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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: September 21, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Labor; Labor Standards Provisions Applicable to Federally Financed and Assisted Construction Contracts

SOURCE: Federal Register, September 21, 2000, Vol. 65, No. 184, page 57269

AGENCIES: Department of Labor (DOL), Employment Standards Administration, Wage and Hour Division

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: DOL is proposing to amend two related definitions in its regulations pertaining to the Davis-Bacon Act and related acts that apply to federal and federally-assisted construction projects: (1) "site of the work" to conform with three appellate court decisions that concluded the definition was contrary to the language of the Davis-Bacon Act that limits coverage to workers employed "directly upon the site of the work"; and (2) "construction, prosecution, completion, or repair" to address situations that were not contemplated when the current regulations were promulgated in 1983.

EDITOR'S NOTE: The DOL regulations pertaining to the Davis-Bacon Act are in Title 29 of the Code of Federal Regulations, Labor; 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).

DATES: Comments must be received on or before October 23, 2000.

ADDRESSES: Send comments to T. Michael Kerr, Administrator, Wage and Hour Division (Attention: Government Contracts Team), Employment Standards Administration, U.S. Department of Labor, Room S-3018, 200 Constitution Avenue, NW, Washington, DC 20210; fax: 202-693-1432.

FOR MORE INFORMATION CONTACT: Timothy Helm, Office of Enforcement Policy, Government Contracts Team, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Room S-3018, 200 Constitution Avenue, NW, Washington, DC 20210; 202-693-0574.

SUPPLEMENTAL INFORMATION: The Davis-Bacon Act requires that construction contracts contain a provision requiring the payment of minimum wages to "all mechanics and laborers employed directly upon the site of the work..." In 1983, DOL issued regulations which provided a two-part definition of "site of the work": (1) "the site of the work is the physical place or places where the construction called for in the contract will remain when work on it has been completed and...other adjacent or nearby property used by the contractor or subcontractor in such construction which can reasonably be said to be included in the site" (paragraph (l)(1) of 29 CFR 5.2, Definitions); and (2) "fabrication plants, mobile factories, batch plants, borrow pits, job headquarters, tool yards, etc." are part of the site of the work provided they are "so located in proximity to the actual construction location that it would be reasonable to include them," and are "dedicated exclusively, or nearly so, to performance of the contract or project") (29 CFR 5.2(l)(2)). Paragraph 29 CFR 5.2(l)(3) goes on to state that the fabrication plants, batch plants, borrow pits, tool yards, job headquarters, etc., "of a commercial supplier or materialman which are established by a supplier of materials for the project before the opening of bids and not on the project site, are not included in the site of the work." As DOL points out, "facilities such as batch plants and borrow pits are not covered if they are ongoing businesses apart from the federal contract work."

In addition, the definition of "construction, prosecution, completion, or repair" in 29 CFR 5.2(j)(1) covers "all types of work done on a particular building or work at the site thereof, including work at a facility which is dedicated to and deemed a part of the site of the work...including without limitation (i) alteration, 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 on the site of the building or work...; and (iv) transportation between the actual construction location and a facility which is dedicated to such construction and deemed a part of the site of the work..."

Three court cases have addressed these definitions:

• Building and Construction Trades Department, AFL-CIO v. United States Department of Labor Wage Appeals Board, 932 F.2d 985 (D.C. Circuit Court of Appeals, 1991), involved truck driver employees of the prime contractor's wholly owned subsidiary, who were delivering materials from a commercial supplier to the construction site. The material delivery truck drivers spent 90% of their workday on the highway driving to and from the commercial supply sources, ranging up to 50 miles round trip and stayed on the site of the work only long enough to drop off their loads, usually for not more than ten minutes at a time. The question involved whether the truck drivers were involved in covered "transportation between the actual construction location and a facility which is dedicated to such construction..." The court held that "the phrase 'mechanics and laborers employed directly upon the site of the work' restricts coverage of the [Davis-Bacon] Act to employees who are working directly on the physical site of the public building or public work being constructed...material delivery truckdrivers who come onto the site of the work merely to drop off construction materials are not covered by the Act even if they are employed by the government contractor." Therefore, the court decided that "29 CFR Sec. 5.2(j), insofar as it includes off-site material delivery truck drivers in the Act's coverage, is invalid."
  
  
• Ball, Ball and Brosamer v. Reich, 24 F. 3d 1447 (D.C. Circuit Court of Appeals, 1994), involved workers at a subcontractor's borrow pit and batch plant who obtained raw materials from a local sand and gravel pit and set up a portable batch plant for mixing concrete. The pit and batch plant were dedicated exclusively to supplying material for the completion of the 13-mile stretch of aqueduct that the prime contractor had contracted to construct, and they were located about two miles away at its nearest point. The court decided that the Davis-Bacon prevailing wage requirements do not apply to the borrow pit and batch plant workers because "the ordinary meaning of the statutory language is that the Act applies only to employees working directly on the physical site of the public building or public work under construction." However, the court went on to state that the 29 CFR 5.2(l)(2) phrase "so located in proximity to the actual construction location that it would be reasonable to include them" might satisfy the geographic limiting principle of the Davis-Bacon Act if it were applied "only to cover batch plants and gravel pits located in actual or virtual adjacency to the construction site."
  
  
• L.P. Cavett Company v. U.S. Department of Labor, 101 F.3d 1111 (6th Circuit Court of Appeals, 1996), involved truck drivers hauling asphalt from a temporary batch plant to an Indiana highway under construction three miles away. Citing the Ball decision, the court decided that the truck drivers were not due prevailing wages because "a facility in virtual adjacency to a public work site might be considered part of that site, a facility located two (or in this case three) miles away from the site would not."

However, subsequent to these decisions, the DOL's Administrative Review Board (ARB) addressed the Davis-Bacon Act's "site of the work" provision in Bechtel Contractors Corporation (Prime Contractor), Rogers Construction Company (Prime Contractor), Ball, Ball and Brosamer, Inc., (Prime Contractor), and the Tanner Companies, Subcontractor (ARB Case No. 97-149, March 25, 1998, reaffirming ARB Case No. 95-045A, July 15, 1996). This case involved a dispute over whether the Davis-Bacon provisions applied to work performed at three batch plants established and operated in connection with construction work on the Central Arizona Project (CAP), a construction project consisting of 330 miles of aqueduct and pumping plants. The batch plants were located less than one-half mile from various pumping stations that were being constructed as part of the project. The ARB ruled that interpretation of 29 CFR 5.2(l)(1) requires examination of the question of whether the temporary facilities are so "located in virtual adjacency" to the site of the work that it would be reasonable to include them. The ARB found that there was no basis for excluding the batch plant workers since they were employed on sites of the work to the same extent as the workers who cleared the land and the workers who inventoried, assembled, transported or operated tools, equipment or materials on nearby or adjacent property.

Because of the confusion produced by these various rulings, and the fact that three court decisions have taken issue with the regulatory definitions of the statutory terms "construction, prosecution, completion, and repair" and "site of the work", DOL has decided to revise the definitions.

• "Site of the Work" (29 CFR 5.2(l)): DOL does not believe it would be appropriate to attempt to define the term "adjacent or virtually adjacent" because the actual distance may vary depending upon the size and nature of the project. However, invites comments on whether this terminology should be defined, and if so, in what manner.
  
  Also, the current definition does not adequately address certain situations which DOL believes warrant coverage. For example, new construction technologies have been developed that make it practical and economically advantageous to build major segments of complex public works, such as lock and dam projects and bridges, at locations some distance up-river from the locations where the permanent structures will remain when their construction is completed. Whole sections can be floated down-river and put in place to form the structure being built. In such situations, much of the construction of the public work is performed at a secondary site other than where it will remain after construction is completed. Therefore, DOL is proposing to revise the definition of "site of the work" in 29 CFR 5.2(l)(1) to "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..."
  
  
• Transportation (29 CFR 5.2(j)(1)(iv)): This subparagraph currently states that "transportation between the actual construction location and a facility which is dedicated to such construction and deemed a part of the site of the work..." is covered by the Davis-Bacon Act. Since the courts have disagreed with this definition, DOL proposes to revise the language so that it covers "transportation between the site of the work within the meaning of Sec. 5.2(l)(1) and a facility which is dedicated to the construction of the building or work and deemed a part of the site of the work within the meaning of paragraph (l)(2) of this section..." (subparagraph (l)(2) would remain unchanged).
  
  Also, in conjunction with the proposed change to subparagraph (l)(1), DOL is proposing to add a subparagraph (j)(1)(iv)(B), which would cover "transportation of portion(s) of the building or work between a site where a significant portion of such building or work is constructed, which is a part of the site of the work within the meaning of paragraph (l)(1) of this section, and the physical place or places where the building or work will remain." DOL explains in the introductory material to the proposed rule that "under these circumstances the site of the work is literally moving between the two work sites, and therefore the laborers or mechanics who transport these portions or segments of the project are reasonably viewed as 'employed directly upon the site of the work.'"

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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