The Davis-Bacon and Service Contract Acta. Laws Whose Tune Has Passed?

• Author: Major Timothy, J, Pendolino
• Pages: 04

1. Introduction

   "Mr Speakec Lf this bill were not demanded b) organized labor. it would not ham a chance ofpassage in this House under suspensron of the rules This LS the most ndLculous proposition I hare euer seen brought 6efore (1 legislative body "l

   In the sixty-three gears mnce Representative Blanton made this statement on the floor of the House of Representatives. the Davis-Bacon Act2 (DBA,or Act), along with the Service Contract Act3 (SCA, or Act), continue to be the subjects of periodic debate. These debates generally pit those who believe that the government must act to protect workers from competitive pressures and unscrupulaus employers againsr those who believe in free marker forces. The result has been that Democratically controlled Congresses amend the Acts to broaden their coverage and strength-en their cantrold while Republican Administrations make regdata-IY changes which have the opposite effect 5

   174 Cox& RPC 6308 19311 ,remarks h) Rep Blanronl

   "Ah L ha 71.798 46 Star 1494 rcod&ed 8s amended BI 40 U S C d 276a

   ,19861) ,Pub L So 89 286, 79 Stat 1034 lcodi6ed ad amended at 41 L! S C P( 351-

   What are these Acts and what do they do? In very simple terms, Congress provided in bath the DBA and SCA that those working on government contracts for construction or services could not be paid less than the wage determined by the Secretary of Labor to be "prevailing'in the locality where the work is to be performed.6

   The DBA applies to "every contract in exce~s of S2000 to which the United States or the District of Columbia is a party, for con-struction, alteration, andior repair, including painting and decorating, of public buildings and public works "7 The DBA requires that these contracts state:

   the mmimum wages to be paid various classes of laborers and mechanics . . . shall be based upon the wages . .

   determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechamcs employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which work LS to be performed . . .a

   The SCA applies to ''every contract entered into by the United States or Distnct of Columbia in excess of S2500 . . . the principal purpose of which ia to furnish services in the United States through the use of service empl~yees."~

   The SCA requires that these contram contain "provismnIs1 specifying the monetary wages to be paid the various classes of service employees in the performance of the contract or any subcontract thereunder, as determmed by the Secretary [of Labor1 . . . m accordance with prevailing rates for such employees m the locality."1o In the case of service employees covered by B collective bargaining agreement, the SCA mandates the payment of wages no less than "the rates for such employees provided for in such agreement, including prospective wage increases provided for in such agreement a8 a result of arm's-length negotiations.""

   Bath the DBA and the SCA authorize the government to withhold funds owed to B contractor to pay employees who have been paid less than the prescribed prevahng wage.12 Both Acts also prande that a contractor may be debarred-made ineligible for receipt

   (19931 far the SCA

   -40 C S C B 276a(a, (1986)

   'Id941 US C B 3511a) 11988)

   WdnidI* 40 U 3 C $8 276alal. 276a-2 (1988). 41 US C D 3Wa) (19881

   of government contracts-for B penad of up to three years If the Secretary of Labor finds that the contractor failed to comply with the Acts' requirements l3

   Unfortunately, Congress failed to define key terms such as "prevailing" and "locality." This left to the Secretary of Labor the rask of working aut the details which would farm the ver: heart of the coverage afboth Acts

   Proponents of the DBA and SCA believe that they are necessary to prevent the wages of those working on government contracts from falling to minimum wage levels due to the competnx-e nature of government procurement, which favor8 the lowest bidder These proponents believe that this protection is worth any additional costs that the Acts may impose on taxpayers. Conversely, entics generally dismiss the argument that wages need protection and clam that the DBA and SCA are simply too expensive, m terms of both direct and admmistrative costs, to justify their continued exmtenee inthese days of dechnmg budgets.

   Prev~ously,critics of the DBA and SCA have introduced bills m

   Congress that muld repeal one or both of the Acta, or raise the dollar threshold at which the Acts apply.14 To date. honeier. support-ers af the Acts hare succeeded and Congress has not enacted any of these bills.

   This article will analyze whether a need for either of these Acts still exists Section 11 discusses the background and history of both Acts. Section I11 provides an ove~iewof the regulations that the DOL has issued to implement and administer the Acts. Section I11 also discusses the procurement regulations which other execu-tive agencies have issued to guide their contracting personnel in the admmmtratmn of the DBA and SCA Section IV examines the bills currently pending before Congress that would repeal or reform the Act8 Finally, Section V discusses the impact of the DBA and SCA. attempts to quantify mme of the costs associated with the Acts. and recommends repeal of both Acts. Section V also recommends that to protect the wages of lover-paid semm workers Congress consider mandating certain changes to procurement replatmns.

   19961 DAVIS.BAC0NAND SERVICE CONTRACT ACTS

   11. History

   A The Daws-Bacon Act

   Congress enacted the DBA in 1931 as a precursor to the New Deal legislation The DBA was the first federal wage law to apply to nongovernment workers l5 At the time Congress enacted the DBA, the country was in the throe8 of the Great Depression and work of any kind was scarce. This was especially true in the canstmctian industry. Under these circumstances, nanloeal contractors could import work crews to a job site for two dollars a day, much lesa than the prevailing rate of three dollars and fifty cents to four dollars a day. These lower wages put even more downward pressure on local wage rates than the Depression Dunng this penod, federal construction was especially important because post offices and Veterans Admmistration hospitals were just about the only buildings being constructed.16

   One of the DBA's original sponsors, Representative Bacon, specifically referred to this situation dunng the 1931 hearings on his bill:

   A practice has been growing up in carrying out the bmlding program where certain itinerant, irresponsible contractors, with itinerant, cheap, bootleg labor, have been going around throughout the country "picking off a con-tract here and a contract there and local labor and the local contractors have been standing an the sidelines looking In. Bitterness has been caused in many cammuni-ties because of this situation. This bill, my friends, is simply to give local labor and the local contractor a fair opportunity to partimpate m this building program."

   However, Some evidence suggested that this problem was not as 8enoub aa the bill's supporters made it out to be. A January 10, 1931 opinion from the Comptroller General of the United States (Comptroller General), submitted for the record during consideration of the bill before Congress, stated that the practice of imparting cheap labor did not appear to be widespread.18 The Comptroller General's study surveyed twenty-six Treasury Department projects

   employng 1724 workers 19 The study found that 368 of these were from outside the area of the project 20 Contractors usually employed outside horkers in mtiea such as Boise. Idaho, and Juneau, Alaska where large supplies of construction workers were not ava1lahle.21

   In addition to this most often stated concern, another, less noble, purpose also may have played a part in the passage of the DBA. Representative Allgood put it most bluntly in his remarks onthe House floor

   Reference has been made to a contractor from Alabama who went to New Ymk with bootleg labor That 1s a fact That contractor has cheap colored labor that he transports, and puts them m cabins. and it 1s labor of that sort that 1s in competition with white labor throughout the

   It appears from these statements that racial higotrl- also may have played a part m the perceived need for the DBA. The argument cantinues to he made that the DBA has a disproportionately adverse affect on minorities and women 23

   Whatever the reason behind its enactment, the DBA became law in 1931 The original text of the Act wa8 deceptively simple 21

   country.''

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   9Id >Id AlId W 4

   CONG Rrc 6513 11931',Le, s g , .hI%\\D J THIIBLOT. Jh Pnriu~ma

   Wizr LECISL~~O\

   Acrs. THE U'AIEH-HLILIY

   CO\TR.ACI ACT 127-28 Labar Reiarmni and P v b l ~

   19868 Iheremafrer PREI'ULI\G

   ?-Dav~i-Baconhct.

   Pub L SD 71 798.46 Stat 1494 1931, icodified a( amended at 40 US C P 2i6a ,19881) The entire iubstantiie portion of the DB.4. BI o n p nali) enacted. readbery contraci in erne% of %,oOo ~n amount. to uhlch the Umfed Srafee or the Diarriet of Columbia LI B pari), rhxh requlrer 01 ~nvdvwthe emplaymenf af laborers or meehamcs m the construcfmn, altanCor repan of an) pvblx buidmgr of the Umted Statea 01 theaf Calvmbia uithm the geographical hmns of the Stares of thethe Dictrief 01 Calvmbia shall contsrn B pm\mon IO the effectram of %ages far d l laborers and mechanics emplo>ed by the cnr any iub~onfraetor on rhe pvbhr buddmgs coshall be not lesd than the preialhnp rate ai wagenature m the elf), toan, \~llage, or other c n d dwhich the pubhe bu~ldmge are locared, or ~n thethe public bvildingi are located there and a furrher pmiman that incase any dispute m i e s BI fn what are the preuadnng rates of uaeei for%ark of a aimilar nature appheable t o the contract uhxh cannot be adjueted by the conirachng olfilcer. the matrer shall be referred to rhe Secretary of Labor for determination and h>s decision thereon shall...