Georgia Tech Procurement Assistance Center

Find Davis-Bacon in federal construction contracts, not in a supermarket

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There is hickory bacon.  There is turkey bacon.  And then there is Davis Bacon.

The first two can be found in the meat department of your local supermarket.

The last one — Davis Bacon — is found in federally-funded construction contracts.  If you’re bidding on a federal contract or subcontract, you’d better educate yourself about this requirement.

The federal Davis-Bacon Act (DBA) applies minimum prevailing wage classifications for all federally-funded or assisted construction projects.  (Note that the Federal Acquisition Regulation – the FAR – now refers to the Davis Bacon Act as “Wage Rate Requirements – Construction.”)

The U.S. Department of Labor creates wage classifications by the type of project for a specific type of worker.   (Although not the case in Georgia, also be aware of the fact that some state governments have adopted “little DBAs” requiring prevailing wages on state-funded public works projects.)

The worker classifications are crafted with broad job scopes, in order to be over-inclusive.  These classifications have drawn the ire of many private construction firms, who complain about what they consider over-payment for non-specialized labor (i.e., paying a wire runner as a journeyman electrician).  So, while many favor the DBA’s heavy wages – it can be crippling to an unprepared private firm’s profit margin.

In order to prepare, a construction professional must read and absorb the federal wage classifications that apply on their project – before bidding.  Wage classifications are prepared by state and by project, and are included in all federally-funded construction work.

If you are bidding a contract in the State of Georgia, you’ll need to check out the Georgia classifications.  For example, if you were building a non-residential structure, such as a government building, in Bibb County, you can see the applicable wage rates here.

If your Bibb County bid needs to include ironworkers to install your structural steel, you would need to bid them per hour at $24.04, plus $9.86 in fringe benefits (insurance, fringe, or even cash).  There are no real boundaries here – if a worker is involved in structural steel work, that worker is to be paid as an ironworker. If a contractor does not plan for this broad application, you’ll be facing penalties that are spelled-out under the Wage & Hour Act or Contract Work Hours and Safety Standards Act.  The penalties are stiff, providing for up to two times the amount of the unpaid or underpaid wages, plus interest.

The lesson here?  Like with all things involving government contracting, do your homework before jumping in with both feet.  To obtain assistance, check with a representative of the Georgia Tech Procurement Assistance Center (GTPAC) nearest you.  With proper preparation, you’ll be able to bid correctly, win a contract or subcontract, and then be able to bring home the real bacon.

© 2010-2017 –  Georgia Tech Procurement Assistance Center – All Rights Reserved.

Labor Dept. resumes providing guidance on wage and hour laws

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The U.S. Department of Labor is reinstating the issuance of opinion letters.  The letters, issued by the department’s Wage and Hour Division, is one of its methods the department uses to provide guidance to covered employers and employees.

An opinion letter is an official, written opinion by the Wage and Hour Division of how a particular law applies in specific circumstances presented by an employer, employee or other entity requesting the opinion. The letters were a division practice for more than 70 years until being stopped and replaced by general guidance in 2010.

“Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” says Labor Secretary Alexander Acosta. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.”

The division has established a webpage where the public can see if existing agency guidance already addresses their questions or submit a request for an opinion letter. The webpage explains what to include in the request, where to submit the request, and where to review existing guidance. The division will exercise discretion in determining which requests for opinion letters will be responded to, and the appropriate form of guidance to be issued.

Federal court rules against Labor Department in wage case

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The nation’s second most powerful court ruled against the Department of Labor (DoL) Tuesday in a case challenging when construction workers are entitled to prevailing wages on public projects.

Davis BaconThe U.S. Court of Appeals for the D.C. Circuit said the workers who built CityCenterDC, a mixed-use development in the heart of the District of Columbia (D.C.), were not entitled to prevailing wages under the Davis-Beacon Act.

The federal law applies to construction contracts that cities enter into for public works projects.

In affirming the lower court’s decision, the D.C. Circuit, however, said CityCenterDC, which features upscale retail stores like Louis Vuitton, high-end restaurants, a large private law firm and luxury residences, is not a “public work.”

“To qualify as a public work, a project must possess at least one of the following two characteristics: public funding for the project’s construction or government ownership or operation of the completed facility, as with a public highway or public park,” Judge Brett Kavanaugh wrote in the court’s decision. “Here, CityCenterDC’s construction was not publicly funded and CityCenterDC is not a government-owned or government-operated facility. So CityCenterDC is not a public work.”

Keep reading this article at: http://thehill.com/regulation/court-battles/275195-federal-court-rules-against-labor-department-in-wage-case

See more details at: http://www.constructiondive.com/news/court-rules-against-dol-in-prevailing-wage-case-due-to-massive-atextual/416908/

Contractor to pay government upwards of $675,000 for failure to pay proper wages

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Justice Dept. sealGovernment contractor Paige Industrial Services, Inc. has agreed to pay the United States between $450,000 and $675,000 to resolve allegations under the False Claims Act that the company submitted false claims to the Department of Health and Human Services.

In a related parallel criminal proceeding involving a Paige subcontracting company, construction company owner Luis Alonso Valle, age 46, of Silver Spring, Maryland, pleaded guilty on February 11, 2016 to an illegal pattern and practice of hiring unauthorized aliens.

This settlement resolves allegations that Paige Industrial Services submitted claims from 2006 to 2013 falsely certifying that it had complied with the Davis-Bacon Act.  The Davis-Bacon Act required Paige to pay certain prevailing wages and fringe benefits to its employees, or the employees of its subcontractors, while working under a government contract performing construction at the National Institute of Health (NIH) campus in Bethesda, Maryland.  Paige, which provided construction and maintenance services to government agencies, allegedly failed to meet the requirements of the statute while certifying that it had.  Paige denies the allegations.

“Contractors are required be truthful in their certifications to federal agencies,” said U.S. Attorney Rod J. Rosenstein.

“This office is committed to investigating allegations of fraud involving the Davis-Bacon Act, which requires that contractors and subcontractors pay prevailing wages to their workers on government projects,” stated Acting SAC John Dolce, U.S. Department of Labor’s Office of Inspector General – Washington Regional Office. “The joint criminal and civil resolutions announced today reflect the seriousness with which our agency and its law enforcement partners pursue allegations of wrongdoing that affect the American workforce.”

As part of the settlement, Paige has agreed to make additional payments above a minimum settlement payment of $450,000, depending on the financial performance of the company over the next five years.

The civil settlement resolves a lawsuit filed in the District of Maryland under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. (U.S. ex rel. Brandon Owens and Stevan Reba v. Gilbane, Inc, Gilbane Building Company, Inc, and Paige Industrial Services, Inc.) The claims resolved by this settlement are allegations only, and there has been no determination of liability.

In a related parallel criminal proceeding, Valle Services, LLC., was a subcontractor to Paige at the NIH campus in Bethesda.  According to his plea agreement, Luis Valle owned and operated Valle Services, a construction company that provided unskilled laborers to clean up after demolition projects.  From at least January 2010 to June 2013, Valle paid some of his employees by handwritten checks without withholding required payroll taxes of at least $54,641.  Additionally, Valle failed to pay a matching employer share of the payroll tax of at least $54,641.  These wages were not included on W-2 forms distributed to the employees at the end of the year.

Furthermore, from March 2008 to August 2013, Valle hired at least 19 illegal aliens to work in the United States, and paid them weekly through checks that he typically distributed in person from his vehicle at a parking lot.  Valle approved the hiring of at least five of the illegal aliens to work on a federal contract at the Bethesda NIH campus, which contract was subject to the provisions of the Davis-Bacon Act.

U.S. District Judge Paul W. Grimm sentenced Valle on February 11, 2016 to three years’ probation and imposed the condition that Valle not employ any unauthorized aliens.  Judge Grimm also entered an order that Valle forfeit $57,000, which represents a $3,000 fine for each of the 19 unauthorized aliens that he illegally hired.

Source: http://www.justice.gov/usao-md/pr/paige-industrial-services-agrees-resolve-false-claims-act-allegations

Labor Dept. to require paid sick leave for workers of federal contractors

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Dept. of LaborThe Department of Labor (DOL) is requiring federal contractors, subcontractors and certain parties who contract with the Federal Government to provide their employees with up to 7 days of paid sick leave annually, implementing Executive Order 13706, which was signed by President Obama on September 7, 2015.

The proposed rule applies to new contracts or contract-like instruments, if:

(i)(A)  it is a procurement contract for services or construction; (B) a contract covered by the Service Contract Act; (C)  a contract for concessions; and (D) a contract entered into with the Federal government in connection with Federal property or lands related to offering services for Federal employees, their dependents, or the general public; and

(ii) the wages of employees under such contract are governed by the Davis-Bacon Act, the Service Contract Act, or the  Fair Labor Standards Act (FLSA), including employees who qualify for an exemption from the FLSA.

DOL estimates that the proposed rule will cost each small business $150-$650 for the first year in implementation costs and payroll costs.

Comments are due to the DOL by March 28, 2016.     

 

Minimum wage for federal contractor workers to increase Jan. 1, 2016

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On February 14, 2014, President Obama issued an executive order requiring certain federal contractors and subcontractors to pay an increased hourly minimum wage as mandated by the secretary of labor, who was also to determine increases to the wage rate on an annual basis.

Dept. of LaborOn September 16, 2015, the Secretary of Labor Announced that, effective Jan. 1, 2016, new minimum wages for employees of federal contractors will be increased from $10.10 to $10.15 per hour and that the rate for tipped employees will rise from $4.90 to $5.85 per hour.

What Contracts Are Covered?

Keep reading this article at: http://www.oanow.com/news/business/article_b09cf56e-5f2b-11e5-b780-d3ebd138a752.html

DOL releases final rule raising minimum wage for employees working on covered federal contracts

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On October 1, the Department of Labor (“DOL”) announced its final rule raising the minimum wage for employees working on covered federal government contracts from $7.25 an hour to $10.10 an hour.  The final rule implements Executive Order 13658, which was issued by President Obama last February.

The final rule applies to a wide range of contracts issued for solicitations on or after January 1, 2015, including (1) procurement contracts for services or construction; (2) service contracts exceeding $2,500 covered by the Service Contract Act; (3) contracts for concessions; and (4) contracts that are both (a) entered into the with the Federal Government in connection with Federal property or lands and (b) covered by the Fair Labor Standards Act, Service Contract Act, or Davis-Bacon Act.  The rule also applies to (1) individuals with disabilities who were previously paid below the minimum wage because their disability affects their productivity; and (2) tipped employees, whose minimum hourly pay will be raised from $2.13 to $4.90.

Keep reading this article at http://www.mondaq.com/article.asp?articleid=344992 for details on employees covered, impact on employers, and next steps.

Subcontractor’s owner sentenced in Davis-Bacon fraud case

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Davis-Bacon Act fraud has resulted in a criminal sentence for the owner of a now-defunct construction subcontractor.

According to a Department of Justice press release, the subcontractor’s owner has been sentenced to four years of probation (including 18 months of home confinement) and ordered to pay $164,627 in restitution, after pleading guilty to charges of conspiracy to pay employees less than prevailing wages on a federal construction project in Boston.

Isreb operated Taunton Forms, a construction company based in Massachusetts.  In 2006, Suffolk Construction was awarded a GSA prime contract to renovate a federal building in Boston.  Suffolk entered into a subcontract with Taunton Forms to perform certain concrete work on the project.  Suffolk ultimately paid Taunton Forms more than $1 million under the subcontract.

Keep reading this article at: http://smallgovcon.com/debarment-and-penalties/davis-bacon-act-fraud-subcontractors-owner-sentenced/

Don’t get burned by this summer’s OFCCP enforcement

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While federal contractors may have been looking forward to having a summer break from new affirmative action regulations and related enforcement activities, President Obama and the U.S. Department of Labor’s Office of Federal Contractor Compliance Programs (OFCCP) have had other ideas.

Indeed, President Obama and the OFCCP have turned up the heat on federal contractors this summer by: (1) issuing a slew of new executive orders and other regulations that exponentially increase their compliance obligations, and (2) sending out a second wave of corporate scheduling announcement letters advising of future compliance audits.

Keep reading this article at: http://californiaemploymentlaw.foxrothschild.com/wp-content/uploads/sites/9/2014/08/OFCCP_article.pdf

Rules proposed to implement Executive Order on minimum wage in federal contracts

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An Executive Order, signed by President Obama in February, directed the U.S. Department of Labor (DOL) to develop guidelines to increase the minimum wage for federal contractors.   On June 12, the DOL, in conjunction with the White House, released its proposed rule that raises the minimum wage for workers on federal service and construction contracts to $10.10 per hour.

The 181-page proposed rule (found here as published in the Federal Register) would increase wages for nearly 200,000 workers, according to an economic analysis included in the proposal.

The Executive Order applies to new and renegotiated federal contracts starting January 1, 2015.

The proposed rule would apply to all construction contracts covered by the Davis-Bacon Act; service contracts covered by the Service Contract Act; concessions contracts, such as contracts to furnish food and lodging on federal property; and contracts to provide services, such as child care or dry cleaning, in federal buildings.  Tipped employees of government contractors and their subcontractors would also receive a raise under the proposed rule.

The DOL’s Wage and Hour Division will be responsible for enforcing the proposed rule. The proposed rule contains a mechanism for investigations and informal complaint resolution as well as remedies for violations, including the payment of back wages and debarment as well as an anti-retaliation provision to protect whistle blowers or complainants.

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