts Contracts
                 This proposed rulemaking will also impact workers on DBRA-covered
                contracts in the 50 States and the District of Columbia. Data are not
                available on the number of workers covered by the Related Acts.
                Additionally, neither USASpending nor any other database fully captures
                this population.\143\ Therefore, the Department used a different
                approach to estimate the number of potentially affected workers for
                DBRA contracts.
                ---------------------------------------------------------------------------
                 \143\ USASpending includes information on grants, assistance,
                and loans provided by the Federal government. However, this does not
                include all covered projects, it does not capture the full value of
                the project because it is just the Federal share (i.e., excludes
                spending by State and local governments or private institutions that
                are also subject to DBRA labor standards because of the Federal
                share on the project), and it cannot easily be restricted to
                construction projects because there is no NAICS or product service
                code (PSC) variable.
                ---------------------------------------------------------------------------
                 The Department identified that the total State and local government
                construction spending as reported by the Census Bureau was $318 billion
                in 2019.\144\ The Department then applied adjustment factors to adjust
                for the share of State and local expenditures that are covered by the
                Related Acts. Data on the share of State and local expenditures covered
                by the Related Acts are not available, therefore the Department used
                rough approximations. The Department requests comments and data on the
                appropriate adjustment factors. The Department assumed half of the
                total State and local government construction expenditures are subject
                to a DBRA, resulting in estimated expenditures of $158 billion. To
                this, the Department added $3 billion to represent U.S. Department of
                Housing and Urban Development (HUD) backed mortgage insurance for
                private construction projects.\145\
                ---------------------------------------------------------------------------
                 \144\ Census Bureau. Annual Value of Public Construction Put in
                Place 2009-2020. Available at: https://www.census.gov/construction/c30/historical_data.html.
                 \145\ Estimate based on personal communications with the Office
                of Labor Standards Enforcement and Economic Opportunity at HUD.
                ---------------------------------------------------------------------------
                 As was done for DBA, the Department divided contracting
                expenditures by gross output, and multiplied that ratio by the estimate
                of private sector employment used above to estimate the share of
                workers working on Related Acts-covered contracts (883,900).
                 Table 3--Number of Potentially Affected Workers
                ----------------------------------------------------------------------------------------------------------------
                 Contracting Share output Private-sector Workers DBRA
                 Private output output from covered workers contracts
                 (billions) \a\ (millions) \b\ contracting (1,000s) \c\ (1,000s) \d\
                ----------------------------------------------------------------------------------------------------------------
                DBA, excl. territories.......... $1,662 $54,400 3.27% 9,100 297.9
                DBRA, territories............... 5 993 (\e\) 35 6.1
                Related Acts.................... 1,667 161,297 9.68% 9,135 883.9
                 -------------------------------------------------------------------------------
                [[Page 15768]]
                
                 Total....................... .............. 216,700 .............. .............. 1,188.0
                ----------------------------------------------------------------------------------------------------------------
                \a\ Bureau of Economic Analysis, NIPA Tables, Gross output. 2019. For territories, gross output estimated by
                 multiplying (1) total GDP for the territory by the ratio of total gross output to total GDP for the U.S. and
                 (2) the share of national gross output in the construction industry.
                \b\ For DBA, and DBRA in the territories, data from USASpending.gov for contracting expenditures for covered
                 contracts in 2019. For Related Acts, data from Census Bureau on value of State and local government
                 construction put in place, adjusted for coverage ratios. The Census data includes some data for territories
                 but may be underestimated.
                \c\ OEWS May 2019. For non-territories, also includes unincorporated self-employed workers from the 2019 CPS
                 MORG.
                \d\ Assumes share of expenditures on contracting is same as share of employment. Assumes workers work
                 exclusively, year-round on DBRA covered contracts.
                \e\ Varies by U.S. Territory.
                3. Demographics of the Construction Industry
                 In order to provide information on the types of workers that may be
                affected by this rule, the Department presents demographic
                characteristics of production workers in the construction industry. For
                purposes of this demographic analysis only, the Department is defining
                the construction industry as workers in the following occupations:
                 Construction and extraction occupations
                 Installation, maintenance, and repair occupations
                 Production occupations
                 Transportation and material moving occupations
                 The Department notes that the demographic characteristics of
                workers on DBRA projects may differ from the general construction
                industry; however, data on the demographics of workers on DBRA projects
                is unavailable. Demographics of the general workforce are also
                presented for comparison. The Department welcomes comments and data on
                how the demographics of workers on DBRA projects would differ from the
                demographics of workers in the construction industry as a whole.
                Tabulated numbers are based on 2019 CPS data for consistency with the
                rest of the analysis and to avoid potential impacts of COVID-19.
                Additional information on the demographics of workers in the
                construction industry can be found in The Construction Chart Book: The
                U.S. Construction Industry and Its Workers.\146\
                ---------------------------------------------------------------------------
                 \146\ Dong, Xiuwen, Xuanwen Wang, Rebecca Katz, Gavin West, and
                Bruce Lippy. The Construction Chart Book: The U.S. Construction
                Industry and Its Workers, 6th ed. Silver Spring: CPWR-The Center for
                Construction Research and Training, 2018, 18. https://www.cpwr.com/wp-content/uploads/publications/The_6th_Edition_Construction_eChart_Book.pdf.
                ---------------------------------------------------------------------------
                 The vast majority of workers in the construction industry are men,
                97 percent (Table 4), which is significantly higher than the general
                workforce where 53 percent are men. Workers in construction are also
                significantly more likely to be Hispanic than the general workforce; 38
                percent of construction workers are Hispanic, compared with 18 percent
                of the workforce. Lastly, while many construction workers may have
                completed registered apprenticeship programs 84 percent of workers in
                the construction industry have a high school diploma or less, compared
                with 54 percent of the general workforce.
                 Table 4--Demographics of Workers in the Construction Industry
                ------------------------------------------------------------------------
                 Production workers Total workforce
                 in construction (%)
                ------------------------------------------------------------------------
                 By Region
                ------------------------------------------------------------------------
                Northeast....................... 16.4 17.9
                Midwest......................... 16.4 21.9
                South........................... 41.7 36.9
                West............................ 25.5 23.3
                ------------------------------------------------------------------------
                 By Sex
                ------------------------------------------------------------------------
                Male............................ 97.1 53.4
                Female.......................... 2.9 46.6
                ------------------------------------------------------------------------
                 By Race
                ------------------------------------------------------------------------
                White only...................... 87.1 77.2
                Black only...................... 7.5 12.4
                All others...................... 5.4 10.4
                ------------------------------------------------------------------------
                 By Ethnicity
                ------------------------------------------------------------------------
                Hispanic........................ 38.0 18.1
                Not Hispanic.................... 62.0 81.9
                ------------------------------------------------------------------------
                [[Page 15769]]
                
                 By Race and Ethnicity
                ------------------------------------------------------------------------
                White only, Not Hispanic........ 52.2 61.1
                Black only, Not Hispanic........ 6.2 11.6
                ------------------------------------------------------------------------
                 By Age
                ------------------------------------------------------------------------
                16-25........................... 15.2 16.7
                26-55........................... 71.6 64.2
                56+............................. 13.3 19.1
                ------------------------------------------------------------------------
                 By Education
                ------------------------------------------------------------------------
                No degree....................... 23.0 8.9
                High school diploma............. 60.6 45.3
                Associate's degree.............. 9.3 10.7
                Bachelor's degree or advanced... 7.2 35.1
                ------------------------------------------------------------------------
                Note: CPS data for 2019.
                 The Department has also presented some demographic data on
                Registered Apprentices, as they are the pipeline for future
                construction workers. These demographics come from Federal Workload
                data, which covers the 25 states administered by the U.S. Department of
                Labor's Office of Apprenticeship and national registered apprenticeship
                programs.\147\ Note that this data includes apprenticeships for other
                industries beyond construction, but 68 percent of the active
                apprentices are in the construction industry, so the Department
                believes this data could be representative of that industry. Of the
                active apprentices in this data set, 9.1 percent are female and 90.9
                percent are male. The data show that 58.4 percent of active apprentices
                are White, 10.5 percent are Black or African American, 2.4 percent are
                American Indian or Alaska Native, 1.5 percent are Asian, and 0.8
                percent are Native Hawaiian or Other Pacific Islander. The data also
                show that 23.6 percent of active apprentices are Hispanic.
                ---------------------------------------------------------------------------
                 \147\ FY2019 Data and Statistics, U.S. Department of Labor,
                Office of Apprenticeship. https://www.dol.gov/agencies/eta/apprenticeship/about/statistics/2019.
                ---------------------------------------------------------------------------
                C. Costs of the Proposed Rule
                 This section quantifies direct employer costs associated with the
                proposed rule. The Department considered employer costs associated with
                both (a) the return to the ``three-step'' method for determining the
                prevailing wage (i.e., the change from a 50 percent threshold to a 30
                percent threshold) and (b) the incorporation of a mechanism to
                periodically update certain non-collectively bargained prevailing wage
                rates. Costs presented are combined for both provisions. However, the
                Department believes most of the costs will be associated with the
                second provision, as will be discussed below. The Department estimated
                both regulatory familiarization costs and implementation costs. Year 1
                costs are estimated to total $12.6 million. Average annualized costs
                across the first 10 years of implementation are estimated to be $3.9
                million (using a 7 percent discount rate). Transfers resulting from
                these provisions are discussed in section V.D.
                1. Regulatory Familiarization Costs
                 The proposed rule will impose direct costs on some covered
                contractors who will review the regulations to understand how the
                prevailing wage determination methodology will change and how certain
                non-collectively bargained rates will be periodically updated. However,
                the Department believes these time costs will be small. Firms are
                simply required to pay no less than the prevailing wage and fringe
                benefit rates set forth in the wage determinations applicable to their
                covered contracts; they do not need to familiarize themselves with the
                methodology used to develop those prevailing wage rates in order to
                comply with them. Costs associated with ensuring compliance are
                included as implementation costs.
                 For this analysis, the Department has included all firms who either
                hold DBA or Related Acts contracts or who are considering bidding on
                work (192,400 firms). However, this may be an overestimate, because
                firms who are registered in SAM might not bid on a DBA contract, and
                therefore may not review these regulations. The Department assumes
                that, on average, 1 hour of a human resources staff member's time will
                be spent reviewing the rulemaking. Some firms will spend more time
                reviewing the rule, but others will spend less or no time reviewing the
                rule. The cost of this time is the median loaded wage for a
                Compensation, Benefits, and Job Analysis Specialist of $52.65 per
                hour.\148\ Therefore, the Department has estimated regulatory
                familiarization costs to be $10.1 million ($52.65 per hour x 1.0 hour x
                192,400 contractors) (Table 5). The Department has included all
                regulatory familiarization costs in Year 1. New entrants will not incur
                any additional regulatory familiarization costs attributable to this
                rule; had this rule not been proposed, they still would have incurred
                the costs of regulatory familiarization with existing provisions.
                Average annualized regulatory familiarization costs over 10 years,
                using a 7 percent discount rate, are $1.4 million.
                ---------------------------------------------------------------------------
                 \148\ This includes the median base wage of $32.30 from the 2020
                OEWS plus benefits paid at a rate of 46 percent of the base wage, as
                estimated from the BLS's Employer Costs for Employee Compensation
                (ECEC) data, and overhead costs of 17 percent. OEWS data available
                at: http://www.bls.gov/oes/current/oes131141.htm.
                ---------------------------------------------------------------------------
                2. Implementation Costs
                 Firms will incur costs associated with implementing updated
                prevailing wage rates. When preparing a bid on a DBRA-covered contract,
                the contractor must review the wage determination identified by the
                contracting agency as appropriate for the work and determine the wage
                rates applicable for each occupation or classification to perform work
                on the contract. Once that contract
                [[Page 15770]]
                is signed, the specified prevailing wages generally remain in effect
                through the life of that contract.\149\
                ---------------------------------------------------------------------------
                 \149\ With the exception of certain significant changes; see
                section III.B.1.vi.(B).
                ---------------------------------------------------------------------------
                 The proposed periodic adjustment rule will generally affect the
                frequency with which prevailing wage rates are updated through both the
                provision to update old, outmoded rates, and moving forward, the
                provision to periodically update rates when that does not occur through
                the survey process (see section V.D.). Implementation costs may be
                incurred by affected firms through the need to update compensation
                rates in their relevant payroll systems. Currently, only a fraction of
                prevailing wages can be expected to change each year. Because the
                Department intends to update older rates to more accurately represent
                wages and benefits being paid in the construction industry, and, moving
                forward, more published wage rates will change more frequently than in
                the past, firms will spend more time updating prevailing wage rates for
                contractual purposes than they have in the past.
                 To estimate the additional cost attributable to the need to update
                out-of-date rates, it is necessary to estimate the number of firms that
                need to update rates each year and the additional time these firms will
                spend implementing the new wage and fringe benefit rates due to this
                provision. The Department estimates that on average new wage rates are
                published from 7.8 surveys per year.\150\ These surveys may cover an
                entire State or a subset of counties, and multiple construction types
                or a single type of construction. For simplicity, the Department
                assumed that each survey impacts all contractors in the State, all
                construction types, and all classes of laborers and mechanics covered
                by DBRA. Under these assumptions, the Department assumed that each year
                15.6 percent of firms with DBRA contracts, roughly 24,100 firms (0.156
                x 154,500 firms), might already be affected by changes in prevailing
                wage rates in any given year and thus will not incur additional
                implementation costs attributable to the rule.\151\
                ---------------------------------------------------------------------------
                 \150\ The Department used the number of surveys started between
                2002 (first year with data readily available) and 2019 (last year
                prior to COVID-19) to estimate that 7.8 surveys are started
                annually. This is a proxy for the number of surveys published on
                average in a year.
                 \151\ The Department divided 7.8 surveys per year by 50 states.
                The District of Columbia and the territories were excluded from the
                denominator because these tend to be surveyed less often (with the
                exception of Guam which is surveyed regularly due to Related Act
                funding).
                ---------------------------------------------------------------------------
                 Additionally, there may be some firms that already update
                prevailing wage rates periodically to reflect CBA increases. These
                firms generally will not incur any additional implementation costs
                because of this rule. The Department lacks specific data on how many
                firms fall into this category, but used information on the share of
                rates that are collectively bargained under the current method to help
                refine the estimate of firms with implementation costs. According to
                section V.D., 24 percent of rates are CBA rates under the current
                method, meaning 37,080 firms (0.24 x 154,500) might already be affected
                by changes in prevailing wages in any given year. Combining this number
                with the 24,100 firms calculated above, 61,180 firms in total would not
                incur additional implementation costs with this rule. The Department
                welcomes comments and data on what is the appropriate share of firms
                who already update wage rates due to CBA increases.
                 Therefore, 93,320 firms (154,500 firms - 61,180 firms) are assumed
                to not update prevailing wage information in any given year because
                prevailing wage rates were unchanged in their areas of operation, and
                would therefore incur implementation costs. Under the proposed
                provisions, the Department intends to first update certain outdated
                non-collectively bargained rates \152\ (currently designated as ``SU''
                rates) up to their current value to better track wages and benefits
                being paid in the construction industry over a staggered period. Then,
                in the future, the Department intends to update non-collectively
                bargained rates afterward as needed, and not more frequently than every
                3 years. Therefore, all firms that intend to bid on future contracts
                may need to update relevant prevailing wage rates and thus incur
                implementation costs. The Department therefore assumes that these
                93,230 firms may be expected to incur additional costs updating rates
                each year. The Department acknowledges that this estimate of firms may
                be an overestimate, because this proposed rule states that rates will
                be updated no more frequently than every 3 years. In each year, only a
                fraction of firms will have to update their prevailing wage rates, but
                the Department has included all firms in the estimate so as to not
                underestimate costs.
                ---------------------------------------------------------------------------
                 \152\ The ``SU'' designation currently is used on general wage
                determinations when the prevailing wage is set through the weighted
                average method based on non-collectively bargained rates or a mix of
                collectively bargained rates and non-collectively bargained rates,
                or when a non-collectively bargained rate prevails.
                ---------------------------------------------------------------------------
                 The Department estimated it will take a half hour on average for
                firms to adjust their wage rates each year for purposes of bidding on
                DBRA contracts. The Department believes that this average estimated
                time is appropriate because some firms will spend no time on
                implementation costs. Only a subset of firms will experience a change
                in payroll costs, because those firms that already pay above the new
                wage determination rates calculated under the 30-percent rule will not
                need to incur any implementation costs.
                 Implementation time will be incurred by human resource workers (or
                a similarly compensated employee) who will implement the changes. As
                with previous costs, these workers earn a loaded hourly wage of $52.65.
                Therefore, total Year 1 implementation costs were estimated to equal
                $2.5 million ($52.65 x 0.5 hour x 93,320 firms). The average annualized
                implementation cost over 10 years, using a 7 percent discount rate, is
                $2.5 million. The Department welcomes comments on exactly how long it
                will take firms to adjust their wage rates each year.
                 Table 5--Summary of Costs
                 [2020 dollars]
                ----------------------------------------------------------------------------------------------------------------
                 Regulatory
                 Variable Total familiarization Implementation
                 costs costs
                ----------------------------------------------------------------------------------------------------------------
                 Year 1 Costs
                ----------------------------------------------------------------------------------------------------------------
                Potentially affected firms.......................... .................. 192,400 93,320
                Hours per firm...................................... .................. 1 0.5
                Loaded wage rate \a\................................ .................. $52.65 $52.65
                [[Page 15771]]
                
                Cost ($1,000s)...................................... $12,600 $10,100 $2,500
                ----------------------------------------------------------------------------------------------------------------
                 Years 2-10 ($1,000s)
                ----------------------------------------------------------------------------------------------------------------
                Annual cost......................................... $2,500 $0 $2,500
                ----------------------------------------------------------------------------------------------------------------
                 Average Annualized Costs ($1,000s)
                ----------------------------------------------------------------------------------------------------------------
                3% discount rate.................................... $3,700 $1,200 $2,500
                7% discount rate.................................... $3,900 $1,400 $2,500
                ----------------------------------------------------------------------------------------------------------------
                \a\ 2020 OEWS median wage for Compensation, Benefits, and Job Analysis Specialists (SOC 13-1141) of $32.30
                 multiplied by 1.63: The ratio of loaded wage to unloaded wage from the 2020 ECEC (46 percent) plus 17 percent
                 for overhead.
                3. Other Provisions Not Analyzed
                 For certain provisions contained in this proposal, the Department
                expects that any impacts of the provision would be negligible, as
                discussed below. The Department welcomes comments with data to help
                analyze these provisions.
                 The Department proposes that prevailing wage rates set by State and
                local governments may be adopted as Davis-Bacon prevailing wage rates
                under specified conditions. Specifically, the Department proposes that
                the Administrator may adopt such a rate if the Administrator determines
                that: (1) The State or local government sets wage rates, and collects
                relevant data, using a survey or other process that is open to full
                participation by all interested parties; (2) the wage rate reflects
                both a basic hourly rate of pay as well as any prevailing fringe
                benefits, each of which can be calculated separately; (3) the State or
                local government classifies laborers and mechanics in a manner that is
                recognized within the field of construction; and (4) the State or local
                government's criteria for setting prevailing wage rates are
                substantially similar to those the Administrator uses in making wage
                determinations. These conditions are intended to provide WHD with the
                flexibility to adopt State and local rates where appropriate while also
                ensuring that adoption of such rates is consistent with the statutory
                requirements of the Davis-Bacon Act. These conditions are also intended
                to ensure that arbitrary distinctions are not created between
                jurisdictions where WHD makes wage determinations using its own surveys
                and jurisdictions where WHD adopts State or local prevailing wage
                rates.
                 The Department does not possess sufficient data to conduct an
                analysis comparing prevailing wage rates set by State and local
                governments nationwide to those established by the Administrator.
                However, by definition, any adopted State or local prevailing wage must
                be set using criteria that are substantially similar to those used by
                the Administrator, so the resulting wage rates are likely to be similar
                to those which would have been established by the Administrator. The
                proposed change would also allow WHD to have more current rates in
                places where wage surveys are out-of-date, and to avoid WHD duplicating
                wage survey work that states and localities are already doing. The
                Department believes that this proposal could result in cost savings,
                which are discussed further in section V.E.
                 The Department also proposes to eliminate the across-the-board
                restriction on mixing rural and metropolitan county data to allow for a
                more flexible case-by-case approach to using such data. Under this
                proposal, if sufficient data were not available to determine a
                prevailing wage in a county, the Department would be permitted to use
                data from surrounding counties whether those counties may be designated
                overall as rural or metropolitan. While sufficient data for analyzing
                the impact of this proposal are not available, the Department believes
                this proposal will improve the quality and accuracy of wage
                determinations by including data from counties that likely share and
                reflect the same labor market conditions when appropriate.
                 The proposal to expressly authorize WHD to list classifications and
                corresponding wage and fringe benefit rates on wage determinations even
                when WHD has received insufficient data through its wage survey process
                is expected to ease the burden on contracting entities, both public and
                private, by improving the timeliness of information about conformed
                wage rates. For classifications for which conformance requests are
                regularly submitted, the Administrator would be authorized to list the
                classification on the wage determination along with wage and fringe
                benefit rates that bear a ``reasonable relationship'' to the wage and
                fringe benefit rates contained in the wage determination, in the same
                manner that such classifications and rates are currently conformed by
                WHD pursuant to current Sec. 5.5(a)(1)(ii)(A)(3). In other words, for
                a classification for which conformance requests are regularly
                submitted, WHD would be expressly authorized to essentially ``pre-
                approve'' certain conformed classifications and wage rates, thereby
                providing contracting agencies, contractors and workers with advance
                notice of the minimum wage and fringe benefits required to be paid for
                work within those classifications, reducing uncertainty and costly
                delays in determining wage rates for the classifications.
                 For example, suppose the Department was not able to publish a
                prevailing wage rate for carpenters on a building wage determination
                for a county due to insufficient data. Currently, every contractor in
                that county working on a Davis-Bacon building project that needed a
                carpenter would have to submit a conformance request for each of their
                building projects in that county. Moreover, because conformances cannot
                be submitted until after contract award, those same contractors would
                have a certain degree of uncertainty in their bidding procedure, as
                they would not know the exact rate that they would have to pay to their
                carpenters. This proposal would eliminate that requirement for
                classifications where conformance requests are common. While the
                Department does not have information on how much administrative time
                and money is spent on these tasks, for the commonly-requested
                classifications, this proposal
                [[Page 15772]]
                could make things more streamlined and efficient for the contractors.
                 There are a few places in the NPRM where the Department is
                proposing to add language that clarifies existing policies. For
                example, the Department proposes to add language to the definitions of
                ``building or work'' and ``public building or public work'' to clarify
                that these definitions can be met even when the construction activity
                involves only a portion of an overall building, structure, or
                improvement. Also, the Department proposes to add language regarding
                the ``material suppliers'' exemption. Although this language is just a
                clarification of existing guidelines and not a change in policy, the
                Department understands that contracting agencies may have differed in
                their implementation of Davis-Bacon labor standards. In these cases,
                there may be firms who are newly applying Davis-Bacon labor standards
                because of the clarifications in this rule. This could result in
                additional rule familiarization and implementation costs for these
                firms, and transfers to workers in the form of higher in wages if the
                contractors are currently paying below the prevailing wage.
                 The Department does not have data to estimate to what extent
                contracting agencies have not been implementing Davis-Bacon labor
                standards but welcomes comments and data to help inform an estimate of
                the impact of these provisions. Specifically, the Department welcomes
                comments from commercial building owners who lease space to the Federal
                Government on how this provision would affect costs and the wages paid
                to workers.
                 Other proposed provisions are also likely to have no significant
                economic impact, such as the proposed clarification of the ``material
                supplier'' exception in Sec. 5.2, and the proposal regarding the
                applicable apprenticeship ratios and wage rates when work is performed
                by apprentices in a different State than the State in which the
                apprenticeship program was originally registered.
                D. Transfer Payments
                1. The Return to the ``Three-Step'' Method for Determining the
                Prevailing Wage
                i. Overview
                 The proposed revision to the definition of prevailing wage (i.e.,
                the return to the ``three-step process'') may lead to income transfers
                to or from workers. Under the ``three-step process'' when a wage rate
                is not paid to a majority of workers in a particular classification, a
                wage rate will be considered prevailing if it is paid to at least 30
                percent of such workers. Thus, under this proposal fewer future wage
                determinations will be established based on a weighted average.
                Consequently, some future wage determinations may be different than
                they otherwise would as a result of this proposed provision. The
                Department is not able to quantify the impact of this proposed change
                because it will apply to surveys yet to be conducted, covering
                classifications and projects in locations not yet determined.
                Nonetheless in an effort to illustrate the potential impact, the
                Department conducted a retrospective analysis that considers the impact
                of the 30-percent rule had it been used to set the wage determinations
                for a few occupations in recent years.
                 Specifically, to demonstrate the impact of this provision, the
                Department compiled data for seven select classifications from 19
                surveys across 17 states from 2015 to 2018 (see Appendix A).\153\ This
                sample of rates covers all four construction types, and includes metro
                and rural counties, and a variety of geographic regions. The seven
                select key classifications considered are as follows:
                ---------------------------------------------------------------------------
                 \153\ Data were obtained from the Automated Survey Data System
                (ASDS), the data system used by the Department to compile and
                process WD-10 submissions. Out of the 21 surveys that occurred
                during this time period and met sufficiency standards, these 19
                surveys are all of the ones with usable data for this analysis.
                ---------------------------------------------------------------------------
                 Building and residential construction: Bricklayers, common
                laborers, plumbers, and roofers.
                 Heavy and highway construction: Common laborers, cement
                masons, and electricians.
                 In total, the sample is comprised of 3,097 county-classification
                observations. Because this sample only covers seven out of the many
                occupations covered by DBRA and all classification-county observations
                are weighted equally in the analysis, the Department believes the
                results need to be interpreted with care and cannot be extrapolated to
                definitively quantify the overall impact of the 30-percent rule.
                Instead, these results should be viewed as an informative illustration
                of the potential direction and magnitude of transfers that will be
                attributed to this proposed provision.
                 The Department began its retrospective analysis by applying the
                current prevailing wage setting protocols (see Appendix B) to this
                sample of wage data to calculate the current prevailing wage and fringe
                benefit rates.\154\ The Department then applied the proposed 30-percent
                rule to the same sample of wage data.\155\ Then the Department compared
                the wage rates determined by the proposed protocol with current wage
                determinations. Results are reported at the county level (i.e., one
                observation represents one classification in one county).
                ---------------------------------------------------------------------------
                 \154\ The Department chose to calculate prevailing wages under
                the current and proposed definitions to ensure comparability between
                the methods. The Department compared calculated current rates to the
                published wage determinations to verify the accuracy of its method.
                The calculated current rates generally match the wage and the fringe
                benefit rates within a few cents. However, there are a few instances
                that do not match, but the Department does not believe these
                differences bias the comparisons to the calculated proposed 30
                percent prevailing definition.
                 \155\ This model, while useful for this illustrative analysis,
                may not be relevant for future surveys. The methodology assumes that
                the level of participation by firms in WHD's wage survey process
                would be the same if the standard were 30 percent and is mostly
                reflective of states with lower union densities.
                ---------------------------------------------------------------------------
                 The results differ depending on how heavily unionized the
                construction industry is in the states analyzed (and thus how many
                union rates are submitted in response to surveys). In Connecticut, for
                example, the Department found that estimated rates were little changed
                because the construction industry in Connecticut is highly unionized
                and union rates prevail under both the 30 percent and the 50 percent
                threshold. Conversely, in Florida, which is less unionized, there is
                more variation in how wage rates would change. For Florida, calculated
                prevailing wage rates generally changed from an average rate (e.g.,
                insufficient identical rates to determine a single prevailing rate
                under the current protocol) to a non-collectively bargained single
                prevailing rate. Depending on the classification and county, the
                prevailing hourly wage rate may have increased or decreased because of
                the change in methodology.
                 Results may also differ by construction type. In particular,
                changes to highway prevailing wages may differ from changes in other
                construction types because they frequently rely on certified payroll.
                Thus, many of the wages used to calculate the prevailing wage reflect
                prevailing wages at the time of the survey.
                ii. Results
                 Table 6 compares the share of counties with calculated wage
                determinations by ``publication rule'' (i.e., the rule under which the
                wage rate was or would be published): (1) An average rate, (2) a
                collectively bargained
                [[Page 15773]]
                single prevailing rate, and (3) a non-collectively bargained single
                prevailing rate. Fringe benefit rate results also include the number of
                counties where the majority of workers received zero fringe benefits.
                It also shows the change in the number of rates in each publication
                rule category.
                 For the surveys analyzed, the majority of current county wage rates
                were based on averages (1,954 / 3,097 = 63 percent), about 25 percent
                were a single prevailing collectively bargained rate, and 12 percent
                were a single prevailing non-collectively bargained rate. Using the 30
                percent requirement for a single prevailing rate, the number of county
                wage rates that would be based on averages decreased to 31 percent (948
                / 3,097). The percentage of rates that would be based on a single wage
                rate increased for both non-collectively bargained and collectively
                bargained rates, although more wage rates would be based on non-
                collectively bargained rates than collectively bargained rates.
                 For fringe benefit rates, fringe benefits do not prevail for a
                similar percent in both scenarios, (i.e., ``no fringes''): 50 percent
                of current rates, 48 percent of proposed ``three-step process'' rates.
                The share determined as average rates decreased from 22 percent to 10
                percent. The prevalence of single prevailing fringe benefit rates
                increased for both non-collectively bargained and collectively
                bargained rates, with slightly more becoming collectively bargained
                rates than non-collectively bargained rates.
                 The total number of counties will differ by classification based on
                the State, applicable survey area (e.g., statewide, metro only), and
                whether the data submitted for the classification met sufficiency
                requirements.
                 Table 6--Prevalence of Calculated Prevailing Wages by Publication Rule
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Laborers Plumbers Roofers Bricklayers Cement masons Elec-tricians Total
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Count................................... 949 504 545 379 360 360 3,097
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Current Hourly Rate
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. 82% 57% 55% 42% 68% 53% 63%
                Single Prevailing--Union................ 12% 40% 23% 39% 4% 44% 25%
                Single Prevailing--Non-Union............ 6% 3% 22% 19% 28% 4% 12%
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Proposed ``Three-Step Process'' Hourly Rate \a\
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. 47% 22% 26% 18% 40% 11% 31%
                Single Prevailing--Union................ 21% 46% 25% 45% 7% 80% 34%
                Single Prevailing--Non-Union............ 32% 31% 49% 37% 53% 9% 36%
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Change for Hourly Rate (Percentage Points)
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. -35 -35 -29 -23 -28 -42 -32
                Single Prevailing--Union................ 9 7 2 5 3 36 9
                Single Prevailing--Non-Union............ 26 28 27 18 25 5 23
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Current Fringe Benefit Rate
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. 23% 27% 12% 13% 9% 48% 22%
                Single Prevailing--Union................ 14% 41% 23% 39% 4% 44% 25%
                Single Prevailing--Non-Union............ 4% 5% 3% 2% 2% 0% 3%
                No fringes.............................. 59% 27% 62% 46% 85% 8% 50%
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Proposed ``Three-Step Process'' Fringe Benefit Rate \a\
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. 13% 13% 9% 6% 5% 13% 10%
                Single Prevailing--Union................ 21% 47% 25% 46% 7% 80% 34%
                Single Prevailing--Non-Union............ 9% 13% 4% 2% 3% 7% 7%
                No fringes.............................. 57% 27% 62% 46% 85% 0% 48%
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Change for Fringe Benefit Rate (Percentage Points)
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Average................................. -11 -14 -3 -7 -4 -35 -11
                Single Prevailing--Union................ 7 6 2 7 3 36 9
                Single Prevailing--Non-Union............ 6 8 1 0 1 7 4
                No fringes.............................. -2 0 0 0 0 -8 -2
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                \a\ Using a threshold of 30 percent of employees' wage or fringe benefit rates being identical.
                 Table 7 summarizes the difference in calculated prevailing wage
                rates using the proposed three-step process compared to the current
                process. The results highlighted in Table 7 show both average changes
                across all observations and average changes when limited to those
                classification-county observations where rates are different (about 32
                percent of all observations in the sample). Notably, all
                classification-counties are weighted equally in the calculations. On
                average:
                 Across all observations, the average hourly rate increases
                by only one cent. Across affected classification-counties, the
                calculated hourly rate increases by 4 cents on average. However, there
                is significant variation. The calculated hourly rate may increase by as
                much as $7.80 or decrease by as much as $5.78.
                 Across all observations, the average hourly fringe benefit
                rate increases by 19 cents. Across affected classification-counties,
                the calculated hourly fringe benefit rate increases by $1.42 on average
                (with a range from -$6.17 to $11.16).
                 Based on this demonstration of the impact of changing from the
                current to the proposed definition of ``prevailing,'' some published
                wage rates and fringe benefit rates may increase and others may
                decrease. In the sample considered, wage rates changed very little on
                average but fringe benefit rates increased on average. As discussed
                above, the Department believes that these results need to be
                interpreted with
                [[Page 15774]]
                care and cannot be extrapolated to definitively quantify the overall
                impact of the 30-percent rule. Instead, these results should be viewed
                as an informative illustration of the potential direction and magnitude
                of transfers that will be attributed to this proposed provision.
                 Table 7--Change in Rates Attributable to Change in Definition of ``Prevailing''
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Laborers Plumbers Roofers Bricklayers Cement masons Electricians Total
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Hourly Rate
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Total................................... 949 504 545 379 360 360 3,097
                Number changed.......................... 330 175 160 89 101 150 1,005
                Percent changed......................... 35% 35% 29% 23% 28% 42% 32%
                Average (non-zero)...................... $0.37 $1.10 -$1.06 $0.44 -$1.35 $0.94 $0.04
                Average (all)........................... $0.13 $0.38 -$0.31 $0.10 -$0.38 $0.39 $0.01
                Maximum................................. $7.80 $7.07 $4.40 $1.02 $2.54 $4.14 $7.80
                Minimum................................. -$3.93 -$4.23 -$2.51 -$0.95 -$5.78 -$4.74 -$5.78
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Fringe Benefit Rate
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Total................................... 949 504 545 379 360 360 3,097
                Number changed.......................... 137 69 17 26 14 184 447
                Percent changed......................... 14% 14% 3% 7% 4% 51% 14%
                Average (non-zero)...................... $2.10 $2.14 -$1.67 $1.21 $0.74 $2.11 $1.42
                Average (all)........................... $0.30 $0.29 -$0.05 $0.08 $0.03 $1.08 $0.19
                Max..................................... $9.42 $11.16 $1.42 $2.19 $6.00 $4.61 $11.16
                Min..................................... -$4.82 -$1.35 -$4.61 -$0.17 -$6.17 -$0.86 -$6.17
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                2. Adjusting Out-of-Date Prevailing Wage and Fringe Benefit Rates
                 Updating old Davis-Bacon prevailing wage and fringe benefit rates
                will increase the minimum required hourly compensation required to be
                paid to workers on Davis-Bacon projects. This would result in transfers
                of income to workers on Davis-Bacon projects who are currently being
                paid only the required minimum hourly rate. Because the Federal
                Government generally pays for increases to the prevailing wage through
                higher contract bids, an increase in the prevailing wage will transfer
                income from the Federal Government to the worker. This transfer will be
                reflected in increased costs paid by the Federal Government for
                construction.
                 However, to estimate a transfer estimate, many assumptions need to
                be made with little or no supporting evidence. For example, the
                Department would need to determine if workers really are being paid the
                prevailing wage rate; some published rates are so outdated that it is
                highly likely effective labor market rates exceed the published rates,
                and the published prevailing wage rates are functionally irrelevant. In
                addition, the Department would need to predict which Davis-Bacon
                projects would occur each year, in which counties these projects will
                occur, and the number of hours of work required from each class of
                laborer and mechanic. Because of many uncertainties, the Department
                instead characterizes the number and size of the changes in published
                Davis-Bacon hourly rates and fringe benefits rather than formally
                estimating the income change to those potentially affected by the
                proposal to update rates.
                 To provide an illustrative analysis, the Department used the entire
                set of wage and fringe benefit rates on Wage Determinations (WDs) as of
                May 2019 to demonstrate the potential changes in Davis-Bacon wage and
                fringe benefit rates resulting from updating old rates to 2021 values
                using the Bureau of Labor Statistics' (BLS) Employment Cost Index
                (ECI).\156\ For this demonstration, the Department considered the
                impact of updating rates for key classification wage and fringe benefit
                rates published prior to 2019 that were based on weighted averages,
                which comprises 172,088 wage and fringe benefit rates lines in 3,997
                WDs.\157\ The Department has focused on wage and fringe benefit rates
                prior to 2019 because these are the universe of key classification
                rates that may be more than 3 years old by the time a final rule is
                issued, and the proposal calls for updating non-collectively-bargained
                wage rates that are more than 3 years old.
                ---------------------------------------------------------------------------
                 \156\ At the time of the analysis, ECI was only available for
                the first two quarters of 2021. Thus, the wage and fringe benefit
                rates were updated to values representative of the first half of
                2021.
                 \157\ In each type of construction covered by the Davis-Bacon
                and Related Acts, some classifications are called ``key'' because
                most projects require these workers. Building construction currently
                has 16 key classifications, residential construction has 12 key
                classifications and heavy and highway construction each have the
                same eight key classifications. A line reflects a wage rate (or
                fringe benefit rate) for a key classification by construction type
                in a specific geographic area. For example, a line could reflect a
                plumber in building construction in Fulton County, GA.
                ---------------------------------------------------------------------------
                 After dropping hourly wages greater than $100 and wage rates that
                were less than $7.25 but were updated to $7.25, 159,545 wage rates were
                updated for this analysis.\158\ To update these wage rates, the
                Department used the BLS' ECI, which measures the change over time in
                the cost of labor total compensation.\159\ The Department believes that
                the ECI for private industry workers, total compensation,
                ``construction, and extraction, farming, fishing, and forestry''
                occupations, not seasonally adjusted is the most appropriate index.
                However, the index for this group is only available starting in 2001.
                Thus, for updating wages and fringe benefits from 1979 through 2000,
                the Department determined the ECI for private industry workers in the
                goods-producing industries was the most appropriate series to use that
                was available back to 1979.\160\
                ---------------------------------------------------------------------------
                 \158\ The 54 wage rates greater than $100 were day or shift
                rates. The remaining 12,489 rates excluded were less than $7.25
                prior to July 24, 2009, but were published from surveys conducted
                before the establishment of DOL's Automated Survey Data System
                (ASDS) in 2002. The Department no longer has records of the original
                published wage rates in these cases.
                 \159\ Available at: https://www.bls.gov/ect/.
                 \160\ Continuous Occupational and Industry Series, Table 5.
                https://www.bls.gov/web/eci/eci-continuous-dollar.txt.
                ---------------------------------------------------------------------------
                 To consider potential transfers to workers due to changes in wages,
                the full increase in the hourly rate would only occur if workers on
                DBRA projects are currently paid the original published rates.\161\
                However, due to market conditions in some areas, workers may be
                receiving more than the published
                [[Page 15775]]
                rate. While completely comparable data on wages paid to workers on DBRA
                projects in specific classifications and counties are not readily
                available and usable for this analysis, the BLS's Occupational
                Employment and Wage Statistics (OEWS) data provide a general estimate
                of wages paid to certain categories of workers performing construction
                and construction-related duties. Although the OEWS data can be
                informative for this illustrative analysis, it is not a representative
                data set of professional construction workers performing work on DBRA
                projects. To estimate the approximate median 2021 wage rates, the
                Department used the median hourly wage rate for each key classification
                in the construction industry in the State 2020 OEWS data, then
                approximated a 2021 value using ECI.\162\
                ---------------------------------------------------------------------------
                 \161\ The hourly wage rate increase would only occur when the
                next contract goes into effect and a new WD with an updated wage
                rate is incorporated into the contract.
                 \162\ Because the May 2021 OEWS data are not yet available, the
                Department used the ECI for private industry workers, wages and
                salaries, ``construction, and extraction, farming, fishing, and
                forestry'' occupations, not seasonally adjusted, applied to the May
                2020 OEWS estimates to approximate the median wage rates for May
                2021. May 2020, Sectors 21, 22, & 23: Mining, Utilities, and
                Construction. https://www.bls.gov/oes/special.requests/oes_research_2020_sec_21-22-23.xlsx.
                ---------------------------------------------------------------------------
                 To provide an example of transfers, the Department compared the
                ECI-updated Davis-Bacon wage rates to the applicable median hourly rate
                in the OEWS data.\163\ Using the OEWS as a general measure of the
                market conditions for construction worker wages in a given State, the
                Department assumed that an updated Davis-Bacon wage rate below the
                median OEWS rates would likely not lead to any income transfers to
                construction workers because most workers are likely already paid more
                than the updated Davis-Bacon rate. After removing the 99,111 updated
                Davis-Bacon wage rates that were less than the OEWS median, there
                remained 60,434 updated Davis-Bacon wage rates that may result in
                transfers to workers. However, the Department notes that some of the
                updated Davis-Bacon rates may be lower because they are a wage rate for
                a rural county, and the OEWS data represents the statewide median.
                ---------------------------------------------------------------------------
                 \163\ The Department used OEWS data for certain occupations
                matching key classifications in the construction industry by State.
                ---------------------------------------------------------------------------
                 Further investigating the ECI-updated Davis-Bacon wage rates that
                were substantially above the OEWS median wage rate, the Department
                found that 24,044 of the originally published Davis-Bacon wage rates
                were already higher than the OEWS median. For at least some of these
                wage rates, the comparison to the OEWS median may not be appropriate
                because such Davis-Bacon wage rates are for work in specialty
                construction. For example, most of the prevailing wage rates published
                specifically for a 2014 WD for Iowa Heavy Construction River Work
                exceed the 2021 OEWS median rates for the same classifications in
                Iowa.\164\ This may be an indication that comparing Davis-Bacon rates
                for this type of construction to a more general measure of wages may
                not be appropriate because workers are generally paid more for this
                type of specialty construction than for more other types of
                construction work measured by the OEWS data.
                ---------------------------------------------------------------------------
                 \164\ WD IA20190002.
                ---------------------------------------------------------------------------
                 Therefore, to measure possible transfers per hour to workers on
                Davis-Bacon projects due to the updating of wage rates, the Department
                began by taking the lesser of:
                 The difference between the updated wage rate and the OEWS
                median wage rate.
                 The difference between the updated and originally
                published wage rates.
                 The second difference accounts for the 24,044 Davis-Bacon wage
                rates that were higher than the 2021 OEWS median rate even before they
                were updated because otherwise the Department would overestimate the
                potential hourly wage transfer.
                 The Department also examined an additional adjustment for DBA wage
                rates because they are also subject to Executive Order 13658:
                Establishing a Minimum Wage for Contractors, which sets the minimum
                wage paid to workers on Federal contracts at $11.25 in 2022.\165\ Thus,
                the Department analyzed an additional restriction that the maximum
                possible hourly transfer to workers on Davis-Bacon projects cannot
                exceed the difference between the updated wage rate and $11.25.
                ---------------------------------------------------------------------------
                 \165\ The Department also ran an analysis using the minimum wage
                of $15.00 as proposed by Executive Order 14026, ``Increasing the
                Minimum Wage for Federal Contractors.'' The results were similar.
                ---------------------------------------------------------------------------
                 However, the added restriction has no impact on estimated transfers
                because any updated wage rates that were less than $11.25 were also
                less than the OEWS median wage rate. Thus, the maximum possible hourly
                transfers attributable to updated Davis-Bacon wage rates are identical
                for construction projects covered by the Davis-Bacon Act and by the
                Related Acts.
                 Table 8 provides the summary statistics of the per hour transfers
                to workers that may occur due to updating old Davis-Bacon wage rates.
                Among the wage rates considered in this demonstration, there are 60,434
                wage rates updates that may result in transfers to workers. On average,
                the maximum hourly transfer is $3.92.
                 Table 8--Distribution of Potential per-Hour Transfers Due to Updated Rates
                ----------------------------------------------------------------------------------------------------------------
                 Number of Standard
                 Coverage rates Mean Median deviation
                ----------------------------------------------------------------------------------------------------------------
                 Wages
                ----------------------------------------------------------------------------------------------------------------
                Davis-Bacon Related Acts........................ 60,434 $3.92 $3.11 $3.92
                Davis-Bacon Act................................. 60,434 3.92 3.11 3.92
                ----------------------------------------------------------------------------------------------------------------
                 Fringe Benefits
                ----------------------------------------------------------------------------------------------------------------
                Davis-Bacon and Related Acts.................... 75,495 1.43 1.02 1.58
                ----------------------------------------------------------------------------------------------------------------
                 Total Compensation
                ----------------------------------------------------------------------------------------------------------------
                Davis-Bacon and Related Acts.................... 94,547 3.65 2.13 4.62
                ----------------------------------------------------------------------------------------------------------------
                 Of the 172,088 pre-2019 SU key classification wage and fringe
                benefit rates, 75,495 were non-zero, and thus would be updated,
                possibly resulting in some transfers to workers (Table 8). On
                [[Page 15776]]
                average, these non-zero fringe benefits would increase by $1.43 per
                hour.
                 Adding the required Davis-Bacon wage and fringe benefit rates
                together measures the required total compensation rate on DBRA
                projects. Due to updating old rates, 94,547 Davis-Bacon total
                compensation hourly rates would increase by $3.65 on average.\166\
                ---------------------------------------------------------------------------
                 \166\ The average increase in total compensation is less than
                the average wage increase because more wage and fringe benefit lines
                are included for total compensation.
                ---------------------------------------------------------------------------
                 The Department conducted these two demonstrations to provide an
                indication of the possible changes to Davis-Bacon wage rates and fringe
                benefit rates attributable to the proposed provision revising the
                definition of ``prevailing,'' and the provision to update out-of-date
                SU rates using the ECI (only one of which would affect a location-
                occupation pair at a particular time). Both provisions may lead to
                higher hourly payments, while the former also has the potential to lead
                to lower hourly payments.
                 However, because accurate data to measure the current county-level
                labor conditions for specific construction classifications are not
                available, it is unclear if an increase or decrease in Davis-Bacon
                minimum required rates will impact what workers earn on DBRA projects.
                Furthermore, even if some of these rate changes do lead to different
                rates paid to workers on DBRA projects, data are not available to
                estimate how large transfers might be. To do so would require detailed
                information on what federally funded construction contracts will be
                issued, the types of projects funded, where the projects will occur
                (specific county or counties), the value of the projects, and the labor
                mix needed to complete the project. Due to these many uncertainties in
                calculating a transfer estimate, the Department instead tried to
                characterize what changes in rates might occur as a result of the
                rulemaking.
                E. Cost Savings
                 This proposed rule could lead to cost savings for both contractors
                and the Federal Government, because the clarifications made in the rule
                would reduce ambiguity and increase efficiency, which could reduce the
                amount of time necessary to comply with the rule. For example, as
                discussed in section V.C.3, the proposal to expressly authorize WHD to
                list classifications and corresponding wage and fringe benefit rates on
                wage determinations even when WHD has received insufficient data
                through its wage survey process will increase certainty and reduce
                administrative burden for contracting entities. It would reduce the
                number of compliance requests needed, which could save time for the
                contractors, contracting agencies, and the Department. Additionally,
                the proposal which permits the Administrator to adopt prevailing wage
                rates set by State and local governments could result in cost savings
                for the Department, because it avoids WHD duplicating wage survey work
                that states and localities are already doing. It could also result in
                cost savings in the form of time savings for contractors, as they will
                only have one wage determination that they will have to reference.
                 Additionally, the Department is providing clarifications throughout
                the rule, which will make clear which contract workers are covered by
                DBRA. For example, the Department is clarifying provisions related to
                the site of work, demolition and removal workers, and truck drivers and
                their assistants, among others. These clarifications will make it clear
                to both contractors and contract workers who is covered, and therefore
                could help reduce legal disputes between the two, resulting in cost
                savings.
                 Because the Department does not have information on how much
                additional time contractors and the Federal Government currently spend
                complying with this rule due to lack of clarity, these cost savings are
                discussed qualitatively. However, the Department welcomes any comments
                and data that could inform a quantitative analysis of these cost
                savings.
                F. Benefits
                 Among the multiple proposals discussed above, the Department
                recognizes that the proposal to update the definition of prevailing
                wage using the ``30 percent rule'' could have various impacts on wage
                rates. The effect of this proposal on actual wages paid is uncertain
                for the reasons discussed in Section V.D.1. However, the Department's
                proposal to update out-of-date wage rates using the ECI would result in
                higher prevailing wage rates due to the increases in employer costs
                over time. Any DBRA-covered workers that were not already being paid
                above these higher wage rates would receive a raise when these updated
                rates were implemented. These higher wages could lead to benefits such
                as improved government services, increased productivity, and reduced
                turnover, which are all discussed here qualitatively. The magnitude of
                these wage increases could influence the magnitude of these benefits.
                 The Department notes that the literature cited in this section
                sometimes does not directly consider changes in the DBRA prevailing
                wages. Additionally, much of the literature is based on voluntary
                changes made by firms. However, the Department has presented the
                information here because the general findings may still be applicable
                in this context. The Department welcomes comments and data on the
                benefits of this proposed rulemaking.
                1. Improved Government Services
                 For workers who are paid higher wage rates as a result of this
                proposed rulemaking, the Department expects that the quality of
                construction could improve. Higher wages can be associated with a
                higher number of bidders for Government contracts, which can be
                expected to generate greater competition and an improved pool of
                contractors. Multiple studies have shown that the bidding for municipal
                contracts remained competitive or even improved when living wage
                ordinances were implemented (Thompson and Chapman, 2006).\167\ In a
                study on the impact of bid competition on final outcomes of State
                Department of Transportation (DOT) construction projects, Delaney
                (2018) demonstrated that each additional bidder reduces final project
                cost overruns by 2.2 percent and increases the likelihood of achieving
                a high-quality bid by 4.9 times.\168\
                ---------------------------------------------------------------------------
                 \167\ Thompson, J. and J. Chapman. (2006). ``The Economic Impact
                of Local Living Wages,'' Economic Policy Institute, Briefing Paper
                #170, 2006.
                 \168\ Delaney, J. (2018). The Effect of Competition on Bid
                Quality and Final Results on State DOT Projects. https://www.proquest.com/openview/33655a0e4c7b8a6d25d30775d350b8ad/1?pq-origsite=gscholar&cbl=18750.
                ---------------------------------------------------------------------------
                2. Increased Productivity
                 For workers whose wages increase as a result of the Department's
                proposal to update out-of-date wage rates, these increases could result
                in increased productivity. Increased productivity could occur through
                numerous channels, such as employee morale, level of effort, and
                reduced absenteeism. A strand of economic research, commonly referred
                to as ``efficiency wage'' theory, considers how an increase in
                compensation may be met with greater productivity.\169\ Efficiency
                wages may elicit greater effort on the
                [[Page 15777]]
                part of workers, making them more effective on the job.\170\
                ---------------------------------------------------------------------------
                 \169\ Akerlof, G.A. (1982). Labor Contracts as Partial Gift
                Exchange. The Quarterly Journal of Economics, 97(4), 543-569.
                 \170\ Another model of efficiency wages, which is less
                applicable here, is the adverse selection model in which higher
                wages raise the quality of the pool of applicants.
                ---------------------------------------------------------------------------
                 Allen (1984) estimates the ratio of the marginal product of union
                and non-union labor.\171\ He finds that union workers are 17 to 22
                percent more productive than non-union members. Although it is unclear
                whether this entire productivity difference is attributable to higher
                wages, it is likely a large contributing factor. The Construction Labor
                Research Council (2004) compared the costs to build a mile of highway
                in higher wage and lower wage states using data reported to the Federal
                Highway Administration from 1994 to 2002.\172\ They found that in
                higher wage states, 32 percent fewer labor hours are needed to complete
                a mile of highway than in lower wage states, despite hourly wage rates
                being 69 percent higher in those states. While this increased worker
                productivity could be due in part to other factors such as greater
                worker experience or more investment in capital equipment in higher
                wage states, the higher wages likely contribute.
                ---------------------------------------------------------------------------
                 \171\ Allen, S.G. (1984). Unionized Construction Workers are
                More Productive. The Quarterly Journal of Economics, 251-174.
                 \172\ The Construction Labor Research Council (2004). The Impact
                of Wages on Highway Construction Costs. http://niabuild.org/WageStudybooklet.pdf.
                ---------------------------------------------------------------------------
                 Conversely, Vedder (1999) compared output per worker across states
                with and without prevailing wage laws.\173\ Data on construction
                workers is from the Department of Labor and data on construction
                contracts is from the Department of Commerce. A worker in a prevailing
                wage law State produced $63,116 of value in 1997 while a worker from a
                non-prevailing wage law State produced $65,754. Based on this simple
                comparison, workers are more productive without prevailing wage laws.
                However, this is a somewhat basic comparison in that it does not
                control for other differences between states that may influence
                productivity (for example, the amount of capital used or other State
                regulations).
                ---------------------------------------------------------------------------
                 \173\ Vedder, R. (1999). Michigan's Prevailing Wage Law and Its
                Effects on Government Spending and Construction Employment. Midland,
                Michigan: Mackinac Center for Public Policy.
                ---------------------------------------------------------------------------
                 Studies on absenteeism have demonstrated that there is a negative
                effect on firm productivity as absentee rates increase.\174\ Zhang et
                al., in their study of linked employer-employee data in Canada, found
                that a 1 percent decline in the attendance rate reduces productivity by
                0.44 percent.\175\ Allen (1983) similarly noted that a 10-percentage
                point increase in absenteeism corresponds to a decrease of 1.6 percent
                in productivity.\176\ Hanna et al. (2005) find that while absenteeism
                rates of between 0 and 5 percent among contractors on electrical
                construction projects lead to no loss of productivity, absenteeism
                rates of between 6 and 10 percent can spark a 24.4 percent drop in
                productivity.\177\
                ---------------------------------------------------------------------------
                 \174\ Allen, S.G. (1983). How Much Does Absenteeism Cost?
                Journal of Human Resources, 18(3), 379-393. https://www.jstor.org/stable/145207?seq=1.
                 \175\ Zhang, W., Sun, H., Woodcock, S., & Anis, A. (2013).
                Valuing Productivity Loss Due to Absenteeism: Firm-level Evidence
                from a Canadian Linked Employer-Employee Data. Health Economics
                Review, 7(3). https://healtheconomicsreview.biomedcentral.com/articles/10.1186/s13561-016-0138-y.
                 \176\ Allen, S.G. (1983). How Much Does Absenteeism Cost?
                Journal of Human Resources, 18(3), 379-393. https://www.jstor.org/stable/145207?seq=1.
                 \177\ Hanna, A., Menches, C., Sullivan, K., & Sargent, J. (2005)
                Factors Affecting Absenteeism in Electrical Construction. Journal of
                Construction Engineering and Management 131(11). https://ascelibrary.org/doi/abs/10.1061/(ASCE)0733-9364(2005)131:11(1212).
                ---------------------------------------------------------------------------
                 Fairris et al. (2005) demonstrated that as a worker's wage
                increases there is a reduction in unscheduled absenteeism.\178\ They
                attribute this effect to workers standing to lose more if forced to
                look for new employment and an increase in pay paralleling an increase
                in access to paid time off. Pfeifer's (2010) study of German companies
                provides similar results, indicating a reduction in absenteeism if
                workers experience an overall increase in pay.\179\ Conversely, Dionne
                and Dostie (2007) attribute a decrease in absenteeism to mechanisms
                other than an increase in worker pay, specifically scheduling that
                provides both the option to work-at-home and for fewer compressed work
                weeks.\180\ However, the relevance of such policies in the context of
                construction is unclear. The Department believes both the connection
                between prevailing wages and absenteeism, and the connection between
                absenteeism and productivity are well enough established that this is a
                feasible benefit of the proposed rule.
                ---------------------------------------------------------------------------
                 \178\ Fairris, D., Runstein, D., Briones, C., & Goodheart, J.
                (2005). Examining the Evidence: The Impact of the Los Angeles Living
                Wage Ordinance on Workers and Businesses. LAANE. https://laane.org/downloads/Examinig_the_Evidence.pdf.
                 \179\ Pfeifer, C. (2010). Impact of Wages and Job Levels on
                Worker Absenteeism. International Journal of Manpower 31(1), 59-72.
                https://doi.org/10.1108/01437721011031694.
                 \180\ Dionne, G., & Dostie, B. (2007). New Evidence on the
                Determinants of Absenteeism Using Linked Employer-Employee Data.
                Industrial and Labor Relations Review 61(1), 108-120. https://journals.sagepub.com/doi/abs/10.1177/001979390706100106.
                ---------------------------------------------------------------------------
                3. Reduced Turnover
                 Little evidence is available on the impact of prevailing wage laws
                and turnover, but an increase in the minimum wage has been shown to
                decrease both turnover rates and the rate of worker separation (Dube,
                Lester and Reich, 2011; Liu, Hyclak and Regmi, 2015; Jardim et al.,
                2018).\181\ This decrease in turnover and worker separation can lead to
                an increase in the profits of firms, as the hiring process can be both
                expensive and time consuming. A review of 27 case studies found that
                the median cost of replacing an employee was 21 percent of the
                employee's annual salary.\182\ Fairris et al. (2005) \183\ found the
                cost reduction due to lower turnover rates ranges from $137 to $638 for
                each worker. Although the impacts cited here are not limited to
                government construction contracting, because data specific to
                government contracting and turnover are not available, the Department
                believes that a reduction in turnover could be observed among those
                workers on DBRA contracts whose wages increase following this proposed
                rule. The potential reduction in turnover is a function of several
                variables: The current wage, the change in the wage rate, hours worked
                on covered contracts, and the turnover rate. Therefore, the Department
                has not quantified the impacts of potential reduction in reduction in
                turnover.
                ---------------------------------------------------------------------------
                 \181\ Dube, A., Lester, T.W., & Reich, M. (2011). Do Frictions
                Matter in the Labor Market? Accessions, Separations, and Minimum
                Wage Effects. (Discussion Paper No. 5811). IZA. https://www.iza.org/publications/dp/5811/do-frictions-matter-in-the-labor-market-accessions-separations-and-minimum-wage-effects.
                 Liu, S., Hyclak, T. J., & Regmi, K. (2015). Impact of the
                Minimum Wage on Youth Labor Markets. Labour 29(4). doi: 10.1111/
                labr.12071.
                 Jardim, E., Long, M.C., Plotnick, R., van Inwegen, E., Vigdor,
                J., & Wething, H. (2018, October). Minimum Wage Increases and
                Individual Employment Trajectories (Working paper No. 25182). NBER.
                doi:10.3386/w25182.
                 \182\ Boushey, H. and Glynn, S. (2012). There are Significant
                Business Costs to Replacing Employees. Center for American Progress.
                Available at: http://www.americanprogress.org/wp-content/uploads/2012/11/CostofTurnover.pdf.
                 \183\ Fairris, D., Runstein, D., Briones, C., & Goodheart, J.
                (2005). Examining the Evidence: The Impact of the Los Angeles Living
                Wage Ordinance on Workers and Businesses. LAANE. https://laane.org/downloads/Examinig_the_Evidence.pdf.
                ---------------------------------------------------------------------------
                VI. Initial Regulatory Flexibility Act (IRFA) Analysis
                 The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
                as amended by the Small Business Regulatory Enforcement Fairness Act of
                1996, Public Law 104-121 (March 29, 1996), requires Federal agencies
                engaged in rulemaking to consider the impact of
                [[Page 15778]]
                their proposals on small entities, consider alternatives to minimize
                that impact, and solicit public comment on their analyses. The RFA
                requires the assessment of the impact of a regulation on a wide range
                of small entities, including small businesses, not-for profit
                organizations, and small governmental jurisdictions. Agencies must
                perform a review to determine whether a proposed or final rule would
                have a significant economic impact on a substantial number of small
                entities. 5 U.S.C. 603, 604.
                A. Why the Department Is Considering Action
                 In order to provide greater clarity and enhance their usefulness in
                the modern economy, the Department proposes to update and modernize the
                regulations at 29 CFR parts 1, 3, and 5, which implement the Davis-
                Bacon Act and the Davis-Bacon Related Acts (collectively, the DBRA).
                The Department has not undertaken a comprehensive revision of the DBRA
                regulations since 1982. Since that time, Congress has expanded the
                reach of the DBRA regulations significantly, adding numerous new
                Related Act statutes to which they apply. The Davis-Bacon Act (DBA) and
                now 71 active Related Acts collectively apply to an estimated tens of
                billions of dollars in Federal and federally assisted construction
                spending per year and provide minimum wage rates for hundreds of
                thousands of U.S. construction workers. The Department expects these
                numbers to continue to grow as Congress seeks to address the
                significant infrastructure needs in the country, including, in
                particular, energy and transportation infrastructure necessary to
                address climate change. These regulations will provide additional
                clarity that will be helpful given the increased number of construction
                projects subject to Davis-Bacon requirements, due to the substantial
                increases in federally funded construction provided for in legislation
                such as the Infrastructure Investment and Jobs Act.
                 In addition to expanding coverage of the prevailing wage rate
                requirements of the DBA, the Federal contracting system itself has
                undergone significant changes since 1982. Federal agencies have
                increased spending through the use of interagency Federal schedules.
                Contractors have increased their use of single-purpose entities such as
                joint ventures and teaming agreements. Off-site construction of
                significant components of public buildings and works has also
                increased. The regulations need to be updated to assure their continued
                effectiveness in the face of changes such as these.
                B. Objectives of and Legal Basis for the Proposed Rule
                 In this NPRM, the Department seeks to address a number of
                outstanding challenges in the program while also providing greater
                clarity in the DBRA regulations and enhancing their usefulness in the
                modern economy. Specifically, the Department proposes to return to the
                definition of ``prevailing wage'' that was used from 1935 to 1983 to
                address the overuse of average rates and ensure that prevailing wages
                reflect actual wages paid to workers in the local community. The
                Department also proposes to periodically update non-collectively
                bargained prevailing wage rates to address out-of-date wage rates. The
                Department proposes to give WHD broader authority to adopt State or
                local wage determinations as the Federal prevailing wage where certain
                specified criteria are satisfied, to issue supplemental rates for key
                classifications where there is insufficient survey data, to modernize
                the scope of work to include energy infrastructure and the site of work
                to include prefabricated buildings, to ensure that DBRA requirements
                protect workers by operation of law, and to strengthen enforcement
                including debarment and anti-retaliation. See Section III.B. for a full
                discussion of the Department's proposed changes to these regulations.
                 Congress has delegated authority to the Department to issue
                prevailing wage determinations and prescribe rules and regulations for
                contractors and subcontractors on DBRA-covered construction
                projects.\184\ See 40 U.S.C. 3142, 3145. It has also directed the
                Department, through Reorganization Plan No. 14 of 1950, to ``prescribe
                appropriate standards, regulations and procedures'' to be observed by
                Federal agencies responsible for the administration of the Davis-Bacon
                and Related Acts. 5 U.S.C. app. 1, effective May 24, 1950, 15 FR 3176,
                64 Stat. 1267. These regulations, which have been updated and revised
                periodically over time, are primarily located in parts 1, 3, and 5 of
                title 29 of the Code of Federal Regulations.
                ---------------------------------------------------------------------------
                 \184\ The DBA and the Related Acts apply to both prime contracts
                and subcontracts of any tier thereunder. In this NPRM, as in the
                regulations themselves, where the terms ``contracts'' or
                ``contractors'' are used, they are intended to include reference
                both prime contracts and contractors and subcontracts and
                subcontractors of any tier.
                ---------------------------------------------------------------------------
                C. Estimating the Number of Small Businesses Affected by the Rulemaking
                 As discussed in section V.B., the Department identified a range of
                firms potentially affected by this rulemaking. This includes both firms
                impacted by the Davis-Bacon Act and firms impacted by the Related Acts.
                The more narrowly defined population includes firms actively holding
                Davis-Bacon contracts and firms affected by the Related Acts. The
                broader population includes those bidding on Davis-Bacon and Related
                Acts contracts but without active contracts, or those considering
                bidding in the future. As described in section V.B., the total number
                of potentially affected firms ranges from 154,500 to 192,400. This
                includes firms that pay at or above the new wage determination rates
                and thus will not be substantially affected. The Department does not
                have data to identify the number of firms that will experience changes
                in payroll costs.
                 To identify the number of small firms, the Department began with
                the total population of firms and identified some of these firms as
                small based on several methods.
                 For prime contractors in USASpending, the Department used
                the variable ``Contracting Officer's Determination of Business Size.''
                \185\
                ---------------------------------------------------------------------------
                 \185\ The description of this variable in the USAspending.gov
                Data Dictionary is: ``The Contracting Officer's determination of
                whether the selected contractor meets the small business size
                standard for award to a small business for the NAICS code that is
                applicable to the contract.'' The Data Dictionary is available at:
                https://www.usaspending.gov/data-dictionary.
                ---------------------------------------------------------------------------
                 For subcontractors from USASpending, the Department
                identified those with ``small'' or ``SBA'' in the ``Subawardee Business
                Types'' variable.\186\
                ---------------------------------------------------------------------------
                 \186\ The description of this variable in the USAspending.gov
                Data Dictionary is: ``Comma separated list representing sub-
                contractor business types pulled from Federal Procurement Data
                System--Next Generation (FPDS-NG) or the System for Award Management
                (SAM).''
                ---------------------------------------------------------------------------
                 For SAM data, the Department used the small business
                determination in the data, in variable ``NAICS Code String.'' This is
                flagged separately for each NAICS reported for the firm; therefore, the
                Department classified a company as a small business if SAM identified
                it as a small business in any 6-digit NAICS beginning with 23.
                This results in an estimated number of potentially affected small
                businesses ranging from 103,600 to 135,200.
                [[Page 15779]]
                 Table 9--Range of Number of Potentially Affected Small Firms
                ------------------------------------------------------------------------
                 Source Small
                ------------------------------------------------------------------------
                 Total Count (Davis-Bacon and Related Acts)
                ------------------------------------------------------------------------
                Narrow definition.................................... 103,600
                Broad definition..................................... 135,200
                ------------------------------------------------------------------------
                 DBA (Narrow Definition)
                ------------------------------------------------------------------------
                Total................................................ 26,700
                 Prime contractors from USASpending............... 11,200
                 Subcontractors from USASpending \a\.............. 15,500
                ------------------------------------------------------------------------
                 DBA (Broad Definition)
                ------------------------------------------------------------------------
                Total................................................ 58,300
                 SAM.............................................. 42,800
                 Subcontractors from USASpending \a\.............. 15,500
                ------------------------------------------------------------------------
                 Related Acts
                ------------------------------------------------------------------------
                Total................................................ 77,000
                ------------------------------------------------------------------------
                \a\ Determination based on inclusion of ``small'' or ``SBA'' in the
                 business types.
                 The Department estimated in section V.B. that 1.2 million employees
                are potentially affected by the rulemaking. That methodology does not
                include a variation to identify only workers employed by small firms.
                The Department therefore assumed that the share of contracting
                expenditures attributed to small businesses is the best approximation
                of the share of employment in small businesses. In USASpending,
                expenditures are available for by firm size. For example, in 2019,
                $55.4 billion was spent on DBA covered contracts (see section V.B.2.)
                and of that, $19.8 billion (36 percent) was awarded to small business
                prime contractors.\187\ Data on expenditures by firm size are
                unavailable for the Related Acts (Table 10). Therefore, the Department
                assumed the same percentage applies to such expenditures as for Davis-
                Bacon contracts. In total, an estimated 424,800 workers are employed by
                potentially affected small businesses.
                ---------------------------------------------------------------------------
                 \187\ If subcontractors are more likely to be small businesses
                than prime contractors, then this methodology may underestimate the
                number of workers who are employed by small businesses.
                 Table 10--Number of Potentially Affected Workers in Small Covered Contracting Firms
                ----------------------------------------------------------------------------------------------------------------
                 Percent of
                 Total workers expenditures in Workers in small
                 (thousands) small contracting businesses
                 firms \a\ (thousands)
                ----------------------------------------------------------------------------------------------------------------
                DBA, excl. territories................................. 297.9 35.7% 106.4
                DBA, territories....................................... 6.1 38.2% 2.3
                Related Acts \b\....................................... 883.9 35.8% 316.0
                 --------------------------------------------------------
                 Total.............................................. 1,188.0 ................. 424.8
                ----------------------------------------------------------------------------------------------------------------
                \a\ Source: USASpending.gov. Percentage of contracting expenditures for covered contracts in small businesses in
                 2019.
                \b\ Because data on expenditures by firm size are unavailable for Related Acts. The Department assumed the same
                 percentage applied as for Davis-Bacon.
                 In several places in the NPRM, the Department is proposing to add
                or revise language to clarify existing policies rather than to
                substantively change them. For example, the Department proposes to add
                language to the definitions of ``building or work'' and ``public
                building or public work'' to clarify that these definitions can be met
                even when the construction activity involves only a portion of an
                overall building, structure, or improvement. Also, the Department
                proposes to add language clarifying the applicability of the ``material
                supplier'' exemption to coverage, the applicability of the DBRA to
                truck drivers and flaggers, and the extent to which demolition
                activities are covered by the DBRA. However, the Department
                acknowledges that some contracting agencies may not have been applying
                Davis-Bacon in accordance with those policies. Where this was the case,
                the clarity provided by this proposed rule could lead to expanded
                application of the Davis-Bacon labor standards, which could lead to
                more small firms being required to comply with Davis-Bacon labor
                standards. Additionally, the Department's proposes to revise the
                definition of ``site of the work'' to further encompass certain
                construction of significant portions of a building or work at secondary
                worksites, which could clarify and strengthen the scope of coverage
                under DBA, which would also lead to more small firms being required to
                comply with Davis-Bacon labor standards. The Department does not have
                data to determine how many of these small firms exist and welcomes data
                and information on the extent to which small firms would newly be
                applying
                [[Page 15780]]
                Davis-Bacon and what potential compliance costs they could incur.
                D. Compliance Requirements of the Proposed Rule, Including Reporting
                and Recordkeeping
                 Many of the proposals in this rule only affect how the prevailing
                wage rate is calculated. For these proposals there will be no new
                compliance requirements for small firms, as they will still need to pay
                the published prevailing wage. The Department is also proposing a
                number of revisions to existing recordkeeping requirements to better
                effectuate compliance and enforcement, including revisions to clarify
                the record retention period and add requirements to maintain worker
                telephone numbers and email addresses. The Department is proposing to
                clarify language used to better distinguish the records that
                contractors must make and maintain (regular payrolls and other basic
                records) from the payroll documents that contractors must submit weekly
                to contracting agencies (certified payrolls). The Department is also
                proposing to clarify that electronic signatures and certified payroll
                submission methods may be used.
                E. Calculating the Impact of the Proposed Rule on Small Business Firms
                 The Department considered employer costs associated with both (a)
                the change in determining the prevailing wage based on a 30 percent
                threshold instead of a 50 percent threshold and (b) the incorporation
                of using the change in the ECI to update certain non-collectively
                bargained prevailing wage rates. The Department estimated both
                regulatory familiarization costs and implementation costs. An overview
                of these costs is explained here but additional details can be found in
                section V.C. Non-quantified direct employer costs are explained in
                section V.C.3.
                 The Department acknowledges that if some wage rates increase due to
                either of the provisions listed above, there could be an increase in
                payroll costs for some small firms. Due to data limitations and
                uncertainty, the Department did not quantify payroll costs (i.e.,
                transfers). The change in the definition of prevailing wage will only
                be applied to wage data received through future surveys, for geographic
                areas and classifications that have not yet been identified. Both this
                provision and the updating of out-of-date rates will not have any
                impact if firms are already paying at or above the new prevailing wage
                rate because of labor market forces. Please see section V.D. for a more
                thorough discussion of these potential payroll costs, including an
                illustrative example of the potential impact of the proposed rule on
                prevailing wage rates.
                 The Department welcomes comments and data on whether small firms
                would incur increased payroll costs following this rule, and the extent
                to which firms are paying above the out-of-date prevailing wage rates.
                 Year 1 direct employer costs for small businesses are estimated to
                total $8.7 million. Average annualized costs across the first 10 years
                are estimated to be $2.6 million (using a 7 percent discount rate). On
                a per firm basis, direct employer costs are estimated to be $78.97 in
                Year 1.
                 The proposed rule will impose direct costs on some covered
                contractors who will review the regulations to understand how the
                prevailing wage setting methodology will change. However, the
                Department believes these regulatory familiarization costs will be
                small because firms are not required to understand how the prevailing
                wage rates are set in order to comply with DBRA requirements, they are
                just required to pay the prevailing wage rates. The Department included
                all small potentially affected firms (135,200 firms). The Department
                assumed that on average, 1 hour of a human resources staff member's
                time will be spent reviewing the rulemaking. The cost of this time is
                the median loaded wage for a Compensation, Benefits, and Job Analysis
                Specialist of $52.65 per hour.\188\ Therefore, the Department has
                estimated regulatory familiarization costs to be $7.1 million ($52.65
                per hour x 1.0 hour x 135,200 contractors) (Table 11). The Department
                has included all regulatory familiarization costs in Year 1. New
                entrants will not incur any additional regulatory familiarization costs
                attributable to this rule. Average annualized regulatory
                familiarization costs over 10 years, using a 7 percent discount rate,
                are $1.0 million.
                ---------------------------------------------------------------------------
                 \188\ This includes the median base wage of $32.30 from the May
                2020 OEWS estimates plus benefits paid at a rate of 46 percent of
                the base wage, as estimated from the BLS's Employer Costs for
                Employee ECEC data, and overhead costs of 17 percent. OEWS data
                available at: http://www.bls.gov/oes/current/oes131141.htm.
                 Table 11--Direct Employer Costs to Small Businesses
                 [2020 dollars]
                ----------------------------------------------------------------------------------------------------------------
                 Regulatory
                 Variable Total familiarization Implementation
                 costs costs
                ----------------------------------------------------------------------------------------------------------------
                Year 1 Costs: ................. ................. .................
                 Potentially affected firms......................... ................. 135,200 62,574
                 Hours per firm..................................... ................. 1 0.5
                 Loaded wage rate................................... ................. $52.65 $52.65
                 Cost ($1,000s)..................................... $8,700 $7,100 $1,600
                Years 2-10 ($1,000s): ................. ................. .................
                 Annual cost........................................ $1,600 $0 $1,600
                Average Annualized Costs ($1,000s): ................. ................. .................
                 3% discount rate................................... $2,400 $835 $1,600
                 7% discount rate................................... $2,600 $1,000 $1,600
                ----------------------------------------------------------------------------------------------------------------
                 When firms update prevailing wage rates, they can incur costs
                associated with adjusting payrolls, adjusting contracts, and
                communicating this information to employees (if applicable). This
                proposed rule would generally affect the frequency with which
                prevailing wage rates are updated through the provision to update old,
                outmoded rates, and moving forward, to periodically update rates when
                that does not occur through the survey process. Currently, only a
                fraction of prevailing wages can be expected to change each year.
                Because the
                [[Page 15781]]
                Department intends to update older rates to more accurately represent
                wages and benefits being paid in the construction industry, and, moving
                forward, more published wage rates will change more frequently than in
                the past, firms may spend more time updating prevailing wage rates for
                contractual purposes than they have in the past, leading to additional
                implementation costs than there otherwise would have been. The
                Department does not believe that there will be additional
                implementation costs associated with the proposal to update the
                definition of the prevailing wage (30 percent rule). This proposed
                change would only apply to new surveys, for which employers would have
                already had to update wage rates.
                 To estimate the size of the implementation cost associated with the
                periodic updates, the Department assumed that each year 39.6 percent of
                firms are already checking rates due to newly published surveys
                (section V.C.2.). Multiplying the remaining 60.4 percent by the 103,600
                small firms holding DBRA contracts results in 62,574 firms impacted
                annually (Table 11). The proposed change to update current non-
                collectively bargained rates will have an implementation cost to firms.
                The proposed change to update non-collectively bargained rates moving
                forward will result in ongoing implementation costs. Each time the rate
                is updated, firms will incur some costs to adjust payroll (if
                applicable) and communicate the new rates to employees. The Department
                assumed that this provision would impact all small firms currently
                holding DBRA contracts (62,574 firms). For the initial increase, the
                Department estimated this will take approximately 0.5 hours per year
                for firms to adjust their rates. As with previous costs, implementation
                time costs are based on a loaded hourly wage of $52.65. Therefore,
                total Year 1 implementation costs were estimated to equal $1.6 million
                ($52.65 x 0.5 hour x 62,574 firms). The average annualized
                implementation cost over 10 years, using a 7 percent discount rate, is
                $1.6 million.
                 To determine direct employer costs on a per firm basis, the
                Department considers only those firms who are fully affected. These are
                firms who seek to bid on DBRA contracts, and who have new wage rates to
                incorporate into their bids and, as needed, into their payroll systems.
                For these firms, the Year 1 costs are estimated as one and a half hours
                of time (1 hour for regulatory familiarization and 0.5 hours for
                implementation) valued at $52.65 per hour. This totals $78.97 in Year 1
                costs per firm. The Department welcomes comments on all of the cost
                estimates presented here.
                F. Relevant Federal Rules Duplicating, Overlapping, or Conflicting With
                the Proposed Rule
                 The Department is not aware of any relevant Federal rules that
                conflict with this NPRM.
                G. Alternative to the Proposed Rule
                 The RFA directs agencies to assess the impacts that various
                regulatory alternatives would have on small entities and to consider
                ways to minimize those impacts. Accordingly, the Department considered
                certain regulatory alternatives.
                 For one alternative, the Department considered requiring all
                contracting agencies--not just Federal agencies--that use wage
                determinations under the DBRA to submit an annual report to the
                Department outlining proposed construction programs for the coming
                year. The Department concluded, however, that this requirement would be
                unnecessarily onerous for non-Federal contracting agencies,
                particularly as major construction projects such as those related to
                road and water quality infrastructure projects may be dependent upon
                approved funding or financial assistance from a Federal partner. The
                Department's proposal to require only Federal agencies to submit these
                annual reports would be simpler and less burdensome for the regulated
                community as some Federal agencies have already been submitting these
                reports pursuant to AAM 144 (Dec. 27, 1985) and AAM 224 (Jan. 17,
                2017).
                 Another alternative that was considered was the use of a different
                index instead of the Employment Cost Index (ECI) for updating out-of-
                date non-collectively bargained wage rates. The Department considered
                proposing to use the Consumer Price Index (CPI) but considers this data
                source to be a less appropriate index to use because the CPI measures
                movement of consumer prices as experienced by day-to-day living
                expenses, unlike the ECI, which measures changes in the costs of labor
                in particular. The CPI does not track changes in wages or benefits, nor
                does it reflect the costs of construction workers nationwide.
                 The Department welcomes comments on these and other alternatives to
                the proposed rule.
                VII. Unfunded Mandates Reform Act of 1995
                 The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, requires
                agencies to prepare a written statement, which includes an assessment
                of anticipated costs and benefits, before proposing any unfunded
                Federal mandate that may result in excess of $100 million (adjusted
                annually for inflation) in expenditures in any one year by State,
                local, and tribal governments in the aggregate, or by the private
                sector. This rulemaking is not expected exceed that threshold. See
                section V. for an assessment of anticipated costs, transfers, and
                benefits.
                VIII. Executive Order 13132, Federalism
                 The Department has (1) reviewed this proposed rule in accordance
                with Executive Order 13132 regarding federalism and (2) determined that
                it does not have federalism implications. The proposed rule would not
                have substantial direct effects on the States, on the relationship
                between the National Government and the States, or on the distribution
                of power and responsibilities among the various levels of government.
                IX. Executive Order 13175, Indian Tribal Governments
                 This proposed rule would not have tribal implications under
                Executive Order 13175 that would require a tribal summary impact
                statement. The proposed rule would not have substantial direct effects
                on one or more Indian tribes, on the relationship between the Federal
                Government and Indian tribes, or on the distribution of power and
                responsibilities between the Federal Government and Indian tribes.
                Appendix A--Surveys Included in the Prevailing Wage Demonstration
                ----------------------------------------------------------------------------------------------------------------
                 Surveys Included
                 Survey year Pub date -----------------------------------------------------------------
                 State Metro/rural Construction type(s)
                ----------------------------------------------------------------------------------------------------------------
                2018.......................... 12/25/2020 Utah............. Metro........... Heavy.
                2017.......................... 12/14/2018 Nevada........... Both............ Highway.
                2017.......................... 12/25/2020 New York......... Rural........... Building.
                [[Page 15782]]
                
                2017.......................... 12/25/2020 North Dakota..... Both............ Heavy.
                2017.......................... 2/7/2020 Oklahoma......... Metro........... Residential.
                2017.......................... 2/7/2020 Pennsylvania..... East Metro...... Residential.
                2017.......................... 1/24/2020 Vermont.......... Both............ Heavy, highway [\a\].
                2016.......................... 12/14/2018 Connecticut...... Metro [\b\]..... Building.
                2016.......................... 12/14/2018 New Mexico....... Metro........... Building and heavy.
                2016.......................... 9/29/2017 New York......... 4 metro counties Building.
                2016.......................... 2/7/2020 North Carolina... Both............ Residential.
                2016.......................... 12/8/2017 South Carolina... Metro [\c\]..... Residential.
                2015.......................... 10/6/2017 Alabama.......... Both [\d\]...... Building and heavy.
                2016.......................... 2/7/2020 Alabama.......... Both............ Highway.
                2015.......................... 4/21/2017 Arkansas......... Both............ Building and heavy.
                2015.......................... 9/28/2018 Minnesota........ Both............ Building.
                2015.......................... 7/28/2017 Mississippi...... Both............ Building and heavy.
                2015.......................... 9/29/2017 New Hampshire.... Both............ Building and heavy.
                2014.......................... 12/16/2016 Florida.......... Metro [\c\]..... Building.
                ----------------------------------------------------------------------------------------------------------------
                [\a\] Building component not sufficient.
                [\b\] Only one rural county so excluded.
                [\c\] Rural component of survey was not sufficient.
                [\d\] Excludes heavy rural which were not sufficient.
                 This includes most surveys with published rates that began in 2015
                or later. They include all four construction types, metro and rural
                counties, and a variety of geographic regions. Two surveys were
                excluded because they did not meet sufficiency standards (2016 Alaska
                residential and 2015 Maryland highway). A few surveys were excluded due
                to anomalies that could not be reconciled. These include:
                 2016 Kansas highway
                 2016 Virginia highway
                Appendix B: Current DOL Wage Determination Protocols
                 Sufficiency requirement is: For a classification to have sufficient
                responses there generally must be data on at least six employees from
                at least three contractors. Additionally, if data is received for
                either exactly six employees or exactly three contractors, then no more
                than 60 percent of the total employees can be employed by any one
                contractor. Exceptions to these criteria are allowed under limited
                circumstances. Examples include: Surveys conducted in rural counties,
                or residential and heavy surveys with limited construction activity, or
                for highly specialized classifications. In these circumstances, the
                rule can be three employees and two contractors.
                 Aggregation: If the classification is not sufficient at the county
                level, data are aggregated to the group level, supergroup level, and
                State level (metro or rural), respectively. For building and
                residential construction, at each level of aggregation (as well as at
                the county level) WHD first attempts to calculate a prevailing rate
                using data only for projects not subject to Davis-Bacon labor
                standards; if such data are insufficient to calculate a prevailing
                rate, then data for projects subject to Davis-Bacon labor standards is
                also included.
                 Majority rate: If more than 50 percent of employees are paid the
                exact same hourly rate, then that rate prevails. If not, the Department
                calculates a weighted average. If more than 50 percent are not exactly
                the same, but 100 percent of the data are union, then a union weighted
                average is calculated.
                 Prevailing fringe benefits: Before a fringe benefit is applicable,
                it must prevail. The first step is to determine if more than 50 percent
                of the workers in the reported classification receive a fringe benefit.
                If more than 50 percent of the employees in a single classification are
                paid any fringe benefits, then fringe benefits prevail. If fringe
                benefits prevail in a classification and:
                 More than 50 percent of the employees receiving fringe
                benefits are paid the same total fringe benefit rate, then that total
                fringe benefit rate prevails.
                 more than 50 percent of the employees receiving benefits
                are not paid at the same total rate, then the average rate of fringe
                benefits weighted by the number of workers who received fringe benefits
                prevails. If more than 50 percent are not paid the same total rate, but
                100 percent of the data are union, then a union weighted average is
                calculated.
                 However, if 50 percent or less of the employees in a single
                classification are paid a fringe benefit, then fringe benefits will not
                prevail, and a fringe benefit rate of $0.00 will be published for that
                classification.
                List of Subjects
                29 CFR Part 1
                 Administrative practice and procedure, Construction industry,
                Government contracts, Government procurement, Law enforcement,
                Reporting and recordkeeping requirements, Wages.
                29 CFR Part 3
                 Administrative practice and procedure, Construction industry,
                Government contracts, Government procurement, Law enforcement,
                Penalties, Reporting and recordkeeping requirements, Wages.
                29 CFR Part 5
                 Administrative practice and procedure, Construction industry,
                Government contracts, Government procurement, Law enforcement,
                Penalties, Reporting and recordkeeping requirements, Wages.
                 For reasons stated in the preamble, the Wage and Hour Division,
                Department of Labor, proposes to amend 29 CFR subtitle A as follows:
                PART 1--PROCEDURES FOR PREDETERMINATION OF WAGE RATES
                0
                1. The authority citation for part 1 is revised to read as follows:
                 Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization
                Plan No. 14 of 1950, 5 U.S.C. Appendix; 40 U.S.C. 3141 et seq.; 40
                U.S.C. 3145; 40 U.S.C. 3148; and Secretary of Labor's Order 01-2014
                (Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014); and the laws
                referenced by 29 CFR 5.1.
                0
                2. Amend Sec. 1.1 by revising paragraphs (a) and (b) to read as
                follows:
                [[Page 15783]]
                Sec. 1.1 Purpose and scope.
                 (a) The procedural rules in this part apply under the Davis-Bacon
                Act (946 Stat. 1494, as amended; 40 U.S.C. 3141 et seq.), and any laws
                now existing or subsequently enacted, which provide for the payment of
                minimum wages, including fringe benefits, to laborers and mechanics
                engaged in construction activity under contracts entered into or
                financed by or with the assistance of agencies of the United States or
                the District of Columbia, based on determinations by the Secretary of
                Labor of the wage rates and fringe benefits prevailing for the
                corresponding classes of laborers and mechanics employed on projects
                similar to the contract work in the local areas where such work is to
                be performed.
                 (1) A listing of laws requiring the payment of wages at rates
                predetermined by the Secretary of Labor under the Davis-Bacon Act is
                currently found at www.dol.gov/agencies/whd/government-contracts.
                 (2) Functions of the Secretary of Labor under these statutes and
                under Reorganization Plan No. 14 of 1950 (64 Stat. 1267, as amended; 5
                U.S.C. Appendix), except for functions assigned to the Office of
                Administrative Law Judges (see part 6 of this subtitle) and appellate
                functions assigned to the Administrative Review Board (see part 7 of
                this subtitle) or reserved by the Secretary of Labor (see Secretary's
                Order 01-2020 (Feb. 21, 2020) have been delegated to the Administrator
                of the Wage and Hour Division and authorized representatives.
                 (b) The regulations in this part set forth the procedures for
                making and applying such determinations of prevailing wage rates and
                fringe benefits pursuant to the Davis-Bacon Act and any laws now
                existing or subsequently enacted providing for determinations of such
                wages by the Secretary of Labor in accordance with the provisions of
                the Davis-Bacon Act.
                * * * * *
                0
                3. Revise Sec. 1.2 to read as follows:
                Sec. 1.2 Definitions.
                 Administrator. The term ``Administrator'' means the Administrator
                of the Wage and Hour Division, U.S. Department of Labor, or authorized
                representative.
                 Agency. The term ``agency'' means any Federal, State, or local
                agency or instrumentality, or other similar entity, that enters into a
                contract or provides assistance through loan, grant, loan guarantee or
                insurance, or otherwise, to a project subject to the Davis-Bacon labor
                standards, as defined in Sec. 5.2 of this subtitle.
                 (1) Federal agency. The term ``Federal agency'' means an agency or
                instrumentality of the United States or the District of Columbia, as
                defined in this section, that enters into a contract or provides
                assistance through loan, grant, loan guarantee or insurance, or
                otherwise, to a project subject to the Davis-Bacon labor standards.
                 (2) [Reserved]
                 Area. The term ``area'' means the city, town, village, county or
                other civil subdivision of the State in which the work is to be
                performed.
                 (1) For highway projects, the area may be State department of
                transportation highway districts or other similar State subdivisions.
                 (2) Where a project requires work in multiple counties, the area
                may include all counties in which the work will be performed.
                 Department of Labor-approved website for wage determinations (DOL-
                approved website). The term ``Department of Labor-approved website for
                wage determinations'' means the government website for both Davis-Bacon
                Act and Service Contract Act wage determinations. In addition, the DOL-
                approved website provides compliance assistance information. The term
                will also apply to any other website or electronic means that the
                Department of Labor may approve for these purposes.
                 Employed. Every person performing the duties of a laborer or
                mechanic in the construction, prosecution, completion, or repair of a
                public building or public work, or building or work financed in whole
                or in part by assistance from the United States through loan, grant,
                loan guarantee or insurance, or otherwise, is employed regardless of
                any contractual relationship alleged to exist between the contractor
                and such person.
                 Prevailing wage. The term ``prevailing wage'' means:
                 (1) The wage paid to the majority (more than 50 percent) of the
                laborers or mechanics in the classification on similar projects in the
                area during the period in question;
                 (2) If the same wage is not paid to a majority of those employed in
                the classification, the prevailing wage will be the wage paid to the
                greatest number, provided that such greatest number constitutes at
                least 30 percent of those employed; or
                 (3) If no wage rate is paid to 30 percent or more of those so
                employed, the prevailing wage will be the average of the wages paid to
                those employed in the classification, weighted by the total employed in
                the classification.
                 Type of construction (or construction type). The term ``type of
                construction (or construction type)'' means the general category of
                construction, as established by the Administrator, for the publication
                of general wage determinations. Types of construction may include, but
                are not limited to, building, residential, heavy, and highway. As used
                in this part, the terms ``type of construction'' and ``construction
                type'' are synonymous and interchangeable.
                 United States or the District of Columbia. The term ``United States
                or the District of Columbia'' means the United States, the District of
                Columbia, and all executive departments, independent establishments,
                administrative agencies, and instrumentalities of the United States and
                of the District of Columbia, and any corporation for which all or
                substantially all of the stock of which is beneficially owned by the
                United States, by the District of Columbia, or any of the foregoing
                departments, establishments, agencies, and instrumentalities.
                0
                4. Revise Sec. 1.3 to read as follows:
                Sec. 1.3 Obtaining and compiling wage rate information.
                 For the purpose of making wage determinations, the Administrator
                will conduct a continuing program for the obtaining and compiling of
                wage rate information. In determining the prevailing wages at the time
                of issuance of a wage determination, the Administrator will be guided
                by the definition of prevailing wage in Sec. 1.2 and will consider the
                types of information listed in this section.
                 (a) The Administrator will encourage the voluntary submission of
                wage rate data by contractors, contractors' associations, labor
                organizations, public officials and other interested parties,
                reflecting wage rates paid to laborers and mechanics on various types
                of construction in the area. The Administrator may also obtain data
                from agencies on wage rates paid on construction projects under their
                jurisdiction. The information submitted should reflect the wage rates
                paid to workers employed in a particular classification in an area, the
                type or types of construction on which such rate or rates are paid, and
                whether or not such wage rates were paid on Federal or federally
                assisted projects subject to Davis-Bacon prevailing wage requirements.
                 (b) The following types of information may be considered in making
                wage rate determinations:
                [[Page 15784]]
                 (1) Statements showing wage rates paid on projects, including the
                names and addresses of contractors, including subcontractors; the
                locations, approximate costs, dates of construction and types of
                projects, as well as whether or not the projects are Federal or
                federally assisted projects subject to Davis-Bacon prevailing wage
                requirements; and the number of workers employed in each classification
                on each project and the respective wage rates paid such workers.
                 (2) Signed collective bargaining agreements, for which the
                Administrator may request that the parties to agreements submit
                statements certifying to their scope and application.
                 (3) Wage rates determined for public construction by State and
                local officials pursuant to State and local prevailing wage
                legislation.
                 (4) Wage rate data submitted to the Department of Labor by
                contracting agencies pursuant to Sec. 5.5(a)(1)(iii) of this subtitle.
                 (5) For Federal-aid highway projects under 23 U.S.C. 113,
                information obtained from the highway department(s) of the State(s) in
                which the project is to be performed. For such projects, the
                Administrator must consult the relevant State highway department and
                give due regard to the information thus obtained.
                 (6) Any other information pertinent to the determination of
                prevailing wage rates.
                 (c) The Administrator may initially obtain or supplement such
                information obtained on a voluntary basis by such means, including the
                holding of hearings, and from any sources determined to be necessary.
                All information of the types described in paragraph (b) of this
                section, pertinent to the determination of the wages prevailing at the
                time of issuance of the wage determination, will be evaluated in light
                of the definition of prevailing wage in Sec. 1.2.
                 (d) In compiling wage rate data for building and residential wage
                determinations, the Administrator will not use data from Federal or
                federally assisted projects subject to Davis-Bacon prevailing wage
                requirements unless it is determined that there is insufficient wage
                data to determine the prevailing wages in the absence of such data.
                Data from Federal or federally assisted projects will be used in
                compiling wage rate data for heavy and highway wage determinations.
                 (e) In determining the prevailing wage, the Administrator may treat
                variable wage rates paid by a contractor or contractors to employees
                within the same classification as the same wage where the pay rates are
                functionally equivalent, as explained by a collective bargaining
                agreement or written policy otherwise maintained by the contractor.
                 (f) If the Administrator determines that there is insufficient wage
                survey data to determine the prevailing wage for a classification for
                which conformance requests are regularly submitted pursuant to Sec.
                5.5(a)(1)(iii) of this subtitle, the Administrator may list the
                classification and wage and fringe benefit rates for the classification
                on the wage determination, provided that:
                 (1) The work performed by the classification is not performed by a
                classification in the wage determination;
                 (2) The classification is used in the area by the construction
                industry; and
                 (3) The wage rate for the classification bears a reasonable
                relationship to the wage rates contained in the wage determination.
                 (g) Under the circumstances described in paragraph (h) of this
                section, the Administrator may make a wage determination by adopting,
                with or without modification, one or more prevailing wage rates
                determined for public construction by State and/or local officials.
                Provided that the conditions in paragraph (h) are met, the
                Administrator may do so even if the methods and criteria used by State
                or local officials differ in some respects from those that the
                Administrator would otherwise use under the Davis-Bacon Act and the
                regulations in this part. Such differences may include, but are not
                limited to, a definition of prevailing wage under a State or local
                prevailing wage law or regulation that differs from the definition in
                Sec. 1.2, a geographic area or scope that differs from the standards
                in Sec. 1.7, and/or the restrictions on data use in paragraph (d) of
                this section.
                 (h) The Administrator may adopt a State or local wage rate as
                described in paragraph (g) of this section if the Administrator, after
                reviewing the rate and the processes used to derive the rate,
                determines that:
                 (1) The State or local government sets wage rates, and collects
                relevant data, using a survey or other process that is open to full
                participation by all interested parties;
                 (2) The wage rate reflects both a basic hourly rate of pay as well
                as any prevailing fringe benefits, each of which can be calculated
                separately;
                 (3) The State or local government classifies laborers and mechanics
                in a manner that is recognized within the field of construction; and
                 (4) The State or local government's criteria for setting prevailing
                wage rates are substantially similar to those the Administrator uses in
                making wage determinations under this part. This determination will be
                based on the totality of the circumstances, including, but not limited
                to, the State or local government's definition of prevailing wage; the
                types of fringe benefits it accepts; the information it solicits from
                interested parties; its classification of construction projects,
                laborers, and mechanics; and its method for determining the appropriate
                geographic area(s).
                 (i) In order to adopt wage rates of a State or local government
                entity pursuant to paragraphs (g) and (h) of this section, the
                Administrator must obtain the wage rates and any relevant supporting
                documentation and data, from the State or local government entity. Such
                information may be submitted via email to
                [email protected], via mail to U.S. Department of Labor,
                Wage and Hour Division, Branch of Wage Surveys, 200 Constitution Avenue
                NW, Washington, DC 20210, or through other means directed by the
                Administrator.
                 (j) Nothing in paragraphs (g), (h), and (i) of this section
                precludes the Administrator from otherwise considering State or local
                prevailing wage rates, consistent with paragraph (b)(3) of this
                section, or from giving due regard to information obtained from State
                highway departments, consistent with paragraph (b)(4) of this section,
                as part of the Administrator's process of making prevailing wage
                determinations under this part.
                0
                5. Revise Sec. 1.4 to read as follows:
                Sec. 1.4 Report of agency construction programs.
                 At the beginning of each fiscal year, each Federal agency using
                wage determinations under the Davis-Bacon Act or any of the laws
                referenced by Sec. 5.1 of this subtitle, must furnish the
                Administrator with a report that contains a general outline of its
                proposed construction programs for the upcoming 3 fiscal years. This
                report must include a list of proposed projects (including those for
                which options to extend the contract term of an existing construction
                contract are expected during the period covered by the report): the
                estimated start date of construction; the anticipated type or types of
                construction; the estimated cost of construction; the location or
                locations of construction; and any other project-specific information
                that the Administrator requests. The report must also include
                notification of any significant changes to previously reported
                construction programs, such as the delay or cancellation of previously
                reported projects. Reports must be
                [[Page 15785]]
                submitted no later than April 10th of each year by email to
                [email protected], and must include the name, telephone number,
                and email address of the official responsible for coordinating the
                submission.
                0
                6. Amend Sec. 1.5 by revising paragraphs (a) and (b) and adding a
                heading to paragraph (c) to read as follows:
                Sec. 1.5 Publication of general wage determinations and procedure for
                requesting project wage determinations.
                 (a) General wage determinations. A general wage determination
                contains, among other information, a list of wage and fringe benefit
                rates determined to be prevailing for various classifications of
                laborers or mechanics for specified type(s) of construction in a given
                area. The Department of Labor publishes general wage determinations
                under the Davis-Bacon Act on the DOL-approved website.
                 (b) Project wage determinations. (1) A project wage determination
                is specific to a particular project. An agency may request a project
                wage determination for an individual project under any of the following
                circumstances:
                 (i) The project involves work in more than one county and will
                employ workers who may work in more than one county;
                 (ii) There is no general wage determination in effect for the
                relevant area and type(s) of construction for an upcoming project, or
                 (iii) All or virtually all of the work on a contract will be
                performed by a classification that is not listed in the general wage
                determination that would otherwise apply, and contract award (or bid
                opening, in contracts entered into in sealed bidding procedures) has
                not yet taken place.
                 (2) To request a project wage determination, the agency must submit
                Standard Form (SF) 308, Request for Wage Determination and Response to
                Request, to the Department of Labor, either by mailing the form to U.S.
                Department of Labor, Wage and Hour Division, Branch of Construction
                Wage Determinations, Washington, DC 20210, or by submitting the form
                through other means directed by the Administrator.
                 (3) In completing Form SF-308, the agency must include the
                following information:
                 (i) A sufficiently detailed description of the work to indicate the
                type(s) of construction involved, as well as any additional description
                or separate attachment, if necessary, for identification of the type(s)
                of work to be performed. If the project involves multiple types of
                construction, the requesting agency must attach information indicating
                the expected cost breakdown by type of construction.
                 (ii) The location (city, county, state, zip code) or locations in
                which the proposed project is located.
                 (iii) The classifications needed for the project. The agency must
                identify only those classifications that will be needed in the
                performance of the work. Inserting a note such as ``entire schedule''
                or ``all applicable classifications'' is not sufficient. Additional
                classifications needed that are not on the form may be typed in the
                blank spaces or on a separate list and attached to the form.
                 (iv) Any other information requested in Form SF-308.
                 (4) A request for a project wage determination must be accompanied
                by any pertinent wage information that may be available. When the
                requesting agency is a State highway department under the Federal-Aid
                Highway Acts as codified in 23 U.S.C. 113, such agency must also
                include its recommendations as to the wages which are prevailing for
                each classification of laborers and mechanics on similar construction
                in the area.
                 (5) The time required for processing requests for project wage
                determinations varies according to the facts and circumstances in each
                case. An agency should anticipate that such processing by the
                Department of Labor will take at least 30 days.
                 (c) Processing time. * * *
                0
                7. Revise Sec. 1.6 to read as follows:
                Sec. 1.6 Use and effectiveness of wage determinations.
                 (a) Application, Validity, and Expiration of Wage Determinations--
                (1) Application of incorporated wage determinations. Once a wage
                determination is incorporated into a contract (or once construction has
                started when there is no contract award), the wage determination
                generally applies for the duration of the contract or project, except
                as specified in this section.
                 (2) General wage determinations. (i) General wage determinations
                published on the DOL-approved website contain no expiration date. Once
                issued, a general wage determination remains valid until revised,
                superseded, or canceled.
                 (ii) If there is a current general wage determination applicable to
                a project, an agency may use it without notifying the Administrator,
                Provided that questions concerning its use are referred to the
                Administrator in accordance with paragraph (b) of this section.
                 (iii) When a wage determination is revised, superseded, or
                canceled, it becomes inactive. Inactive wage determinations may be
                accessed on the DOL-approved website for informational purposes only.
                Contracting officers may not use such an inactive wage determination in
                a contract action unless the inactive wage determination is the
                appropriate wage determination that must be incorporated to give
                retroactive effect to the post-award incorporation of a contract clause
                under Sec. 5.6(a)(1)(ii) of this subtitle or a wage determination
                under paragraph (f) of this section. Under such circumstances, the
                agency must provide prior notice to the Administrator of its intent to
                incorporate an inactive wage determination, and may not incorporate it
                if the Administrator instructs otherwise.
                 (3) Project wage determinations. (i) Project wage determinations
                initially issued will be effective for 180 calendar days from the date
                of such determinations. If a project wage determination is not
                incorporated into a contract (or, if there is no contract award, if
                construction has not started) in the period of its effectiveness it is
                void.
                 (ii) Accordingly, if it appears that a project wage determination
                may expire between bid opening and contract award (or between initial
                endorsement under the National Housing Act or the execution of an
                agreement to enter into a housing assistance payments contract under
                section 8 of the U.S. Housing Act of 1937, and the start of
                construction) the agency shall request a new project wage determination
                sufficiently in advance of the bid opening to assure receipt prior
                thereto.
                 (iii) However, when due to unavoidable circumstances a project wage
                determination expires before award but after bid opening (or before the
                start of construction, but after initial endorsement under the National
                Housing Act, or before the start of construction but after the
                execution of an agreement to enter into a housing assistance payments
                contract under section 8 of the U.S. Housing Act of 1937), the head of
                the agency or his or her designee may request the Administrator to
                extend the expiration date of the project wage determination in the bid
                specifications instead of issuing a new project wage determination.
                Such request shall be supported by a written finding, which shall
                include a brief statement of factual support, that the extension of the
                expiration date of the project wage determination is necessary and
                proper in the public interest to prevent injustice or undue hardship or
                to avoid
                [[Page 15786]]
                serious impairment in the conduct of Government business. The
                Administrator will either grant or deny the request for an extension
                after consideration of all of the circumstances, including an
                examination to determine if the previously issued rates remain
                prevailing. If the request for extension is denied, the Administrator
                will proceed to issue a new wage determination for the project.
                 (b) Identifying and incorporating appropriate wage determinations.
                (1) Contracting agencies are responsible for making the initial
                determination of the appropriate wage determination(s) for a project
                and for ensuring that the appropriate wage determination(s) are
                incorporated in bid solicitations and contract specifications and that
                inapplicable wage determinations are not incorporated. When a contract
                involves construction in more than one area, and no multi-county
                project wage determination has been obtained, the solicitation and
                contract must incorporate the applicable wage determination for each
                area. When a contract involves more than one type of construction, the
                solicitation and contract must incorporate the applicable wage
                determination for each type of construction involved that is
                anticipated to be substantial. The contracting agency is responsible
                for designating the specific work to which each incorporated wage
                determination applies.
                 (2) The contractor or subcontractor has an affirmative obligation
                to ensure that its pay practices are in compliance with the Davis-Bacon
                Act labor standards.
                 (3) Any question regarding application of wage rate schedules or
                wage determinations must be referred to the Administrator for
                resolution. The Administrator should consider any relevant factors when
                resolving such questions, including, but not limited to, relevant area
                practice information.
                 (c) Revisions to wage determinations. (1) General and project wage
                determinations may be revised from time to time to keep them current. A
                revised wage determination replaces the previous wage determination.
                ``Revisions,'' as used in this section, refers both to modifications of
                some or all of the rates in a wage determination, such as periodic
                updates to reflect current rates, and to instances where a wage
                determination is re-issued entirely, such as after a new wage survey is
                conducted. Revisions also include adjustments to non-collectively
                bargained prevailing wage 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. Such periodic revisions to wage determinations are
                distinguished from the circumstances described in paragraphs (d), (e),
                and (f) of this section.
                 (2)(i) Whether a revised wage determination is effective with
                respect to a particular contract or project generally depends on the
                date on which the revised wage determination is issued. The date on
                which a revised wage determination is ``issued,'' as used in this
                section, means the date that a revised general wage determination is
                published on the DOL-approved website or the date that the contracting
                agency receives actual written notice of a revised project wage
                determination.
                 (ii) If a revised wage determination is issued before contract
                award (or the start of construction when there is no award), it is
                effective with respect to the project, except as follows:
                 (A) 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. A copy of such report must be made
                available to the Administrator upon request. No such report is required
                if the revision is issued after bid opening.
                 (B) In the case of projects assisted under the National Housing
                Act, a revised wage determination is effective with respect to the
                project if it is issued prior to the beginning of construction or the
                date the mortgage is initially endorsed, whichever occurs first.
                 (C) In the case of projects to receive housing assistance payments
                under section 8 of the U.S. Housing Act of 1937, a revised wage
                determination is effective with respect to the project if it is issued
                prior to the beginning of construction or the date the agreement to
                enter into a housing assistance payments contract is signed, whichever
                occurs first.
                 (D) If, in the case of a contract entered into pursuant to sealed
                bidding procedures under paragraph (c)(2)(ii)(A) of this section the
                contract has not been awarded within 90 days after bid opening, or if,
                in the case of projects assisted under the National Housing Act or
                receiving housing assistance payments section 8 of the U.S. Housing Act
                of 1937 under paragraph (c)(2)(ii)(B) or (C) of this section,
                construction has not begun within 90 days after initial endorsement or
                the signing of the agreement to enter into a housing assistance
                payments contract, any revised general wage determination issued prior
                to award of the contract or the beginning of construction, as
                appropriate, is effective with respect to that contract unless the head
                of the agency or the agency head's designee requests and obtains an
                extension of the 90-day period from the Administrator. Such request
                must be supported by a written finding, which includes a brief
                statement of the factual support, that 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. The
                Administrator will either grant or deny the request for an extension
                after consideration of all the circumstances.
                 (iii) If a revised wage determination is issued after contract
                award (or after the beginning of construction where there is no
                contract award), it is not effective with respect to that project,
                except under the following circumstances:
                 (A) 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 agency exercises an option provision to
                unilaterally extend the term of a contract, the contracting agency must
                include the most recent revision of any wage determination(s) at the
                time the contract is changed or the option is exercised. This does not
                apply where the contractor is simply given additional time to complete
                its original commitment or where the additional construction,
                alteration, and/or repair work in the modification is merely
                incidental.
                 (B) Some contracts call for construction, alteration, and/or repair
                work over a period of time that is not tied to the completion of any
                particular project. Examples of such contracts include, but are not
                limited to, indefinite-delivery-indefinite-quantity construction
                contracts to perform any necessary repairs to a Federal facility over a
                period of time; long-term operations-and-maintenance contracts
                [[Page 15787]]
                that may include construction, alteration, and/or repair work covered
                by Davis-Bacon labor standards; or schedule contracts or blanket
                purchase agreements in which a contractor agrees to provide certain
                construction work at agreed-upon prices to Federal agencies. These
                types of contracts often involve a general commitment to perform
                necessary construction as the need arises, but do not necessarily
                specify the exact construction to be performed. For the types of
                contracts described here, the contracting agency must incorporate into
                the contract the most recent revision(s) of any applicable wage
                determination(s) on each anniversary date of the contract's award (or
                each anniversary date of the beginning of construction when there is no
                award), or another similar anniversary date where the agency has sought
                and received prior approval from the Department for the alternative
                date. Such 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 such construction work is
                completed, even if the completion of that work extends beyond the
                twelve-month period. Where such contracts have task orders, purchase
                orders, or other similar contract instruments awarded under the master
                contract, the contracting and ordering agency must include the
                applicable updated wage determination in such task orders, purchase
                orders, or other similar contract instrument.
                 (d) Corrections for clerical errors. Upon the Administrator's own
                initiative or at the request of an agency, the Administrator may
                correct any wage determination, without regard to paragraph (a) or (c)
                of this section, whenever the Administrator finds that it contains
                clerical errors. Such corrections must be included in any
                solicitations, bidding documents, or ongoing contracts containing the
                wage determination in question, and such inclusion, and application of
                the correction(s), must be retroactive to the start of construction if
                construction has begun.
                 (e) Pre-award determinations that a wage determination may not be
                used. If, prior to the award of a contract (or the start of
                construction under the National Housing Act, under section 8 of the
                U.S. Housing Act of 1937, or where there is no contract award), the
                Administrator provides written notice that:
                 (1) The wrong wage determination or the wrong schedule was included
                in the bidding documents or solicitation; or
                 (2) A wage determination included in the bidding documents or
                solicitation was withdrawn by the Department of Labor as a result of a
                decision by the Administrative Review Board, the wage determination may
                not be used for the contract, without regard to whether bid opening (or
                initial endorsement or the signing of a housing assistance payments
                contract) has occurred.
                 (f) Post-award determinations and procedures. (1) If a contract
                subject to the labor standards provisions of the laws referenced by
                Sec. 5.1 of this subtitle is entered into without the correct wage
                determination(s), the agency must, upon the request of the
                Administrator or upon its own initiative, incorporate the correct wage
                determination into the contract or require its incorporation. Where the
                agency is not entering directly into such a contract but instead is
                providing Federal financial assistance, the agency must ensure that the
                recipient or sub-recipient of the Federal assistance similarly
                incorporates the correct wage determination(s) into its contracts.
                 (2) The Administrator may require the agency to incorporate a wage
                determination after contract award or after the beginning of
                construction if the agency has failed to incorporate a wage
                determination in a contract required to contain prevailing wage rates
                determined in accordance with the Davis-Bacon Act, or has used a wage
                determination which by its terms or the provisions of this part clearly
                does not apply to the contract. Further, the Administrator may require
                the application of the correct wage determination to a contract after
                contract award or after the beginning of construction when it is found
                that the wrong wage determination has been incorporated in the contract
                because of an inaccurate description of the project or its location in
                the agency's request for the wage determination.
                 (3) Under any of the circumstances described in paragraphs (f)(1)
                and (2) of this section, the agency must either terminate and resolicit
                the contract with the correct wage determination, or incorporate the
                correct wage determination into the contract (or ensure it is so
                incorporated) through supplemental agreement, change order, or any
                other authority that may be needed. The method of incorporation of the
                correct wage determination, and adjustment in contract price, where
                appropriate, should be in accordance with applicable law. Additionally,
                the following requirements apply:
                 (i) Unless the Administrator directs otherwise, the incorporation
                of the correct wage determination(s) must be retroactive to the date of
                contract award or start of construction if there is no award.
                 (ii) If incorporation occurs as the result of a request from the
                Administrator, the incorporation must take place within 30 days of the
                date of that request, unless the agency has obtained an extension from
                the Administrator.
                 (iii) Before the agency requires incorporation upon its own
                initiative, it must provide notice to the Administrator of the proposed
                action.
                 (iv) The contractor must be compensated for any increases in wages
                resulting from incorporation of a missing wage determination.
                 (v) If a recipient or sub-recipient of Federal assistance under any
                of the applicable statutes referenced by Sec. 5.1 of this subtitle
                refuses to incorporate the wage determination as required, the agency
                must make no further payment, advance, grant, loan, or guarantee of
                funds in connection with the contract until the recipient incorporates
                the required wage determination into its contract, and must promptly
                refer the dispute to the Administrator for further proceedings under
                Sec. 5.13 of this subtitle.
                 (vi) Before terminating a contract pursuant to this section, the
                agency must withhold or cross-withhold sufficient funds to remedy any
                back-wage liability resulting from the failure to incorporate the
                correct wage determination or otherwise identify and obligate
                sufficient funds through a termination settlement agreement, bond, or
                other satisfactory mechanism.
                 (4) Under any of the above circumstances, notwithstanding the
                requirement to incorporate the correct wage determination(s) within 30
                days, the correct wage determination(s) will be effective by operation
                of law, retroactive to the date of award or the beginning of
                construction (under the National Housing Act, under section 8 of the
                U.S. Housing Act of 1937, or where there is no contract award), in
                accordance with Sec. 5.5(e) of this subtitle.
                 (g) Approval of Davis-Bacon Related Act Federal funding or
                assistance after contract award. If Federal funding or assistance under
                a statute requiring payment of wages determined in accordance with the
                Davis-Bacon Act is not approved prior to contract award (or the
                beginning of construction where there is no contract award), the
                applicable wage determination must be incorporated based upon the wages
                and fringe benefits found to be prevailing on the date of award or the
                beginning of construction (under the National Housing Act, under
                section 8 of the U.S. Housing Act of 1937, or where there is no
                contract award), as appropriate, and
                [[Page 15788]]
                must be incorporated in the contract specifications retroactively to
                that date, Provided that upon the request of the head of the Federal
                agency providing the Federal funding or assistance, in individual cases
                the Administrator may direct incorporation of the wage determination to
                be effective on the date of approval of Federal funds or assistance
                whenever the Administrator finds that it is necessary and proper in the
                public interest to prevent injustice or undue hardship, Provided
                further that the Administrator finds no evidence of intent to apply for
                Federal funding or assistance prior to contract award or the start of
                construction, as appropriate.
                0
                8. Revise Sec. 1.7 to read as follows:
                Sec. 1.7 Scope of consideration.
                 (a) In making a wage determination, the area from which wage data
                will be drawn will normally be the county unless sufficient current
                wage data (data on wages paid on current projects or, where necessary,
                projects under construction no more than 1 year prior to the beginning
                of the survey or the request for a wage determination, as appropriate)
                is unavailable to make a wage determination.
                 (b) If sufficient current wage data is not available from projects
                within the county to make a wage determination, wages paid on similar
                construction in surrounding counties may be considered.
                 (c) If sufficient current wage data is not available in surrounding
                counties, the Administrator may consider wage data from similar
                construction in comparable counties or groups of counties in the State,
                and, if necessary, overall statewide data.
                 (d) If sufficient current statewide wage data is not available,
                wages paid on projects completed more than 1 year prior to the
                beginning of the survey or the request for a wage determination, as
                appropriate, may be considered.
                 (e) The use of helpers and apprentices is permitted in accordance
                with part 5 of this subtitle.
                0
                9. Revise Sec. 1.8 to read as follows:
                Sec. 1.8 Reconsideration by the Administrator.
                 (a) Any interested party may seek reconsideration of a wage
                determination issued under this part or of a decision of the
                Administrator regarding application of a wage determination.
                 (b) Such a request for reconsideration must be in writing,
                accompanied by a full statement of the interested party's views and any
                supporting wage data or other pertinent information. Requests must be
                submitted via email to [email protected]; by mail to
                Administrator, Wage and Hour Division, U.S. Department of Labor, 200
                Constitution Ave. NW, Washington, DC 20210; or through other means
                directed by the Administrator. The Administrator will respond within 30
                days of receipt thereof, or will notify the requestor within the 30-day
                period that additional time is necessary.
                 (c) If the decision for which reconsideration is sought was made by
                an authorized representative of the Administrator of the Wage and Hour
                Division, the interested party seeking reconsideration may request
                further reconsideration by the Administrator of the Wage and Hour
                Division. Such a request must be submitted within 30 days from the date
                the decision is issued; this time may be extended for good cause at the
                discretion of the Administrator upon a request by the interested party.
                The procedures in paragraph (b) of this section apply to any such
                reconsideration requests.
                0
                10. Add Sec. 1.10 to read as follows:
                Sec. 1.10 Severability.
                 The provisions of this part are separate and severable and operate
                independently from one another. If any provision of this part is held
                to be invalid or unenforceable by its terms, or as applied to any
                person or circumstance, or stayed pending further agency action, the
                provision is to be construed so as to continue to give the maximum
                effect to the provision permitted by law, unless such holding is one of
                utter invalidity or unenforceability, in which event the provision is
                severable from this part and will not affect the remaining provisions.
                Appendix A to Part 1--[Removed]
                0
                11. Remove appendix A to part 1.
                Appendix B to Part 1--[Removed]
                0
                12. Remove appendix B to part 1.
                PART 3-- CONTRACTORS AND SUBCONTRACTORS ON PUBLIC BUILDING OR
                PUBLIC WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM
                THE UNITED STATES
                0
                13. The authority citation for part 3 continues to read as follows:
                 Authority: R.S. 161, 48 Stat. 848, Reorg. Plan No. 14 of 1950,
                64 Stat. 1267; 5 U.S.C. 301; 40 U.S.C. 3145; Secretary's Order 01-
                2014 (Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014).
                0
                14. Revise Sec. 3.1 to read as follows:
                Sec. 3.1 Purpose and scope.
                 This part prescribes ``anti-kickback'' regulations under section 2
                of the Act of June 13, 1934, as amended (40 U.S.C. 3145), popularly
                known as the Copeland Act. This part applies to any contract which is
                subject to Federal wage standards and which is for the construction,
                prosecution, completion, or repair of public buildings, public works or
                buildings or works financed in whole or in part by loans or grants from
                the United States. The part is intended to aid in the enforcement of
                the minimum wage provisions of the Davis-Bacon Act and the various
                statutes dealing with federally assisted construction that contain
                similar minimum wage provisions, including those provisions which are
                not subject to Reorganization Plan No. 14 of 1950 (e.g., the College
                Housing Act of 1950, the Federal Water Pollution Control Act, and the
                Housing Act of 1959), and in the enforcement of the overtime provisions
                of the Contract Work Hours and Safety Standards Act whenever they are
                applicable to construction work. The part details the obligation of
                contractors and subcontractors relative to the weekly submission of
                statements regarding the wages paid on work covered thereby; sets forth
                the circumstances and procedures governing the making of payroll
                deductions from the wages of those employed on such work; and
                delineates the methods of payment permissible on such work.
                0
                15. Revise Sec. 3.2 to read as follows:
                Sec. 3.2 Definitions.
                 As used in the regulations in this part:
                 Affiliated person. The term ``affiliated person'' includes a
                spouse, child, parent, or other close relative of the contractor or
                subcontractor; a partner or officer of the contractor or subcontractor;
                a corporation closely connected with the contractor or subcontractor as
                parent, subsidiary, or otherwise, and an officer or agent of such
                corporation.
                 Agency. The term ``agency'' means any Federal, State, or local
                government agency or instrumentality, or other similar entity, that
                enters into a contract or provides assistance through loan, grant, loan
                guarantee or insurance, or otherwise, for a project subject to the
                Davis-Bacon labor standards, as defined in Sec. 5.2 of this subtitle.
                 (1) Federal agency. The term ``Federal agency'' means an agency or
                instrumentality of the United States or the District of Columbia, as
                defined in this section, that enters into a contract or provides
                assistance through loan, grant, loan guarantee or insurance, or
                otherwise, to a project subject to the Davis-Bacon labor standards.
                 (2) [Reserved]
                [[Page 15789]]
                 Building or work. The term ``building or work'' generally includes
                construction activity of all types, as distinguished from
                manufacturing, furnishing of materials, or servicing and maintenance
                work. The term includes, without limitation, buildings, structures, and
                improvements of all types, such as bridges, dams, solar panels, wind
                turbines, broadband installation, installation of electric car
                chargers, plants, highways, parkways, streets, subways, tunnels,
                sewers, mains, powerlines, pumping stations, heavy generators,
                railways, airports, terminals, docks, piers, wharves, ways,
                lighthouses, buoys, jetties, breakwaters, levees, and canals; dredging,
                shoring, scaffolding, drilling, blasting, excavating, clearing, and
                landscaping. The term ``building or work'' also includes a portion of a
                building or work, or the installation (where appropriate) of equipment
                or components into a building or work.
                 (1) Building or work financed in whole or in part by loans or
                grants from the United States. The term ``building or work financed in
                whole or in part by loans or grants from the United States'' includes
                any building or work for which construction, prosecution, completion,
                or repair, as defined in this section, payment or part payment is made
                directly or indirectly from funds provided by loans or grants by a
                Federal agency. The term includes any building or work for which the
                Federal assistance granted is in the form of loan guarantees or
                insurance.
                 (2) [Reserved]
                 Construction, prosecution, completion, or repair. The term
                ``construction, prosecution, completion, or repair'' mean all types of
                work done on a particular building or work at the site thereof as
                specified in Sec. 5.2 of this subtitle, including, without limitation,
                altering, remodeling, painting and decorating, installation on the site
                of the work of items fabricated off-site, transportation as reflected
                in Sec. 5.2, demolition as reflected in Sec. 5.2, and the
                manufacturing or furnishing of materials, articles, supplies, or
                equipment on the site of the building or work, performed by laborers
                and mechanics at the site.
                 Employed (and wages). Every person paid by a contractor or
                subcontractor in any manner for their labor in the construction,
                prosecution, completion, or repair of a public building or public work
                or building or work financed in whole or in part by assistance from the
                United States through loan, grant, loan guarantee or insurance, or
                otherwise, is employed and receiving wages, regardless of any
                contractual relationship alleged to exist between him and the real
                employer.
                 Public building (or public work). The term ``public building (or
                public work)'' includes a building or work the construction,
                prosecution, completion, or repair of which, as defined in this
                section, is carried on directly by authority of or with funds of a
                Federal agency to serve the general public regardless of whether title
                thereof is in a Federal agency. The construction, prosecution,
                completion, or repair of a portion of a building or work may still be
                considered a public building or work, even where the entire building or
                work is not owned, leased by, or to be used by the Federal agency, as
                long as the construction, prosecution, completion, or repair of that
                portion of the building or work is carried on by authority of or with
                funds of a Federal agency to serve the interest of the general public.
                 United States or the District of Columbia. The term ``United States
                or the District of Columbia'' means the United States, the District of
                Columbia, and all executive departments, independent establishments,
                administrative agencies, and instrumentalities of the United States and
                of the District of Columbia, and any corporation for which all or
                substantially all of the stock of which is beneficially owned by the
                United States, by the District of Columbia, or any of the foregoing
                departments, establishments, agencies, and instrumentalities.
                0
                16. Revise Sec. 3.3 to read as follows:
                Sec. 3.3 Certified payrolls.
                 (a) [Reserved]
                 (b) Each contractor or subcontractor engaged in the construction,
                prosecution, completion, or repair of any public building or public
                work, or building or work financed in whole or in part by loans or
                grants from the United States, each week must provide a copy of its
                weekly payroll for all laborers and mechanics engaged on work covered
                by this part and part 5 of this chapter during the preceding weekly
                payroll period, accompanied by a statement of compliance certifying the
                accuracy of the weekly payroll information. This statement must be
                executed by the contractor or subcontractor or by an authorized officer
                or employee of the contractor or subcontractor who supervises the
                payment of wages, and must be on the back of Form WH-347, ``Payroll
                (For Contractors Optional Use)'' or on any form with identical wording.
                Copies of WH-347 may be obtained from the contracting or sponsoring
                agency or from the Wage and Hour Division website at https://www.dol.gov/agencies/whd/government-contracts/construction/forms or its
                successor site. The signature by the contractor, subcontractor, or the
                authorized officer or employee must be an original handwritten
                signature or a legally valid electronic signature.
                 (c) The requirements of this section shall not apply to any
                contract of $2,000 or less.
                 (d) Upon a written finding by the head of a Federal agency, the
                Secretary of Labor may provide reasonable limitations, variations,
                tolerances, and exemptions from the requirements of this section
                subject to such conditions as the Secretary of Labor may specify.
                0
                17. Revise Sec. 3.4 to read as follows:
                Sec. 3.4 Submission of certified payroll and the preservation and
                inspection of weekly payroll records.
                 (a) Certified payroll. Each certified payroll required under Sec.
                3.3 must be delivered by the contractor or subcontractor, within 7 days
                after the regular payment date of the payroll period, to a
                representative at the site of the building or work of the agency
                contracting for or financing the work, or, if there is no
                representative of the agency at the site of the building or work, the
                statement must be delivered by mail or by any other means normally
                assuring delivery by the contractor or subcontractor, within that 7 day
                time period, to the agency contracting for or financing the building or
                work. After the certified payrolls have been reviewed in accordance
                with the contracting or sponsoring agency's procedures, such certified
                payrolls must be preserved by the Federal agency for a period of 3
                years after all the work on the prime contract is completed and must be
                produced for inspection, copying, and transcription by the Department
                of Labor upon request. The certified payrolls must also be transmitted
                together with a report of any violation, in accordance with applicable
                procedures prescribed by the United States Department of Labor.
                 (b) Recordkeeping. Each contractor or subcontractor must preserve
                the regular payroll records for a period of 3 years after all the work
                has been completed on the prime contract. The regular payroll records
                must set out accurately and completely the name; Social Security
                number; last known address, telephone number, and email address of each
                laborer and mechanic; each worker's correct classification(s) of work
                actually performed; hourly rates of wages paid (including rates of
                contributions or costs anticipated for bona fide fringe benefits or
                cash equivalents thereof); daily and
                [[Page 15790]]
                weekly number of hours actually worked in total and on each covered
                contract; deductions made; and actual wages paid. The contractor or
                subcontractor must make such regular payroll records, as well as copies
                of the certified payrolls provided to the contracting or sponsoring
                agency, available at all times for inspection, copying, and
                transcription by the contracting officer or his authorized
                representative, and by authorized representatives of the Department of
                Labor.
                0
                18. Revise Sec. 3.5 to read as follows:
                Sec. 3.5 Payroll deductions permissible without application to or
                approval of the Secretary of Labor.
                 Deductions made under the circumstances or in the situations
                described in the paragraphs of this section may be made without
                application to and approval of the Secretary of Labor:
                 (a) Any deduction made in compliance with the requirements of
                Federal, State, or local law, such as Federal or State withholding
                income taxes and Federal social security taxes.
                 (b) Any deduction of sums previously paid to the laborer or
                mechanic as a bona fide prepayment of wages when such prepayment is
                made without discount or interest. A bona fide prepayment of wages is
                considered to have been made only when cash or its equivalent has been
                advanced to the person employed in such manner as to give him complete
                freedom of disposition of the advanced funds.
                 (c) Any deduction of amounts required by court process to be paid
                to another, unless the deduction is in favor of the contractor,
                subcontractor, or any affiliated person, or when collusion or
                collaboration exists.
                 (d) Any deduction constituting a contribution on behalf of the
                laborer or mechanic employed to funds established by the contractor or
                representatives of the laborers or mechanics, or both, for the purpose
                of providing either from principal or income, or both, medical or
                hospital care, pensions or annuities on retirement, death benefits,
                compensation for injuries, illness, accidents, sickness, or disability,
                or for insurance to provide any of the foregoing, or unemployment
                benefits, vacation pay, savings accounts, or similar payments for the
                benefit of the laborers or mechanics, their families and dependents:
                Provided, however, That the following standards are met:
                 (1) The deduction is not otherwise prohibited by law;
                 (2) It is either:
                 (i) Voluntarily consented to by the laborer or mechanic in writing
                and in advance of the period in which the work is to be done and such
                consent is not a condition either for the obtaining of or for the
                continuation of employment; or
                 (ii) Provided for in a bona fide collective bargaining agreement
                between the contractor or subcontractor and representatives of its
                laborers or mechanics;
                 (3) No profit or other benefit is otherwise obtained, directly or
                indirectly, by the contractor or subcontractor or any affiliated person
                in the form of commission, dividend, or otherwise; and
                 (4) The deductions shall serve the convenience and interest of the
                laborer or mechanic.
                 (e) Any deduction requested by the laborer or mechanic to enable
                him or her to repay loans to or to purchase shares in credit unions
                organized and operated in accordance with Federal and State credit
                union statutes.
                 (f) Any deduction voluntarily authorized by the laborer or mechanic
                for the making of contributions to governmental or quasi-governmental
                agencies, such as the American Red Cross.
                 (g) Any deduction voluntarily authorized by the laborer or mechanic
                for the making of contributions to charitable organizations as defined
                by 26 U.S.C 501(c)(3).
                 (h) Any deductions to pay regular union initiation fees and
                membership dues, not including fines or special assessments: Provided,
                however, That a collective bargaining agreement between the contractor
                or subcontractor and representatives of its laborers or mechanics
                provides for such deductions and the deductions are not otherwise
                prohibited by law.
                 (i) Any deduction not more than for the ``reasonable cost'' of
                board, lodging, or other facilities meeting the requirements of section
                3(m) of the Fair Labor Standards Act of 1938, as amended, and 29 CFR
                part 531. When such a deduction is made the additional records required
                under 29 CFR 516.25(a) shall be kept.
                 (j) Any deduction for the cost of safety equipment of nominal value
                purchased by the laborer or mechanic as his or her own property for his
                or her personal protection in his or her work, such as safety shoes,
                safety glasses, safety gloves, and hard hats, if such equipment is not
                required by law to be furnished by the contractor, if such deduction
                does not violate the Fair Labor Standards Act or any other law, if the
                cost on which the deduction is based does not exceed the actual cost to
                the contractor where the equipment is purchased from him or her and
                does not include any direct or indirect monetary return to the
                contractor where the equipment is purchased from a third person, and if
                the deduction is either:
                 (1) Voluntarily consented to by the laborer or mechanic in writing
                and in advance of the period in which the work is to be done and such
                consent is not a condition either for the obtaining of employment or
                its continuance; or
                 (2) Provided for in a bona fide collective bargaining agreement
                between the contractor or subcontractor and representatives of its
                laborers and mechanics.
                0
                19. Revise Sec. 3.7 to read as follows:
                Sec. 3.7 Applications for the approval of the Secretary of Labor.
                 Any application for the making of payroll deductions under Sec.
                3.6 shall comply with the requirements prescribed in the following
                paragraphs of this section:
                 (a) The application must be in writing and addressed to the
                Secretary of Labor. The application must be submitted by email to
                [email protected], by mail to the United States Department of
                Labor, Wage and Hour Division, Director, Division of Government
                Contracts Enforcement, 200 Constitution Ave. NW, Room S-3502,
                Washington, DC 20210, or by any other means normally assuring delivery.
                 (b) The application need not identify the contract or contracts
                under which the work in question is to be performed. Permission will be
                given for deductions on all current and future contracts of the
                applicant for a period of 1 year. A renewal of permission to make such
                payroll deduction will be granted upon the submission of an application
                which makes reference to the original application, recites the date of
                the Secretary of Labor's approval of such deductions, states
                affirmatively that there is continued compliance with the standards set
                forth in the provisions of Sec. 3.6, and specifies any conditions
                which have changed in regard to the payroll deductions.
                 (c) The application must state affirmatively that there is
                compliance with the standards set forth in the provisions of Sec. 3.6.
                The affirmation must be accompanied by a full statement of the facts
                indicating such compliance.
                 (d) The application must include a description of the proposed
                deduction, the purpose of the deduction, and the classes of laborers or
                mechanics from whose wages the proposed deduction would be made.
                 (e) The application must state the name and business of any third
                person
                [[Page 15791]]
                to whom any funds obtained from the proposed deductions are to be
                transmitted and the affiliation of such person, if any, with the
                applicant.
                0
                20. Revise Sec. 3.8 to read as follows:
                Sec. 3.8 Action by the Secretary of Labor upon applications.
                 The Secretary of Labor will decide whether or not the requested
                deduction is permissible under provisions of Sec. 3.6; and will notify
                the applicant in writing of the decision.
                0
                21. Revise Sec. 3.11 to read as follows:
                Sec. 3.11 Regulations part of contract.
                 All contracts made with respect to the construction, prosecution,
                completion, or repair of any public building or public work or building
                or work financed in whole or in part by loans or grants from the United
                States covered by the regulations in this part must expressly bind the
                contractor or subcontractor to comply with such of the regulations in
                this part as may be applicable. In this regard, see Sec. 5.5(a) of
                this subtitle. However, these requirements will be considered to be
                effective by operation of law, whether or not they are incorporated
                into such contracts, as set forth in Sec. 5.5(e) of this subtitle.
                PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING
                FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS
                PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE
                CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)
                0
                22. The authority citation for part 5 is revised to read as follows:
                 Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization
                Plan No. 14 of 1950, 5 U.S.C. appendix; 40 U.S.C. 3141 et seq.; 40
                U.S.C. 3145; 40 U.S.C. 3148; 40 U.S.C. 3701 et seq.; and the laws
                listed in 5.1(a) of this part; Secretary's Order No. 01-2014 (Dec.
                19, 2014), 79 FR 77527 (Dec. 24, 2014); 28 U.S.C. 2461 note (Federal
                Civil Penalties Inflation Adjustment Act of 1990); Pub. L. 114-74 at
                section 701, 129 Stat 584.
                0
                23. Revise Sec. 5.1 to read as follows:
                Sec. 5.1 Purpose and scope.
                 (a) The regulations contained in this part are promulgated under
                the authority conferred upon the Secretary of Labor by Reorganization
                Plan No. 14 of 1950 (64 Stat. 1267, as amended, 5 U.S.C. Appendix) and
                the Copeland Act (48 Stat. 948; 18 U.S.C. 874; 40 U.S.C. 3145) in order
                to coordinate the administration and enforcement of labor standards
                provisions contained in the Davis-Bacon Act (946 Stat. 1494, as
                amended; 40 U.S.C. 3141 et seq.) and its related statutes (``Related
                Acts'').
                 (1) A listing of laws requiring Davis-Bacon labor standards
                provisions is currently found at www.dol.gov/agencies/whd/government-contracts.
                 (b) Part 1 of this subtitle contains the Department's procedural
                rules governing requests for wage determinations and the issuance and
                use of such wage determinations under the Davis-Bacon Act and its
                Related Acts.
                0
                24. Revise Sec. 5.2 to read as follows:
                Sec. 5.2 Definitions.
                 Administrator. The term ``Administrator'' means the Administrator
                of the Wage and Hour Division, U.S. Department of Labor, or authorized
                representative.
                 Agency. The term ``agency'' means any Federal, State, or local
                government agency or instrumentality, or other similar entity, that
                enters into a contract or provides assistance through loan, grant, loan
                guarantee or insurance, or otherwise, to a project subject to the
                Davis-Bacon labor standards, as defined in this section.
                 (1) Federal agency. The term ``Federal agency'' means an agency or
                instrumentality of the United States or the District of Columbia, as
                defined in this section, that enters into a contract or provides
                assistance through loan, grant, loan guarantee or insurance, or
                otherwise, to a project subject to the Davis-Bacon labor standards.
                 (2) [Reserved]
                 Agency Head. The term ``Agency Head'' means the principal official
                of an agency and includes those persons duly authorized to act on
                behalf of the Agency Head.
                 Apprentice and helper. The terms ``apprentice'' and ``helper'' are
                defined as follows:
                 (1) ``Apprentice'' means:
                 (i) A person employed and individually registered in a bona fide
                apprenticeship program registered with the U.S. Department of Labor,
                Employment and Training Administration, Office of Apprenticeship, or
                with a State Apprenticeship Agency recognized by the Office of
                Apprenticeship; or
                 (ii) A person in the first 90 days of probationary employment as an
                apprentice in such an apprenticeship program, who is not individually
                registered in the program, but who has been certified by the Office of
                Apprenticeship or a State Apprenticeship Agency (where appropriate) to
                be eligible for probationary employment as an apprentice;
                 (2) These provisions do not apply to apprentices and trainees
                employed on projects subject to 23 U.S.C. 113 who are enrolled in
                programs which have been certified by the Secretary of Transportation
                in accordance with 23 U.S.C. 113(c).
                 (3) A distinct classification of helper will be issued in wage
                determinations applicable to work performed on construction projects
                covered by the labor standards provisions of the Davis-Bacon and
                Related Acts only where:
                 (i) The duties of the helper are clearly defined and distinct from
                those of any other classification on the wage determination;
                 (ii) The use of such helpers is an established prevailing practice
                in the area; and
                 (iii) The helper is not employed as a trainee in an informal
                training program. A helper classification will be added to wage
                determinations pursuant to Sec. 5.5(a)(1)(iii)(A) only where, in
                addition, the work to be performed by the helper is not performed by a
                classification in the wage determination.
                 Building or work. The term ``building or work'' generally includes
                construction activities of all types, as distinguished from
                manufacturing, furnishing of materials, or servicing and maintenance
                work. The term includes, without limitation, buildings, structures, and
                improvements of all types, such as bridges, dams, solar panels, wind
                turbines, broadband installation, installation of electric car
                chargers, plants, highways, parkways, streets, subways, tunnels,
                sewers, mains, power lines, pumping stations, heavy generators,
                railways, airports, terminals, docks, piers, wharves, ways,
                lighthouses, buoys, jetties, breakwaters, levees, canals, dredging,
                shoring, rehabilitation and reactivation of plants, scaffolding,
                drilling, blasting, excavating, clearing, and landscaping. The term
                building or work also includes a portion of a building or work, or the
                installation (where appropriate) of equipment or components into a
                building or work.
                 Construction, prosecution, completion, or repair. The term
                ``construction, prosecution, completion, or repair'' means the
                following:
                 (1) These terms include all types of work done--
                 (i) On a particular building or work at the site of the work, as
                defined in this section, by laborers and mechanics employed by a
                contractor or subcontractor, or
                [[Page 15792]]
                 (ii) In the construction or development of a project under a
                development statute.
                 (2) These terms include, without limitation (except as specified in
                this definition):
                 (i) Altering, remodeling, installation (where appropriate) on the
                site of the work of items fabricated off-site;
                 (ii) Painting and decorating;
                 (iii) Manufacturing or furnishing of materials, articles, supplies
                or equipment, but only if such work is done
                 (A) On the site of the work, as defined in this section, or
                 (B) In the construction or development of a project under a
                development statute;
                 (iv) ``Covered transportation'' is defined as transportation under
                any of the following circumstances:
                 (A) Transportation that takes place entirely within a location
                meeting the definition of ``site of the work'' in this section;
                 (B) Transportation of portion(s) of the building or work between a
                ``secondary construction site'' as defined in this section and a
                ``primary construction site'' as defined in this section;
                 (C) Transportation between a ``nearby dedicated support site'' as
                defined in this section and a ``primary construction site'' or
                ``secondary construction site'' as defined in this section;
                 (D) ``Onsite activities essential or incidental to offsite
                transportation''--defined as activities conducted by a truck driver or
                truck driver's assistant on the site of the work that are essential or
                incidental to the transportation of materials or supplies to or from
                the site of the work, such as loading, unloading, or waiting for
                materials to be loaded or unloaded--where the driver or driver's
                assistant's time spent on the site of the work is not so insubstantial
                or insignificant that it cannot as a practical administrative matter be
                precisely recorded; and
                 (E) Any transportation and related activities, whether on or off
                the site of the work, by laborers and mechanics employed in the
                construction or development of the project under a development statute.
                 (v) Demolition and/or removal, under any of the following
                circumstances:
                 (A) Where the demolition and/or removal activities themselves
                constitute construction, alteration, and/or repair of an existing
                building or work. Examples of such activities include the removal of
                asbestos, paint, components, systems, or parts from a facility that
                will not be demolished; as well as contracts for hazardous waste
                removal, land recycling, or reclamation that involve substantial earth
                moving, removal of contaminated soil, re-contouring surfaces, and/or
                habitat restoration.
                 (B) Where subsequent construction covered in whole or in part by
                the labor standards in this part is contemplated at the site of the
                demolition or removal, either as part of the same contract or as part
                of a future contract. In determining whether covered construction is
                contemplated within the meaning of this provision, relevant factors
                include, but are not limited to, the existence of engineering or
                architectural plans or surveys of the site; the allocation of, or an
                application for, Federal funds; contract negotiations or bid
                solicitations; the stated intent of the relevant government officials;
                and the disposition of the site after demolition.
                 (C) Where otherwise required by statute.
                 (3) Except for transportation that constitutes ``covered
                transportation'' as defined in this section, construction, prosecution,
                completion, or repair does not include the transportation of materials
                or supplies to or from the site of the work.
                 Contract. The term ``contract'' means any prime contract which is
                subject wholly or in part to the labor standards provisions of any of
                the laws referenced by Sec. 5.1 and any subcontract of any tier
                thereunder, let under the prime contract.
                 Contracting Officer. The term ``Contracting Officer'' means the
                individual, a duly appointed successor, or authorized representative
                who is designated and authorized to enter into contracts on behalf of
                an agency, sponsor, owner, applicant, or other similar entity.
                 Contractor. The term ``contractor'' means any individual or other
                legal entity that enters into or is awarded a contract that is subject
                wholly or in part to the labor standards provisions of any of the laws
                referenced by Sec. 5.1, including any prime contract or subcontract of
                any tier under a covered prime contract. In addition, the term
                contractor includes any surety that is completing performance for a
                defaulted contractor pursuant to a performance bond. The U.S.
                Government, its agencies, and instrumentalities are not contractors,
                subcontractors, employers or joint employers for purposes of the labor
                standards provisions of any of the laws referenced by Sec. 5.1. A
                State or local government is not regarded as a contractor or
                subcontractor under statutes providing loans, grants, or other Federal
                assistance in situations where construction is performed by its own
                employees. However, under development statutes or other statutes
                requiring payment of prevailing wages to all laborers and mechanics
                employed on the assisted project, such as the U.S. Housing Act of 1937,
                State and local recipients of Federal-aid must pay these employees
                according to Davis-Bacon labor standards. The term ``contractor'' does
                not include an entity that is a material supplier, except if the entity
                is performing work under a development statute.
                 Davis-Bacon labor standards. The term ``Davis-Bacon labor
                standards'' as used in this part means the requirements of the Davis-
                Bacon Act, the Contract Work Hours and Safety Standards Act (other than
                those relating to safety and health), the Copeland Act, and the
                prevailing wage provisions of the other statutes referenced in Sec.
                5.1, and the regulations in parts 1 and 3 of this subtitle and this
                part.
                 Development statute. The term ``development statute'' means a
                statute that requires payment of prevailing wages under the Davis-Bacon
                labor standards to all laborers and mechanics employed in the
                development of a project.
                 Employed. Every person performing the duties of a laborer or
                mechanic in the construction, prosecution, completion, or repair of a
                public building or public work, or building or work financed in whole
                or in part by assistance from the United States through loan, grant,
                loan guarantee or insurance, or otherwise, is ``employed'' regardless
                of any contractual relationship alleged to exist between the contractor
                and such person.
                 Laborer or mechanic. The term ``laborer or mechanic'' includes at
                least those workers whose duties are manual or physical in nature
                (including those workers who use tools or who are performing the work
                of a trade), as distinguished from mental or managerial. The term
                ``laborer'' or ``mechanic'' includes apprentices, helpers, and, in the
                case of contracts subject to the Contract Work Hours and Safety
                Standards Act, watchmen or guards. The term does not apply to workers
                whose duties are primarily administrative, executive, or clerical,
                rather than manual. Persons employed in a bona fide executive,
                administrative, or professional capacity as defined in 29 CFR part 541
                are not deemed to be laborers or mechanics. Working supervisors who
                devote more than 20 percent of their time during a workweek to mechanic
                or laborer duties, and who do not meet the criteria of part 541, are
                laborers and mechanics for the time so spent.
                 Material supplier. The term ``material supplier'' is defined as
                follows:
                [[Page 15793]]
                 (1) A material supplier is an entity meeting all of the following
                criteria:
                 (i) Its only obligations for work on the contract or project are
                the delivery of materials, articles, supplies, or equipment, which may
                include pickup of the same in addition to, but not exclusive of,
                delivery;
                 (ii) It also supplies materials, articles, supplies, or equipment
                to the general public; and
                 (iii) Its facility manufacturing the materials, articles, supplies,
                or equipment, if any, is neither established specifically for the
                contract or project nor located at the site of the work.
                 (2) If an entity, in addition to being engaged in the activities
                specified in paragraph (1)(i) of this definition, also engages in other
                construction, prosecution, completion, or repair work at the site of
                the work, it is not a material supplier.
                 Prime contractor. The term ``prime contractor'' means any person or
                entity that enters into a contract with an agency. For the purposes of
                the labor standards provisions of any of the laws referenced by Sec.
                5.1, the term prime contractor 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, any contractor (e.g., a general contractor) that has
                been delegated all or substantially all of the responsibilities for
                overseeing any construction anticipated by the prime contract, and any
                other person or entity that has been delegated all or substantially all
                of the responsibility for overseeing Davis-Bacon labor standards
                compliance on a prime contract. For the purposes of the cross-
                withholding provisions in Sec. 5.5, any such related entities holding
                different prime contracts are considered to be the same prime
                contractor.
                 Public building or public work. The term ``public building'' or
                ``public work'' includes a building or work, the construction,
                prosecution, completion, or repair of which, as defined in this
                section, is carried on directly by authority of or with funds of a
                Federal agency to serve the interest of the general public regardless
                of whether title thereof is in a Federal agency. The construction,
                prosecution, completion, or repair of a portion of a building or work
                may still be considered a public building or work, even where the
                entire building or work is not owned, leased by, or to be used by a
                Federal agency, as long as the construction, prosecution, completion,
                or repair of that portion of the building or work is carried on by
                authority of or with funds of a Federal agency to serve the interest of
                the general public.
                 Secretary. The term ``Secretary'' includes the Secretary of Labor,
                or authorized representative.
                 Site of the work. The term ``site of the work'' is defined as
                follows:
                 (1) ``Site of the work'' includes all of the following:
                 (i) The primary construction site(s), defined as the physical place
                or places where the building or work called for in the contract will
                remain.
                 (ii) Any secondary construction site(s), defined as any other
                site(s) where a significant portion of the building or work is
                constructed, provided that such construction is for specific use in
                that building or work and does not simply reflect the manufacture or
                construction of a product made available to the general public. A
                ``significant portion'' of a building or work means one or more entire
                portion(s) or module(s) of the building or work, as opposed to smaller
                prefabricated components, with minimal construction work remaining
                other than the installation and/or assembly of the portions or modules
                at the place where the building or work will remain.
                 (iii) Any nearby dedicated support sites, defined as:
                 (A) Job headquarters, tool yards, batch plants, borrow pits, and
                similar facilities that are dedicated exclusively, or nearly so, to
                performance of the contract or project, and adjacent or virtually
                adjacent to either a primary construction site or a secondary
                construction site, and
                 (B) Locations adjacent or virtually adjacent to a primary
                construction site at which workers perform activities associated with
                directing vehicular or pedestrian traffic around or away from the
                primary construction site.
                 (2) With the exception of locations that are secondary construction
                sites as defined in paragraph (1)(ii) of this definition, site of the
                work does not include:
                 (i) Permanent home offices, branch plant establishments,
                fabrication plants, tool yards, etc., of a contractor or subcontractor
                whose location and continuance in operation are determined wholly
                without regard to a particular Federal or federally assisted contract
                or project; or
                 (ii) Fabrication plants, batch plants, borrow pits, job
                headquarters, tool yards, etc., of a material supplier, which are
                established by a material supplier for the project before opening of
                bids and not on the physical place or places where the building or work
                called for in the contract will remain, even where the operations for a
                period of time may be dedicated exclusively, or nearly so, to the
                performance of a contract.
                 Subcontractor. The term ``subcontractor'' means any contractor that
                agrees to perform or be responsible for the performance of any part of
                a contract that is subject wholly or in part to the labor standards
                provisions of any of the laws referenced in Sec. 5.1. The term
                subcontractor includes subcontractors of any tier, but does not include
                the ordinary laborers or mechanics to whom a prevailing wage must be
                paid regardless of any contractual relationship which may be alleged to
                exist between the contractor or subcontractor and the laborers and
                mechanics.
                 United States or the District of Columbia. The term ``United States
                or the District of Columbia'' means the United States, the District of
                Columbia, and all executive departments, independent establishments,
                administrative agencies, and instrumentalities of the United States and
                of the District of Columbia, including non-appropriated fund
                instrumentalities and any corporation for which all or substantially
                all of its stock is beneficially owned by the United States or by the
                foregoing departments, establishments, agencies, or instrumentalities.
                 Wages. The term ``wages'' means the basic hourly rate of pay; any
                contribution irrevocably made by a contractor or subcontractor to a
                trustee or to a third person pursuant to a bona fide fringe benefit
                fund, plan, or program; and the rate of costs to the contractor or
                subcontractor which may be reasonably anticipated in providing bona
                fide fringe benefits to laborers and mechanics pursuant to an
                enforceable commitment to carry out a financially responsible plan or
                program, which was communicated in writing to the laborers and
                mechanics affected. The fringe benefits enumerated in the Davis-Bacon
                Act include medical or hospital care, pensions on retirement or death,
                compensation for injuries or illness resulting from occupational
                activity, or insurance to provide any of the foregoing; unemployment
                benefits; life insurance, disability insurance, sickness insurance, or
                accident insurance; vacation or holiday pay; defraying costs of
                apprenticeship or other similar programs; or other bona fide fringe
                benefits. Fringe benefits do not include benefits required by other
                Federal, State, or local law.
                 Wage determination. The term ``wage determination'' includes the
                original decision and any subsequent decisions revising, modifying,
                superseding,
                [[Page 15794]]
                correcting, or otherwise changing the provisions of the original
                decision. The application of the wage determination shall be in
                accordance with the provisions of Sec. 1.6 of this subtitle.
                0
                25. Amend Sec. 5.5 by:
                0
                a. Revising paragraphs (a) introductory text and (a)(1) through (4),
                (6), and (10);
                0
                b. Adding paragraph (a)(11);
                0
                c. Revising paragraphs (b)(2) through (4);
                0
                d. Adding paragraph (b)(5);
                0
                e. Revising paragraph (c); and
                0
                f. Adding paragraphs (d) and (e).
                 The revisions and additions read as follows:
                Sec. 5.5 Contract provisions and related matters.
                 (a) Required contract clauses. The Agency head will cause or
                require the contracting officer to insert in full in any contract in
                excess of $2,000 which is entered into for the actual construction,
                alteration and/or repair, including painting and decorating, of a
                public building or public work, or building or work financed in whole
                or in part from Federal funds or in accordance with guarantees of a
                Federal agency or financed from funds obtained by pledge of any
                contract of a Federal agency to make a loan, grant or annual
                contribution (except where a different meaning is expressly indicated),
                and which is subject to the labor standards provisions of any of the
                laws referenced by Sec. 5.1, the following clauses (or any
                modifications thereof to meet the particular needs of the agency,
                Provided, That such modifications are first approved by the Department
                of Labor):
                 (1) Minimum wages--(i) Wage rates and fringe benefits. All laborers
                and mechanics employed or working upon the site of the work (or
                otherwise working in construction or development of the project under a
                development statute), will be paid unconditionally and not less often
                than once a week, and without subsequent deduction or rebate on any
                account (except such payroll deductions as are permitted by regulations
                issued by the Secretary of Labor under the Copeland Act (part 3 of this
                subtitle)), the full amount of basic hourly wages and bona fide fringe
                benefits (or cash equivalents thereof) due at time of payment computed
                at rates not less than those contained in the wage determination of the
                Secretary of Labor which is attached hereto and made a part hereof,
                regardless of any contractual relationship which may be alleged to
                exist between the contractor and such laborers and mechanics. As
                provided in paragraphs (d) and (e) of this section, the appropriate
                wage determinations are effective by operation of law even if they have
                not been attached to the contract. Contributions made or costs
                reasonably anticipated for bona fide fringe benefits under the Davis-
                Bacon Act (40 U.S.C. 3141(2)(B)) on behalf of laborers or mechanics are
                considered wages paid to such laborers or mechanics, subject to the
                provisions of paragraph (a)(1)(v) of this section; also, regular
                contributions made or costs incurred for more than a weekly period (but
                not less often than quarterly) under plans, funds, or programs which
                cover the particular weekly period, are deemed to be constructively
                made or incurred during such weekly period. Such laborers and mechanics
                must be paid the appropriate wage rate and fringe benefits on the wage
                determination for the classification(s) of work actually performed,
                without regard to skill, except as provided in paragraph (a)(4) of this
                section. Laborers or mechanics performing work in more than one
                classification may be compensated at the rate specified for each
                classification for the time actually worked therein: Provided, That the
                employer's payroll records accurately set forth the time spent in each
                classification in which work is performed. The wage determination
                (including any additional classifications and wage rates conformed
                under paragraph (a)(1)(iii) of this section) and the Davis-Bacon poster
                (WH-1321) must be posted at all times by the contractor and its
                subcontractors at the site of the work in a prominent and accessible
                place where it can be easily seen by the workers.
                 (ii) Frequently recurring classifications. (A) In addition to wage
                and fringe benefit rates that have been determined to be prevailing
                under the procedures set forth in part 1 of this subtitle, a wage
                determination may contain, pursuant to Sec. 1.3(f), wage and fringe
                benefit rates for classifications of laborers and mechanics for which
                conformance requests are regularly submitted pursuant to paragraph
                (a)(1)(iii) of this section, provided that:
                 (1) The work performed by the classification is not performed by a
                classification in the wage determination for which a prevailing wage
                rate has been determined;
                 (2) The classification is used in the area by the construction
                industry; and
                 (3) The wage rate for the classification bears a reasonable
                relationship to the prevailing wage rates contained in the wage
                determination.
                 (B) The Administrator will establish wage rates for such
                classifications in accordance with paragraph (a)(1)(iii)(A)(3) of this
                section. Work performed in such a classification must be paid at no
                less than the wage and fringe benefit rate listed on the wage
                determination for such classification.
                 (iii) Conformance. (A) The contracting officer must require that
                any class of laborers or mechanics, including helpers, which is not
                listed in the wage determination and which is to be employed under the
                contract be classified in conformance with the wage determination.
                Conformance of an additional classification and wage rate and fringe
                benefits is appropriate only when the following criteria have been met:
                 (1) The work to be performed by the classification requested is not
                performed by a classification in the wage determination; and
                 (2) The classification is used in the area by the construction
                industry; and
                 (3) The proposed wage rate, including any bona fide fringe
                benefits, bears a reasonable relationship to the wage rates contained
                in the wage determination.
                 (B) The conformance process may not be used to split, subdivide, or
                otherwise avoid application of classifications listed in the wage
                determination.
                 (C) If the contractor and the laborers and mechanics to be employed
                in the classification (if known), or their representatives, and the
                contracting officer agree on the classification and wage rate
                (including the amount designated for fringe benefits where
                appropriate), a report of the action taken will be sent by the
                contracting officer by email to [email protected]. The
                Administrator, or an authorized representative, will approve, modify,
                or disapprove every additional classification action within 30 days of
                receipt and so advise the contracting officer or will notify the
                contracting officer within the 30-day period that additional time is
                necessary.
                 (D) In the event the contractor, the laborers or mechanics to be
                employed in the classification or their representatives, and the
                contracting officer do not agree on the proposed classification and
                wage rate (including the amount designated for fringe benefits, where
                appropriate), the contracting officer will, by email to
                [email protected], refer the questions, including the views of all
                interested parties and the recommendation of the contracting officer,
                to the Administrator for determination. The Administrator, or an
                authorized representative, will issue a determination within 30 days of
                receipt and so advise the contracting officer or will notify the
                contracting officer within
                [[Page 15795]]
                the 30-day period that additional time is necessary.
                 (E) The contracting officer must promptly notify the contractor of
                the action taken by the Wage and Hour Division under paragraphs
                (a)(1)(iii)(C) and (D) of this section. The contractor must furnish a
                written copy of such determination to each affected worker or it must
                be posted as a part of the wage determination. The wage rate (including
                fringe benefits where appropriate) determined pursuant to paragraph
                (a)(1)(iii)(C) or (D) must be paid to all workers performing work in
                the classification under this contract from the first day on which work
                is performed in the classification.
                 (iv) Fringe benefits not expressed as an hourly rate. Whenever the
                minimum wage rate prescribed in the contract for a class of laborers or
                mechanics includes a fringe benefit which is not expressed as an hourly
                rate, the contractor may either pay the benefit as stated in the wage
                determination or may pay another bona fide fringe benefit or an hourly
                cash equivalent thereof.
                 (v) Unfunded plans. If the contractor does not make payments to a
                trustee or other third person, the contractor may consider as part of
                the wages of any laborer or mechanic the amount of any costs reasonably
                anticipated in providing bona fide fringe benefits under a plan or
                program, Provided, That the Secretary of Labor has found, upon the
                written request of the contractor, in accordance with the criteria set
                forth in Sec. 5.28, that the applicable standards of the Davis-Bacon
                Act have been met. The Secretary of Labor may require the contractor to
                set aside in a separate account assets for the meeting of obligations
                under the plan or program.
                 (vi) Interest. In the event of a failure to pay all or part of the
                wages required by the contract, the contractor will be required to pay
                interest on any underpayment of wages.
                 (2) Withholding--(i) Withholding requirements. The (write in name
                of Federal agency or the loan or grant recipient) must, upon its own
                action or upon written request of an authorized representative of the
                Department of Labor, withhold or cause to be withheld from the
                contractor under this contract so much of the accrued payments or
                advances as may be considered necessary to satisfy the liabilities of
                the prime contractor or any subcontractor for the full amount of wages
                required by the clause set forth in paragraph (a)(1) of this section
                and monetary relief for violations of paragraph (a)(11) of this section
                of this contract, including interest, or to satisfy any such
                liabilities required by any other Federal contract, or federally
                assisted contract subject to Davis-Bacon labor standards, that is held
                by the same prime contractor (as defined in Sec. 5.2). The necessary
                funds may be withheld from the contractor under this contract or any
                other Federal contract with the same prime contractor, or any other
                federally assisted contract that is subject to Davis-Bacon prevailing
                wage requirements and is held by the same prime contractor, regardless
                of whether the other contract was awarded or assisted by the same
                agency. In the event of a contractor's failure to pay any laborer or
                mechanic, including any apprentice or helper working on the site of the
                work (or otherwise working in construction or development of the
                project under a development statute) all or part of the wages required
                by the contract, or upon the contractor's failure to submit the
                required records as discussed in paragraph (a)(3)(iv) of this section,
                the (Agency) may on its own initiative and after written notice to the
                contractor, sponsor, applicant, owner, or other entity, as the case may
                be, take such action as may be necessary to cause the suspension of any
                further payment, advance, or guarantee of funds until such violations
                have ceased.
                 (ii) Priority to withheld funds. The Department has priority to
                funds withheld or to be withheld in accordance with paragraph (a)(2)(i)
                or (b)(3)(i) of this section, or both, over claims to those funds by:
                 (A) A contractor's surety(ies), including without limitation
                performance bond sureties and payment bond sureties;
                 (B) A contracting agency for its reprocurement costs;
                 (C) A trustee(s) (either a court-appointed trustee or a U.S.
                trustee, or both) in bankruptcy of a contractor, or a contractor's
                bankruptcy estate;
                 (D) A contractor's assignee(s);
                 (E) A contractor's successor(s); or
                 (F) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
                3907.
                 (3) Records and certified payrolls--(i) Basic record requirements--
                (A) Length of record retention. All regular payrolls and other basic
                records must be maintained by the contractor and any subcontractor
                during the course of the work and preserved for all laborers and
                mechanics working at the site of the work (or otherwise working in
                construction or development of the project under a development statute)
                for a period of at least 3 years after all the work on the prime
                contract is completed.
                 (B) Information required. Such records must contain the name;
                Social Security number; last known address, telephone number, and email
                address of each such worker; each worker's correct classification(s) of
                work actually performed; hourly rates of wages paid (including rates of
                contributions or costs anticipated for bona fide fringe benefits or
                cash equivalents thereof of the types described in 40 U.S.C. 3141(2)(B)
                of the Davis-Bacon Act); daily and weekly number of hours actually
                worked in total and on each covered contract; deductions made; and
                actual wages paid.
                 (C) Additional records relating to fringe benefits. Whenever the
                Secretary of Labor has found under paragraph (a)(1)(v) of this section
                that the wages of any laborer or mechanic include the amount of any
                costs reasonably anticipated in providing benefits under a plan or
                program described in 40 U.S.C. 3141(2)(B) of the Davis-Bacon Act, the
                contractor must maintain records which show that the commitment to
                provide such benefits is enforceable, that the plan or program is
                financially responsible, and that the plan or program has been
                communicated in writing to the laborers or mechanics affected, and
                records which show the costs anticipated or the actual cost incurred in
                providing such benefits.
                 (D) Additional records relating to apprenticeship. Contractors with
                apprentices working under approved programs must maintain written
                evidence of the registration of apprenticeship programs, the
                registration of the apprentices, and the ratios and wage rates
                prescribed in the applicable programs.
                 (ii) Certified payroll requirements--(A) Frequency and method of
                submission. The contractor or subcontractor must submit weekly for each
                week in which any DBA- or Related Acts-covered work is performed
                certified payrolls to the (write in name of appropriate Federal agency)
                if the agency is a party to the contract, but if the agency is not such
                a party, the contractor will submit the certified payrolls to the
                applicant, sponsor, owner, or other entity, as the case may be, that
                maintains such records, for transmission to the (write in name of
                agency). The prime contractor is responsible for the submission of
                copies of certified payrolls by all subcontractors. A contracting
                agency or prime contractor may permit or require contractors to submit
                certified payrolls through an electronic system, as long as the
                electronic system requires a legally valid electronic signature and the
                contracting agency or prime contractor permits other methods of
                submission in situations where the contractor is unable or limited in
                its ability to use or access the electronic system.
                [[Page 15796]]
                 (B) Information required. The certified payrolls submitted must set
                out accurately and completely all of the information required to be
                maintained under paragraph (a)(3)(i) of this section, except that full
                Social Security numbers and last known addresses, telephone numbers,
                and email addresses must not be included on weekly transmittals.
                Instead the payrolls need only include an individually identifying
                number for each worker (e.g., the last four digits of the worker's
                Social Security number). The required weekly certified payroll
                information may be submitted using Optional Form WH-347, or in any
                other format desired. Optional Form WH-347 is available for this
                purpose from the Wage and Hour Division website at https://www.dol.gov/files/WHD/legacy/files/wh347.pdf or its successor site. It is not a
                violation of this section for a prime contractor to require a
                subcontractor to provide full Social Security numbers and last known
                addresses, telephone numbers, and email addresses to the prime
                contractor for its own records, without weekly submission by the
                subcontractor to the sponsoring government agency (or the applicant,
                sponsor, owner, or other entity, as the case may be, that maintains
                such records).
                 (C) Statement of Compliance. Each certified payroll submitted must
                be accompanied by a ``Statement of Compliance,'' signed by the
                contractor or subcontractor, or the contractor's or subcontractor's
                agent who pays or supervises the payment of the persons working on the
                contract, and must certify the following:
                 (1) That the certified payroll for the payroll period contains the
                information required to be provided under paragraph (a)(3)(ii) of this
                section, the appropriate information and basic records are being
                maintained under paragraph (a)(3)(i) of this section, and such
                information and records are correct and complete;
                 (2) That each laborer or mechanic (including each helper and
                apprentice) working on the contract during the payroll period has been
                paid the full weekly wages earned, without rebate, either directly or
                indirectly, and that no deductions have been made either directly or
                indirectly from the full wages earned, other than permissible
                deductions as set forth in part 3 of this subtitle; and
                 (3) That each laborer or mechanic has been paid not less than the
                applicable wage rates and fringe benefits or cash equivalents for the
                classification(s) of work actually performed, as specified in the
                applicable wage determination incorporated into the contract.
                 (D) Use of Optional Form WH-347. The weekly submission of a
                properly executed certification set forth on the reverse side of
                Optional Form WH-347 will satisfy the requirement for submission of the
                ``Statement of Compliance'' required by paragraph (a)(3)(ii)(C) of this
                section.
                 (E) Signature. The signature by the contractor, subcontractor, or
                the contractor's or subcontractor's agent, must be an original
                handwritten signature or a legally valid electronic signature.
                 (F) Falsification. The falsification of any of the above
                certifications may subject the contractor or subcontractor to civil or
                criminal prosecution under 18 U.S.C. 1001 and 31 U.S.C. 3729.
                 (iii) Contracts, subcontracts, and related documents. The
                contractor or subcontractor must maintain this contract or subcontract,
                and related documents including, without limitation, bids, proposals,
                amendments, modifications, and extensions. The contractor or
                subcontractor must preserve these contracts, subcontracts, and related
                documents during the course of the work and for a period of 3 years
                after all the work on the prime contract is completed.
                 (iv) Required disclosures and access--(A) Required record
                disclosures and access to workers. The contractor or subcontractor must
                make the records required under paragraphs (a)(3)(i) through (iii) of
                this section and any other documents that the (write the name of the
                agency) or the Department of Labor deems necessary to determine
                compliance with the labor standards provisions of any of the applicable
                statutes referenced by Sec. 5.1, available for inspection, copying, or
                transcription by authorized representatives of the (write the name of
                the agency) or the Department of Labor, and must permit such
                representatives to interview workers during working hours on the job.
                 (B) Sanctions for non-compliance with records and worker access
                requirements. If the contractor or subcontractor fails to submit the
                required records or to make them available, or to permit worker
                interviews during working hours on the job, the Federal agency may,
                after written notice to the contractor, sponsor, applicant, owner, or
                other entity, as the case may be, that maintains such records or that
                employs such workers, take such action as may be necessary to cause the
                suspension of any further payment, advance, or guarantee of funds.
                Furthermore, failure to submit the required records upon request or to
                make such records available, or to permit worker interviews during
                worker hours on the job, may be grounds for debarment action pursuant
                to Sec. 5.12. In addition, any contractor or other person that fails
                to submit the required records or make those records available to WHD
                within the time WHD requests that the records be produced, will be
                precluded from introducing as evidence in an administrative proceeding
                under part 6 of this subtitle any of the required records that were not
                provided or made available to WHD. WHD will take into consideration a
                reasonable request from the contractor or person for an extension of
                the time for submission of records. WHD will determine the
                reasonableness of the request and may consider, among other things, the
                location of the records and the volume of production.
                 (C) Required information disclosures. Contractors and
                subcontractors must maintain the full Social Security number and last
                known address, telephone number, and email address of each covered
                worker, and must provide them upon request to the (write in name of
                appropriate Federal agency) if the agency is a party to the contract,
                or to the Wage and Hour Division of the Department of Labor. If the
                Federal agency is not such a party to the contract, the contractor or
                subcontractor, or both, must upon request provide the full Social
                Security number and last known address, telephone number, and email
                address of each covered worker to the applicant, sponsor, owner, or
                other entity, as the case may be, that maintains such records, for
                transmission to the (write in name of agency), the contractor, or the
                Wage and Hour Division of the Department of Labor for purposes of an
                investigation or other compliance action.
                 (4) Apprentices and equal employment opportunity --(i)
                Apprentices--(A) Rate of pay. Apprentices will be permitted to work at
                less than the predetermined rate for the work they perform when they
                are employed pursuant to and individually registered in a bona fide
                apprenticeship program registered with the U.S. Department of Labor,
                Employment and Training Administration, Office of Apprenticeship (OA),
                or with a State Apprenticeship Agency recognized by the OA. A person
                who is not individually registered in the program, but who has been
                certified by the OA or a State Apprenticeship Agency (where
                appropriate) to be eligible for probationary employment as an
                apprentice, will be permitted to work at less than the predetermined
                rate for the
                [[Page 15797]]
                work they perform in the first 90 days of probationary employment as an
                apprentice in such a program. In the event the OA or a State
                Apprenticeship Agency recognized by the OA withdraws approval of an
                apprenticeship program, the contractor will no longer be permitted to
                use apprentices at less than the applicable predetermined rate for the
                work performed until an acceptable program is approved.
                 (B) Fringe benefits. Apprentices must be paid fringe benefits in
                accordance with the provisions of the apprenticeship program. If the
                apprenticeship program does not specify fringe benefits, apprentices
                must be paid the full amount of fringe benefits listed on the wage
                determination for the applicable classification. If the Administrator
                determines that a different practice prevails for the applicable
                apprentice classification, fringe benefits must be paid in accordance
                with that determination.
                 (C) Apprenticeship ratio. The allowable ratio of apprentices to
                journeyworkers on the job site in any craft classification must not be
                greater than the ratio permitted to the contractor as to the entire
                work force under the registered program. Any worker listed on a payroll
                at an apprentice wage rate, who is not registered or otherwise employed
                as stated above, must be paid not less than the applicable wage rate on
                the wage determination for the classification of work actually
                performed. In addition, any apprentice performing work on the job site
                in excess of the ratio permitted under the registered program must be
                paid not less than the applicable wage rate on the wage determination
                for the work actually performed.
                 (D) Reciprocity of ratios and wage rates. Where a contractor is
                performing construction on a project in a locality other than the
                locality in which its program is registered, the ratios and wage rates
                (expressed in percentages of the journeyworker's hourly rate)
                applicable within the locality in which the construction is being
                performed must be observed. Every apprentice must be paid at not less
                than the rate specified in the registered program for the apprentice's
                level of progress, expressed as a percentage of the journeyworker
                hourly rate specified in the applicable wage determination.
                 (ii) Equal employment opportunity. The use of apprentices and
                journeyworkers under this part shall be in conformity with the equal
                employment opportunity requirements of Executive Order 11246, as
                amended, and 29 CFR part 30.
                * * * * *
                 (6) Subcontracts. The contractor or subcontractor must insert in
                any subcontracts the clauses contained in paragraphs (a)(1) through
                (11) of this section, along with the applicable wage determination(s)
                and such other clauses as the (write in the name of the Federal agency)
                may by appropriate instructions require, and also a clause requiring
                the subcontractors to include these clauses and wage determination(s)
                in any lower tier subcontracts. The prime contractor is responsible for
                the compliance by any subcontractor or lower tier subcontractor with
                all the contract clauses in this section. In the event of any
                violations of these clauses, the prime contractor and any
                subcontractor(s) responsible will be liable for any unpaid wages and
                monetary relief, including interest from the date of the underpayment
                or loss, due to any workers of lower-tier subcontractors, and may be
                subject to debarment, as appropriate.
                * * * * *
                 (10) Certification of eligibility. (i) By entering into this
                contract, the contractor certifies that neither it nor any person or
                firm who has an interest in the contractor's firm is a person or firm
                ineligible to be awarded Government contracts by virtue of 40 U.S.C.
                3144(b) or Sec. 5.12(a) or (b).
                 (ii) No part of this contract shall be subcontracted to any person
                or firm ineligible for award of a Government contract by virtue of 40
                U.S.C. 3144(b) or Sec. 5.12(a) or (b).
                 (iii) The penalty for making false statements is prescribed in the
                U.S. Code, Title 18 Crimes and Criminal Procedure, 18 U.S.C. 1001.
                 (11) Anti-retaliation. It is unlawful for any person to discharge,
                demote, intimidate, threaten, restrain, coerce, blacklist, harass, or
                in any other manner discriminate against, or to cause any person to
                discharge, demote, intimidate, threaten, restrain, coerce, blacklist,
                harass, or in any other manner discriminate against, any worker or job
                applicant for:
                 (i) Notifying any contractor of any conduct which the worker
                reasonably believes constitutes a violation of the DBA, Related Acts,
                this part, or part 1 or 3 this subtitle;
                 (ii) Filing any complaint, initiating or causing to be initiated
                any proceeding, or otherwise asserting on behalf of themselves or
                others any right or protection under the DBA, Related Acts, this part,
                or part 1 or 3 of this subtitle;
                 (iii) Cooperating in any investigation or other compliance action,
                or testifying in any proceeding under the DBA, Related Acts, this part,
                or part 1 or 3 of this subtitle; or
                 (iv) Informing any other person about their rights under the DBA,
                Related Acts, this part, or part 1 or 3 of this subtitle.
                 (b) * * *
                 (2) Violation; liability for unpaid wages; liquidated damages. In
                the event of any violation of the clause set forth in paragraph (b)(1)
                of this section the contractor and any subcontractor responsible
                therefor shall be liable for the unpaid wages and interest from the
                date of the underpayment. In addition, such contractor and
                subcontractor shall be liable to the United States (in the case of work
                done under contract for the District of Columbia or a territory, to
                such District or to such territory), for liquidated damages. Such
                liquidated damages shall be computed with respect to each individual
                laborer or mechanic, including watchmen and guards, employed in
                violation of the clause set forth in paragraph (b)(1), in the sum of
                $29 for each calendar day on which such individual was required or
                permitted to work in excess of the standard workweek of forty hours
                without payment of the overtime wages required by the clause set forth
                in paragraph (b)(1).
                 (3) Withholding for unpaid wages and liquidated damages--(i)
                Withholding process. The (write in the name of the Federal agency or
                the loan or grant recipient) must, upon its own action or upon written
                request of an authorized representative of the Department of Labor,
                withhold or cause to be withheld from the contractor under this
                contract so much of the accrued payments or advances as may be
                considered necessary to satisfy the liabilities of the prime contractor
                or any subcontractor for unpaid wages and monetary relief, including
                interest, required by the clauses set forth in paragraphs (b)(2) and
                (5) of this section and liquidated damages for violations of paragraph
                (b)(2) of this section or to satisfy any such liabilities required by
                any other Federal contract, or federally assisted contract subject to
                Davis-Bacon prevailing wage requirements, that is held by the same
                prime contractor (as defined in Sec. 5.2). The necessary funds may be
                withheld from the contractor under this contract or any other Federal
                contract with the same prime contractor, or any other federally
                assisted contract that is subject to Davis-Bacon prevailing wage
                requirements and is held by the same prime contractor, regardless of
                whether the other contract was awarded or assisted by the same agency.
                [[Page 15798]]
                 (ii) Priority to withheld funds. The Department has priority to
                funds withheld or to be withheld in accordance with paragraph (a)(2)(i)
                or (b)(3)(i) of this section, or both, over claims to those funds by:
                 (A) A contractor's surety(ies), including without limitation
                performance bond sureties and payment bond sureties;
                 (B) A contracting agency for its reprocurement costs;
                 (C) A trustee(s) (either a court-appointed trustee or a U.S.
                trustee, or both) in bankruptcy of a contractor, or a contractor's
                bankruptcy estate;
                 (D) A contractor's assignee(s);
                 (E) A contractor's successor(s); or
                 (F) A claim asserted under the Prompt Payment Act, 31 U.S.C. 3901-
                3907.
                 (4) Subcontracts. The contractor or subcontractor must insert in
                any subcontracts the clauses set forth in paragraphs (b)(1) through (5)
                of this section and also a clause requiring the subcontractors to
                include these clauses in any lower tier subcontracts. The prime
                contractor is responsible for compliance by any subcontractor or lower
                tier subcontractor with the clauses set forth in paragraphs (b)(1)
                through (5). In the event of any violations of these clauses, the prime
                contractor and any subcontractor(s) responsible will be liable for any
                unpaid wages and monetary relief, including interest from the date of
                the underpayment or loss, due to any workers of lower-tier
                subcontractors, and associated liquidated damages, and may be subject
                to debarment, as appropriate.
                 (5) Anti-retaliation. It is unlawful for any person to discharge,
                demote, intimidate, threaten, restrain, coerce, blacklist, harass, or
                in any other manner discriminate against, or to cause any person to
                discharge, demote, intimidate, threaten, restrain, coerce, blacklist,
                harass, or in any other manner discriminate against, any worker or job
                applicant for:
                 (i) Notifying any contractor of any conduct which the worker
                reasonably believes constitutes a violation of the Contract Work Hours
                and Safety Standards Act (CWHSSA) or its implementing regulations in
                this part;
                 (ii) Filing any complaint, initiating or causing to be initiated
                any proceeding, or otherwise asserting on behalf of themselves or
                others any right or protection under CWHSSA or part 5 of this title;
                 (iii) Cooperating in any investigation or other compliance action,
                or testifying in any proceeding under CWHSSA or this part; or
                 (iv) Informing any other person about their rights under CWHSSA or
                this part.
                 (c) CWHSSA payroll records clause. In addition to the clauses
                contained in paragraph (b) of this section, in any contract subject
                only to the Contract Work Hours and Safety Standards Act and not to any
                of the other laws referenced by Sec. 5.1, the Agency Head must cause
                or require the contracting officer to insert a clause requiring that
                the contractor or subcontractor must maintain payrolls and basic
                payroll records during the course of the work and must preserve them
                for a period of 3 years after all the work on the prime contract is
                completed for all laborers and mechanics, including guards and
                watchmen, working on the contract. Such records must contain the name;
                last known address, telephone number, and email address; and social
                security number of each such worker; each worker's correct
                classification(s) of work actually performed; hourly rates of wages
                paid; daily and weekly number of hours actually worked; deductions
                made; and actual wages paid. Further, the Agency Head must cause or
                require the contracting officer to insert in any such contract a clause
                providing that the records to be maintained under this paragraph must
                be made available by the contractor or subcontractor for inspection,
                copying, or transcription by authorized representatives of the (write
                the name of agency) and the Department of Labor, and the contractor or
                subcontractor will permit such representatives to interview workers
                during working hours on the job.
                 (d) Incorporation of contract clauses and wage determinations by
                reference. Although agencies are required to insert the contract
                clauses set forth in this section, along with appropriate wage
                determinations, in full into covered contracts, and contractors and
                subcontractors are required to insert them in any lower-tier
                subcontracts, the incorporation by reference of the required contract
                clauses and appropriate wage determinations will be given the same
                force and effect as if they were inserted in full text.
                 (e) Incorporation by operation of law. The contract clauses set
                forth in this section, along with the correct wage determinations, will
                be considered to be a part of every prime contract required by the
                applicable statutes referenced by Sec. 5.1 to include such clauses,
                and will be effective by operation of law, whether or not they are
                included or incorporated by reference into such contract, unless the
                Administrator grants a variance, tolerance, or exemption from the
                application of this paragraph. Where the clauses and applicable wage
                determinations are effective by operation of law under this paragraph,
                the prime contractor must be compensated for any resulting increase in
                wages in accordance with applicable law.
                0
                26. Revise Sec. 5.6 to read as follows:
                Sec. 5.6 Enforcement.
                 (a) Agency responsibilities. (1)(i) The Federal agency has the
                initial responsibility to ascertain whether the clauses required by
                Sec. 5.5 and the appropriate wage determination(s) have been
                incorporated into the contracts subject to the labor standards
                provisions of the laws referenced by Sec. 5.1. Additionally, a Federal
                agency that provides Federal financial assistance that is subject to
                the labor standards provisions of the Act must promulgate the necessary
                regulations or procedures to require the recipient or sub-recipient of
                the Federal assistance to insert in its contracts the provisions of
                Sec. 5.5. No payment, advance, grant, loan, or guarantee of funds will
                be approved by the Federal agency unless it ensures that the clauses
                required by Sec. 5.5 and the appropriate wage determination(s) are
                incorporated into such contracts. Furthermore, no payment, advance,
                grant, loan, or guarantee of funds will be approved by the Federal
                agency after the beginning of construction unless there is on file with
                the Federal agency a certification by the contractor that the
                contractor and its subcontractors have complied with the provisions of
                Sec. 5.5 or unless there is on file with the Federal agency a
                certification by the contractor that there is a substantial dispute
                with respect to the required provisions.
                 (ii) If a contract subject to the labor standards provisions of the
                applicable statutes referenced by Sec. 5.1 is entered into without the
                incorporation of the clauses required by Sec. 5.5, the agency must,
                upon the request of the Administrator or upon its own initiative,
                either terminate and resolicit the contract with the required contract
                clauses, or incorporate the required clauses into the contract (or
                ensure they are so incorporated) through supplemental agreement, change
                order, or any and all authority that may be needed. Where an agency has
                not entered directly into such a contract but instead has provided
                Federal financial assistance, the agency must ensure that the recipient
                or sub-recipient of the Federal assistance similarly incorporates the
                clauses required into its contracts. The method of incorporation of the
                correct wage determination, and adjustment in contract price, where
                appropriate, should be in accordance with applicable
                [[Page 15799]]
                law. Additionally, the following requirements apply:
                 (A) Unless the Administrator directs otherwise, the incorporation
                of the clauses required by Sec. 5.5 must be retroactive to the date of
                contract award or start of construction if there is no award.
                 (B) If this incorporation occurs as the result of a request from
                the Administrator, the incorporation must take place within 30 days of
                the date of that request, unless the agency has obtained an extension
                from the Administrator.
                 (C) The contractor must be compensated for any increases in wages
                resulting from incorporation of a missing contract clauses.
                 (D) If the recipient refuses to incorporate the clauses as
                required, the agency must make no further payment, advance, grant,
                loan, or guarantee of funds in connection with the contract until the
                recipient incorporates the required clauses into its contract, and must
                promptly refer the dispute to the Administrator for further proceedings
                under Sec. 5.13.
                 (E) Before terminating a contract pursuant to this section, the
                agency must withhold or cross-withhold sufficient funds to remedy any
                back wage liability resulting from the failure to incorporate the
                correct wage determination or otherwise identify and obligate
                sufficient funds through a termination settlement agreement, bond, or
                other satisfactory mechanism.
                 (F) Notwithstanding the requirement to incorporate the contract
                clauses and correct wage determination within 30 days, the contract
                clauses and correct wage determination will be effective by operation
                of law, retroactive to the beginning of construction, in accordance
                with Sec. 5.5(e).
                 (2)(i) Certified payrolls submitted pursuant to Sec. 5.5(a)(3)(ii)
                must be preserved by the Federal agency for a period of 3 years after
                all the work on the prime contract is completed, and must be produced
                at the request of the Department of Labor at any time during the 3-year
                period, regardless of whether the Department of Labor has initiated an
                investigation or other compliance action.
                 (ii) In situations where the Federal agency does not itself
                maintain certified payrolls required to be submitted pursuant to Sec.
                5.5(a)(3)(ii), upon the request of the Department of Labor the Federal
                agency must ensure that such certified payrolls are provided to the
                Department of Labor. Such certified payrolls may be provided by the
                applicant, sponsor, owner, or other entity, as the case may be,
                directly to the Department of Labor, or to the Federal agency which, in
                turn, must provide those records to the Department of Labor.
                 (3) The Federal agency will cause such investigations to be made as
                may be necessary to assure compliance with the labor standards clauses
                required by Sec. 5.5 and the applicable statutes referenced in Sec.
                5.1. Investigations will be made of all contracts with such frequency
                as may be necessary to assure compliance. Such investigations will
                include interviews with workers, which must be taken in confidence, and
                examinations of certified payrolls, regular payrolls, and other basic
                records required to be maintained under Sec. 5.5(a)(3). In making such
                examinations, particular care must be taken to determine the
                correctness of classification(s) of work actually performed, and to
                determine whether there is a disproportionate amount of work by
                laborers and of apprentices registered in approved programs. Such
                investigations must also include evidence of fringe benefit plans and
                payments thereunder. Federal agencies must give priority to complaints
                of alleged violations.
                 (4) In accordance with normal operating procedures, the contracting
                agency may be furnished various investigatory material from the
                investigation files of the Department of Labor. None of the material,
                other than computations of back wages, liquidated damages, and monetary
                relief for violations of Sec. 5.5(a)(11) or (b)(5), and the summary of
                back wages due, may be disclosed in any manner to anyone other than
                Federal officials charged with administering the contract or program
                providing Federal assistance to the contract, without requesting the
                permission and views of the Department of Labor.
                 (b) Department of Labor investigations and other compliance
                actions. (1) The Administrator will investigate and conduct other
                compliance actions as deemed necessary in order to obtain compliance
                with the labor standards provisions of the applicable statutes
                referenced by Sec. 5.1, or to affirm or reject the recommendations by
                the Agency Head with respect to labor standards matters arising under
                the statutes referenced by Sec. 5.1.
                 (2) Federal agencies, contractors, subcontractors, sponsors,
                applicants, owners, or other entities, as the case may be, must
                cooperate with any authorized representative of the Department of Labor
                in the inspection of records, in interviews with workers, and in all
                other aspects of the investigations or other compliance actions.
                 (3) The findings of such an investigation or other compliance
                action, including amounts found due, may not be altered or reduced
                without the approval of the Department of Labor.
                 (4) Where the underpayments disclosed by such an investigation or
                other compliance action total $1,000 or more, where there is reason to
                believe that the contractor or subcontractor has disregarded its
                obligations to workers or subcontractors, or where liquidated damages
                may be assessed under CWHSSA, the Department of Labor will furnish the
                Federal agency an enforcement report detailing the labor standards
                violations disclosed by the investigation or other compliance action
                and any action taken by the contractor or subcontractor to correct the
                violations, including any payment of back wages or any other relief
                provided workers or remedial actions taken for violations of Sec.
                5.5(a)(11) or (b)(5). In other circumstances, the Federal agency will
                be furnished a notification summarizing the findings of the
                investigation or other compliance action.
                 (c) Confidentiality requirements. It is the policy of the
                Department of Labor to protect the identity of its confidential sources
                and to prevent an unwarranted invasion of personal privacy.
                Accordingly, the identity of a worker or other informant who makes a
                written or oral statement as a complaint or in the course of an
                investigation or other compliance action, as well as portions of the
                statement which would tend to reveal the identity of the informant,
                will not be disclosed in any manner to anyone other than Federal
                officials without the prior consent of the informant. Disclosure of
                such statements will be governed by the provisions of the ``Freedom of
                Information Act'' (5 U.S.C. 552, see part 70 of this subtitle) and the
                ``Privacy Act of 1974'' (5 U.S.C. 552a, see part 71 of this subtitle).
                0
                27. Amend Sec. 5.7 by revising paragraph (a) to read as follows:
                Sec. 5.7 Reports to the Secretary of Labor.
                 (a) Enforcement reports. (1) Where underpayments by a contractor or
                subcontractor total less than $1,000, where there is no reason to
                believe that the contractor or subcontractor has disregarded its
                obligations to workers or subcontractors, and where restitution has
                been effected and future compliance assured, the Federal agency need
                not submit its investigative findings and recommendations to the
                Administrator, unless the investigation or other compliance action was
                made at the request of the Department of Labor. In
                [[Page 15800]]
                the latter case, the Federal agency will submit a factual summary
                report detailing any violations including any data on the amount of
                restitution paid, the number of workers who received restitution,
                liquidated damages assessed under the Contract Work Hours and Safety
                Standards Act, corrective measures taken (such as ``letters of notice''
                or remedial action taken for violations of Sec. 5.5(a)(11) or (b)(5)),
                and any information that may be necessary to review any recommendations
                for an appropriate adjustment in liquidated damages under Sec. 5.8.
                 (2) Where underpayments by a contractor or subcontractor total
                $1,000 or more, or where there is reason to believe that the contractor
                or subcontractor has disregarded its obligations to workers or
                subcontractors, the Federal agency will furnish within 60 days after
                completion of its investigation, a detailed enforcement report to the
                Administrator.
                * * * * *
                0
                28. Revise Sec. 5.9 to read as follows:
                Sec. 5.9 Suspension of funds.
                 (a) Suspension and withholding. In the event of failure or refusal
                of the contractor or any subcontractor to comply with the applicable
                statutes referenced by Sec. 5.1 and the labor standards clauses
                contained in Sec. 5.5, whether incorporated into the contract
                physically, by reference, or by operation of law, the Federal agency,
                upon its own action or upon written request of an authorized
                representative of the Department of Labor, must take such action as may
                be necessary to cause the suspension of the payment, advance, or
                guarantee of funds until such time as the violations are discontinued
                or until sufficient funds are withheld to compensate workers for the
                wages to which they are entitled, any monetary relief due for
                violations of Sec. 5.5(a)(11) or (b)(5), and to cover any liquidated
                damages and pre-judgment or post-judgment interest which may be due.
                 (b) Cross-withholding. In addition to the suspension and
                withholding of funds from the contract under which the violation(s)
                occurred, the necessary funds also may be withheld under any other
                Federal contract with the same prime contractor, or any other federally
                assisted contract that is subject to Davis-Bacon prevailing wage
                requirements and is held by the same prime contractor, regardless of
                whether the other contract was awarded or assisted by the same agency.
                 (c) Cross-withholding from different legal entities. Cross-
                withholding of funds may be requested from contracts held by other
                entities that may be considered to be the same prime contractor as that
                term is defined in Sec. 5.2. Such cross-withholding is appropriate
                where the separate legal entities have independently consented to it by
                entering into contracts containing the withholding provisions at Sec.
                5.5(a)(2) and (b)(3). Cross-withholding from a contract held by a
                different legal entity is not appropriate unless the withholding
                provisions were incorporated in full or by reference in that entity's
                contract. Absent exceptional circumstances, cross-withholding is not
                permitted from a contract held by a different legal entity where the
                labor standards were incorporated only by operation of law into that
                contract.
                0
                29. Revise Sec. 5.10 to read as follows:
                Sec. 5.10 Restitution, criminal action.
                 (a) In cases other than those forwarded to the Attorney General of
                the United States under paragraph (b) of this section where violations
                of the labor standards clauses contained in Sec. 5.5 and the
                applicable statutes referenced by Sec. 5.1 result in underpayment of
                wages to workers or monetary damages caused by violations of Sec.
                5.5(a)(11) or (b)(5), the Federal agency or an authorized
                representative of the Department of Labor will request that restitution
                be made to such workers or on their behalf to plans, funds, or programs
                for any type of bona fide fringe benefits within the meaning of 40
                U.S.C. 3141(2)(B), including interest from the date of the underpayment
                or loss. Interest on any back wages or monetary relief provided for in
                this part will be calculated using the percentage established for the
                underpayment of taxes under 26 U.S.C. 6621 and will be compounded
                daily.
                 (b) In cases where the Agency Head or the Administrator finds
                substantial evidence that such violations are willful and in violation
                of a criminal statute, the matter will be forwarded to the Attorney
                General of the United States for prosecution if the facts warrant. In
                all such cases the Administrator will be informed simultaneously of the
                action taken.
                0
                30. Revise Sec. 5.11 to read as follows:
                Sec. 5.11 Disputes concerning payment of wages.
                 (a) This section sets forth the procedure for resolution of
                disputes of fact or law concerning payment of prevailing wage rates,
                overtime pay, proper classification, or monetary relief for violations
                of Sec. 5.5(a)(11) or (b)(5). The procedures in this section may be
                initiated upon the Administrator's own motion, upon referral of the
                dispute by a Federal agency pursuant to Sec. 5.5(a)(9), or upon
                request of the contractor or subcontractor.
                 (b)(1) In the event of a dispute described in paragraph (a) of this
                section in which it appears that relevant facts are at issue, the
                Administrator will notify the affected contractor and subcontractor, if
                any, by registered or certified mail to the last known address or by
                any other means normally assuring delivery, of the investigation
                findings. If the Administrator determines that there is reasonable
                cause to believe that either the contractor, the subcontractor, or
                both, should also be subject to debarment under the Davis-Bacon Act or
                any of the other applicable statutes referenced by Sec. 5.1, the
                notification will so indicate.
                 (2) A contractor or subcontractor desiring a hearing concerning the
                Administrator's investigation findings must request such a hearing by
                letter or by any other means normally assuring delivery, sent within 30
                days of the date of the Administrator's notification. The request must
                set forth those findings which are in dispute and the reasons therefor,
                including any affirmative defenses.
                 (3) Upon receipt of a timely request for a hearing, the
                Administrator will refer the case to the Chief Administrative Law Judge
                by Order of Reference, with an attached copy of the notification from
                the Administrator and the response of the contractor or subcontractor,
                for designation of an Administrative Law Judge to conduct such hearings
                as may be necessary to resolve the disputed matters. The hearings will
                be conducted in accordance with the procedures set forth in part 6 of
                this subtitle.
                 (c)(1) In the event of a dispute described in paragraph (a) of this
                section in which it appears that there are no relevant facts at issue,
                and where there is not at that time reasonable cause to institute
                debarment proceedings under Sec. 5.12, the Administrator will notify
                the contractor and subcontractor, if any, by registered or certified
                mail to the last known address or by any other means normally assuring
                delivery, of the investigation findings, and will issue a ruling on any
                issues of law known to be in dispute.
                 (2)(i) If the contractor or subcontractor disagrees with the
                factual findings of the Administrator or believes that there are
                relevant facts in dispute, the contractor or subcontractor must advise
                the Administrator by letter or by any other means normally assuring
                delivery, sent within 30 days of the date of the Administrator's
                notification. In the response, the contractor or
                [[Page 15801]]
                subcontractor must explain in detail the facts alleged to be in dispute
                and attach any supporting documentation.
                 (ii) Upon receipt of a response under paragraph (c)(2)(i) of this
                section alleging the existence of a factual dispute, the Administrator
                will examine the information submitted. If the Administrator determines
                that there is a relevant issue of fact, the Administrator will refer
                the case to the Chief Administrative Law Judge in accordance with
                paragraph (b)(3) of this section. If the Administrator determines that
                there is no relevant issue of fact, the Administrator will so rule and
                advise the contractor and subcontractor, if any, accordingly.
                 (3) If the contractor or subcontractor desires review of the ruling
                issued by the Administrator under paragraph (c)(1) or (2) of this
                section, the contractor or subcontractor must file a petition for
                review thereof with the Administrative Review Board within 30 days of
                the date of the ruling, with a copy thereof the Administrator. The
                petition for review must be filed in accordance with part 7 of this
                subtitle.
                 (d) If a timely response to the Administrator's findings or ruling
                is not made or a timely petition for review is not filed, the
                Administrator's findings or ruling will be final, except that with
                respect to debarment under the Davis-Bacon Act, the Administrator will
                advise the Comptroller General of the Administrator's recommendation in
                accordance with Sec. 5.12(a)(2). If a timely response or petition for
                review is filed, the findings or ruling of the Administrator will be
                inoperative unless and until the decision is upheld by the
                Administrative Law Judge or the Administrative Review Board.
                0
                31. Revise Sec. 5.12 to read as follows:
                Sec. 5.12 Debarment proceedings.
                 (a) Debarment standard and ineligible list. (1) Whenever any
                contractor or subcontractor is found by the Secretary of Labor to have
                disregarded their obligations to workers or subcontractors under the
                Davis-Bacon Act, any of the other applicable statutes referenced by
                Sec. 5.1, this part, or part 3 of this subtitle, such contractor or
                subcontractor and their responsible officers, if any, and any firm,
                corporation, partnership, or association in which such contractor,
                subcontractor, or responsible officer has an interest will be
                ineligible for a period of 3 years to be awarded any contract or
                subcontract of the United States or the District of Columbia and any
                contract or subcontract subject to the labor standards provisions of
                any of the statutes referenced by Sec. 5.1.
                 (2) In cases arising under contracts covered by the Davis-Bacon
                Act, the Administrator will transmit to the Comptroller General the
                name(s) of the contractors or subcontractors and their responsible
                officers, if any, and any firms, corporations, partnerships, or
                associations in which the contractors, subcontractors, or responsible
                officers are known to have an interest, who have been found to have
                disregarded their obligations to workers or subcontractors, and the
                recommendation of the Secretary of Labor or authorized representative
                regarding debarment. In cases arising under contracts covered by any of
                the applicable statutes referenced by Sec. 5.1 other than the Davis-
                Bacon Act, the Administrator determines the name(s) of the contractors
                or subcontractors and their responsible officers, if any, and any
                firms, corporations, partnerships, or associations in which the
                contractors, subcontractors, or responsible officers are known to have
                an interest, to be debarred. The Comptroller General will distribute a
                list to all Federal agencies giving the names of such ineligible person
                or firms, who will be ineligible for a period of 3 years (from the date
                of publication by the Comptroller General of the name(s) of any such
                person or firm on the ineligible list) to be awarded any contract or
                subcontract of the United States or the District of Columbia and any
                contract or subcontract subject to the labor standards provisions of
                any of the statutes referenced by Sec. 5.1.
                 (b) Procedure. (1) In addition to cases under which debarment
                action is initiated pursuant to Sec. 5.11, whenever as a result of an
                investigation conducted by the Federal agency or the Department of
                Labor, and where the Administrator finds reasonable cause to believe
                that a contractor or subcontractor has committed violations which
                constitute a disregard of its obligations to workers or subcontractors
                under the Davis-Bacon Act, the labor standards provisions of any of the
                other applicable statutes referenced by Sec. 5.1, this part, or part 3
                of this subtitle, the Administrator will notify by registered or
                certified mail to the last known address or by any other means normally
                assuring delivery, the contractor or subcontractor and responsible
                officers, if any, and any firms, corporations, partnerships, or
                associations in which the contractors, subcontractors, or responsible
                officers are known to have an interest of the finding.
                 (i) The Administrator will afford such contractor, subcontractor,
                responsible officer, and any other parties notified an opportunity for
                a hearing as to whether debarment action should be taken under
                paragraph (a) of this section. The Administrator will furnish to those
                notified a summary of the investigative findings.
                 (ii) If the contractor, subcontractor, responsible officer, or any
                other parties notified wish to request a hearing as to whether
                debarment action should be taken, such a request must be made by letter
                or by any other means normally assuring delivery, sent within 30 days
                of the date of the notification from the Administrator, and must set
                forth any findings which are in dispute and the basis for such disputed
                findings, including any affirmative defenses to be raised.
                 (iii) Upon timely receipt of such request for a hearing, the
                Administrator will refer the case to the Chief Administrative Law Judge
                by Order of Reference, with an attached copy of the notification from
                the Administrator and the responses of the contractor, subcontractor,
                responsible officers, or any other parties notified, for designation of
                an Administrative Law Judge to conduct such hearings as may be
                necessary to determine the matters in dispute.
                 (iv) In considering debarment under any of the statutes referenced
                by Sec. 5.1 other than the Davis-Bacon Act, the Administrative Law
                Judge will issue an order concerning whether the contractor,
                subcontractor, responsible officer, or any other party notified is to
                be debarred in accordance with paragraph (a) of this section. In
                considering debarment under the Davis-Bacon Act, the Administrative Law
                Judge will issue a recommendation as to whether the contractor,
                subcontractor, responsible officers, or any other party notified should
                be debarred under 40 U.S.C. 3144(b).
                 (2) Hearings under this section will be conducted in accordance
                with part 6 of this subtitle. If no hearing is requested within 30 days
                of the date of the notification from the Administrator, the
                Administrator's findings will be final, except with respect to
                recommendations regarding debarment under the Davis-Bacon Act, as set
                forth in paragraph (a)(2) of this section.
                 (c) Interests of debarred parties. (1) A finding as to whether
                persons or firms whose names appear on the ineligible list have an
                interest under 40 U.S.C. 3144(b) or paragraph (a) of this section in
                any other firm, corporation, partnership, or association, may be made
                through investigation, hearing, or otherwise.
                 (2)(i) The Administrator, on their own motion or after receipt of a
                request for a determination pursuant to paragraph
                [[Page 15802]]
                (c)(3) of this section may make a finding on the issue of interest.
                 (ii) If the Administrator determines that there may be an interest,
                but finds that there is insufficient evidence to render a final ruling
                thereon, the Administrator may refer the issue to the Chief
                Administrative Law Judge in accordance with paragraph (c)(4) of this
                section.
                 (iii) If the Administrator finds that no interest exists, or that
                there is not sufficient information to warrant the initiation of an
                investigation, the requesting party, if any, will be so notified and no
                further action taken.
                 (iv)(A) If the Administrator finds that an interest exists, the
                person or firm affected will be notified of the Administrator's finding
                (by certified mail to the last known address or by any other means
                normally assuring delivery), which will include the reasons therefore,
                and such person or firm will be afforded an opportunity to request that
                a hearing be held to decide the issue.
                 (B) Such person or firm will have 20 days from the date of the
                Administrator's ruling to request a hearing. A person or firm desiring
                a hearing must request it by letter or by any other means normally
                assuring delivery, sent within 20 days of the date of the
                Administrator's notification. A detailed statement of the reasons why
                the Administrator's ruling is in error, including facts alleged to be
                in dispute, if any, must be submitted with the request for a hearing.
                 (C) If no hearing is requested within the time mentioned in
                paragraph (c)(2)(iv)(B) of this section, the Administrator's finding
                will be final and the Administrator will notify the Comptroller General
                in cases arising under the DBA. If a hearing is requested, the ruling
                of the Administrator will be inoperative unless and until the
                administrative law judge or the Administrative Review Board issues an
                order that there is an interest.
                 (3)(i) A request for a determination of interest may be made by any
                interested party, including contractors or prospective contractors and
                associations of contractors, representatives of workers, and interested
                agencies. Such a request must be submitted in writing to the
                Administrator, Wage and Hour Division, U.S. Department of Labor, 200
                Constitution Avenue NW, Washington, DC 20210.
                 (ii) The request must include a statement setting forth in detail
                why the petitioner believes that a person or firm whose name appears on
                the ineligible list has an interest in any firm, corporation,
                partnership, or association which is seeking or has been awarded a
                contract or subcontract of the United States or the District of
                Columbia, or a contract or subcontract that is subject to the labor
                standards provisions of any of the statutes referenced by Sec. 5.1. No
                particular form is prescribed for the submission of a request under
                this section.
                 (4) The Administrator, on their own motion under paragraph
                (c)(2)(ii) of this section or upon a request for hearing where the
                Administrator determines that relevant facts are in dispute, will by
                order refer the issue to the Chief Administrative Law Judge, for
                designation of an Administrative Law Judge who will conduct such
                hearings as may be necessary to render a decision solely on the issue
                of interest. Such proceedings must be conducted in accordance with the
                procedures set forth in part 6 of this subtitle.
                 (5) If the person or firm affected requests a hearing and the
                Administrator determines that relevant facts are not in dispute, the
                Administrator will refer the issue and the record compiled thereon to
                the Administrative Review Board to render a decision solely on the
                issue of interest. Such proceeding must be conducted in accordance with
                the procedures set forth in part 7 of this subtitle.
                0
                32. Revise Sec. 5.13 to read as follows:
                Sec. 5.13 Rulings and interpretations.
                 (a) All questions relating to the application and interpretation of
                wage determinations (including the classifications therein) issued
                pursuant to part 1 of this subtitle, of the rules contained in this
                part and in parts 1 and 3 of this subtitle, and of the labor standards
                provisions of any of the statutes listed in Sec. 5.1 must be referred
                to the Administrator for appropriate ruling or interpretation. These
                rulings and interpretations are authoritative and those under the
                Davis-Bacon Act may be relied upon as provided for in section 10 of the
                Portal-to-Portal Act of 1947 (29 U.S.C. 259). Requests for such rulings
                and interpretations should be submitted via email to
                [email protected]; by mail to Administrator, Wage and Hour
                Division, U.S. Department of Labor, 200 Constitution Ave. NW,
                Washington, DC 20210; or through other means directed by the
                Administrator.
                 (b) If any such ruling or interpretation is made by an authorized
                representative of the Administrator of the Wage and Hour Division, any
                interested party may seek reconsideration of the ruling or
                interpretation by the Administrator of the Wage and Hour Division. The
                procedures and time limits set out in Sec. 1.8 of this subtitle apply
                to any such request for reconsideration.
                0
                33. Amend Sec. 5.15 by revising paragraphs (c)(4) and (d)(1) to read
                as follows:
                Sec. 5.15 Limitations, variations, tolerances, and exemptions under
                the Contract Work Hours and Safety Standards Act.
                * * * * *
                 (c) * * *
                 (4)(i) Time spent in an organized program of related, supplemental
                instruction by laborers or mechanics employed under bona fide
                apprenticeship programs may be excluded from working time if the
                criteria prescribed in paragraphs (c)(4)(ii) and (iii) of this section
                are met.
                 (ii) The apprentice comes within the definition contained in Sec.
                5.2.
                 (iii) The time in question does not involve productive work or
                performance of the apprentice's regular duties.
                 (d) * * *
                 (1) In the event of failure or refusal of the contractor or any
                subcontractor to comply with overtime pay requirements of the Contract
                Work Hours and Safety Standards Act, if the funds withheld by Federal
                agencies for the violations are not sufficient to pay fully the unpaid
                wages and any back pay or other monetary relief due laborers and
                mechanics, with interest, and the liquidated damages due the United
                States, the available funds will be used first to compensate the
                laborers and mechanics for the wages to which they are entitled (or an
                equitable portion thereof when the funds are not adequate for this
                purpose); and the balance, if any, will be used for the payment of
                liquidated damages.
                * * * * *
                Sec. 5.16 [Removed and Reserved]
                0
                34. Remove and reserve Sec. 5.16.
                Sec. 5.17 [Removed and Reserved]
                0
                35. Remove and reserve Sec. 5.17.
                0
                36. Add Sec. 5.18 to subpart A to read as follows:
                Sec. 5.18 Remedies for retaliation.
                 (a) Administrator request to remedy violation. When the
                Administrator finds that any person has discriminated in any way
                against any worker or job applicant in violation of Sec. 5.5(a)(11) or
                (b)(5), or caused any person to discriminate in any way against any
                worker or job applicant in violation of Sec. 5.5(a)(11) or (b)(5), the
                Administrator will notify the person, any contractors for whom the
                person worked or on whose behalf the person acted, and any upper tier
                contractors, as well as the relevant contracting agency(ies) of the
                [[Page 15803]]
                discrimination and request that the person and any contractors for whom
                the person worked or on whose behalf the person acted remedy the
                violation.
                 (b) Administrator directive to remedy violation and provide make
                whole relief. If the person and any contractors for whom the person
                worked or on whose behalf the person acted do not remedy the violation,
                the Administrator in the notification of violation findings issued
                under Sec. 5.11 or Sec. 5.12 will direct the person and any
                contractors for whom the person worked or on whose behalf the person
                acted to provide appropriate make whole relief to affected worker(s)
                and job applicant(s) or take appropriate remedial action, or both, to
                correct the violation, and will specify the particular relief and
                remedial actions to be taken.
                 (c) Examples of available make whole relief and remedial actions.
                Such relief and remedial actions may include, but are not limited to,
                employment, reinstatement, and promotion, together with back pay and
                interest; restoration of the terms, conditions, and privileges of the
                worker's employment or former employment; the expungement of warnings,
                reprimands, or derogatory references; the provision of a neutral
                employment reference; and the posting of a notice to workers that the
                contractor or subcontractor agrees to comply with the Davis-Bacon Act
                and Related Acts anti-retaliation requirements.
                0
                37. Revise Sec. 5.20 to read as follows:
                Sec. 5.20 Scope and significance of this subpart.
                 The 1964 amendments (Pub. L. 88-349) to the Davis-Bacon Act
                require, among other things, that the prevailing wage determined for
                Federal and federally assisted construction include the basic hourly
                rate of pay and the amount contributed by the contractor or
                subcontractor for certain fringe benefits (or the cost to them of such
                benefits). The purpose of this subpart is to explain the provisions of
                these amendments. This subpart makes available in one place official
                interpretations of the fringe benefits provisions of the Davis-Bacon
                Act. These interpretations will guide the Department of Labor in
                carrying out its responsibilities under these provisions. These
                interpretations are intended also for the guidance of contractors,
                their associations, laborers and mechanics and their organizations, and
                local, State and Federal agencies, who may be concerned with these
                provisions of the law. The interpretations contained in this subpart
                are authoritative and may be relied upon as provided for in section 10
                of the Portal-to-Portal Act of 1947 (29 U.S.C. 259). The omission to
                discuss a particular problem in this subpart or in interpretations
                supplementing it should not be taken to indicate the adoption of any
                position by the Secretary of Labor with respect to such problem or to
                constitute an administrative interpretation, practice, or enforcement
                policy. Questions on matters not fully covered by this subpart may be
                referred to the Secretary for interpretation as provided in Sec. 5.13.
                0
                38. Revise Sec. 5.22 to read as follows:
                Sec. 5.22 Effect of the Davis-Bacon fringe benefits provisions.
                 The Davis-Bacon Act and the prevailing wage provisions of the
                statutes referenced in Sec. 1.1 of this subtitle confer upon the
                Secretary of Labor the authority to predetermine, as minimum wages,
                those wage rates found to be prevailing for corresponding classes of
                laborers and mechanics employed on projects of a character similar to
                the contract work in the area in which the work is to be performed. See
                the definitions of the terms ``prevailing wage'' and ``area'' in Sec.
                1.2 of this subtitle. The fringe benefits amendments enlarge the scope
                of this authority by including certain bona fide fringe benefits within
                the meaning of the terms ``wages'', ``scale of wages'', ``wage rates'',
                ``minimum wages'', and ``prevailing wages'', as used in the Davis-Bacon
                Act.
                0
                39. Revise Sec. 5.23 to read as follows:
                Sec. 5.23 The statutory provisions.
                 Pursuant to the Davis-Bacon Act, as amended and codified at 40
                U.S.C. 3141(2), the term ``prevailing wages'' and similar terms include
                the basic hourly rate of pay and, for the listed fringe benefits and
                other bona fide fringe benefits not required by other law, the
                contributions irrevocably made by a contractor or subcontractor to a
                trustee or third party pursuant to a bona fide fringe benefit fund,
                plan, or program, and the costs to the contractor or subcontractor that
                may be reasonably anticipated in providing bona fide fringe benefits
                pursuant to an enforceable commitment to carry out a financially
                responsible plan or program, which was communicated in writing to the
                affected laborers and mechanics. Section 5.29 discusses specific fringe
                benefits that may be considered to be bona fide.
                0
                40. Amend Sec. 5.25 by adding paragraph (c) to read as follows:
                Sec. 5.25 Rate of contribution or cost for fringe benefits.
                * * * * *
                 (c) Contractors must annualize all fringe benefit contributions to
                determine the hourly equivalent for which they may take credit against
                their fringe benefit obligation.
                 (1) Method of computation. To annualize the cost of providing a
                fringe benefit, a contractor must divide the cost of the fringe benefit
                by the total number of hours worked on Davis-Bacon and non-Davis-Bacon
                work during the time period to which the cost is attributable to
                determine the rate of contribution per hour. If the amount of
                contribution varies per worker, credit must be determined separately
                for the amount contributed on behalf of each worker.
                 (2) Exceptions requests. Contractors and other interested parties
                may request an exception from the annualization requirement by
                submitting a request to the WHD Administrator. Requests must be
                submitted in writing to the Division of Government Contracts
                Enforcement via email at [email protected] or by mail to
                Director, Division of Government Contracts Enforcement, Wage and Hour
                Division, U.S. Department of Labor, 200 Constitution Ave., NW, Room S-
                3502, Washington, DC 20210. A request for exception must demonstrate
                the fringe benefit plan in question meets the following three factors:
                 (i) The benefit provided is not continuous in nature; and
                 (ii) The benefit does not compensate both private and public work;
                and
                 (iii) The plan provides for immediate participation and essentially
                immediate vesting.
                 (3) Previous exceptions. In the event that a fringe benefit plan
                (including a defined contribution pension plan with immediate
                participation and immediate vesting) was excepted from the
                annualization requirement prior to the effective date of these
                regulations, the plan's exception will expire 18 months from the
                effective date of these regulations, unless an exception for the plan
                has been requested and received by that date under paragraph (c)(2) of
                this section.
                0
                41. Revise Sec. 5.26 to read as follows:
                Sec. 5.26 ``* * * contribution irrevocably made * * * to a trustee or
                to a third person''.
                 (a) Requirements. The following requirements apply to any fringe
                benefit contributions made to a trustee or to a third person pursuant
                to a fund, plan, or program:
                 (1) Such contributions must be made irrevocably;
                 (2) The trustee or third person may not be affiliated with the
                contractor or subcontractor;
                 (3) The trustee or third person must adhere to any fiduciary
                responsibilities applicable under law; and
                [[Page 15804]]
                 (4) The trust or fund must not permit the contractor or
                subcontractor to recapture any of the contributions paid in or any way
                divert the funds to its own use or benefit.
                 (b) Excess payments. Notwithstanding the above, a contractor or
                subcontractor may recover sums which it had paid to a trustee or third
                person in excess of the contributions actually called for by the plan,
                such as excess payments made in error or in order to cover the
                estimated cost of contributions at a time when the exact amount of the
                necessary contributions is not yet known. For example, a benefit plan
                may provide for definite insurance benefits for employees in the event
                of contingencies such as