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© Council of Infrastructure Financing Authorities (CIFA) 

Contact: dfinn@cifanet.org

Davis Bacon

Allowing alternative methods to demonstrate compliance with Davis Bacon will reduce the administrative cost of water infrastructure projects.
What is Davis Bacon?

Davis Bacon is a federal law that mandates hourly wage rates and fringe benefits for laborers and mechanics who work on construction projects that receive federal funding. The U.S. Department of Labor determines wages and develops compliance procedures for Davis Bacon. See EPA Guidance and EPA Handbook for Davis Bacon.

Who's Impacted?

Since 2009, federal law has required all water infrastructure projects funded by Clean Water and Drinking Water SRF loans to comply with Davis Bacon. 

What's the problem?

The paperwork and procedures to demonstrate compliance with Davis Bacon are prescriptive, burdensome and often duplicative. In states with state prevailing wage laws, contractors and subcontractors must demonstrate compliance with both federal and state wage laws - creating twice the work without providing added benefits to workers. 

Compliance with the federal requirements is reducing funding for construction:

  • Florida offers a 3/4 cut in the interest rate to cover the cost of compliance by borrowers. The lower interest rate reduces the amount of money that will be repaid into the revolving fund to meet future water infrastructure needs.  

  • Indiana paid the cost of compliance - $2,277,053 - for loan applicants from 2009 to 2014, funding that might otherwise have been used for construction of water infrastructure projects. 

What's the solution?

Reduce the cost and complexity of compliance by:

  • Allowing states with state prevailing wage laws to be considered in compliance with Davis Bacon without any additional paperwork or process.

  • Allowing states without prevailing wage laws to create their own compliance procedures which is authorized under current law. 

Key Points: 

Consistency with Federal and State Prevailing Wages

The U.S. Department of Labor adopts state prevailing wages for transportation projects but not for other projects, like water infrastructure. In a recent audit, the Inspector General for U.S. Department of Labor recommended changing this policy, which would ensure prevailing wages are consistent under federal and state laws for all construction projects. (Please see page 10 of the audit, Regulatory Changes May Be Needed, for a discussion of this issue.)

Precedent for State-by-State Compliance Procedures

For more than 30 years, federal law has allowed State Revolving Funds to develop their own procedures, as determined by the Governor of the State, for compliance with the National Environmental Policy Act (NEPA). The law applies the same flexibility to Davis Bacon in the Federal Water Protection Control Act Section 602(b)(6). Section 511(c)(1) applies to NEPA and section 513 applies to Davis Bacon.

 

"(6) treatment works eligible under this Act which will be constructed in whole or in part with assistance made available by a State water pollution control revolving fund authorized under this title, or section 205(m) of this Act, or both, will meet the requirements of, or otherwise be treated (as determined by the Governor of the State) under sections 511(c)(1) and 513 of this Act in the same manner as treatment works constructed with assistance under title II of this Act."