DATE: December 20, 2000

FROM: Barry McVay, CPCM

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

SOURCE: Federal Register, December 20, 2000, Vol. 65, No. 245, page 80267

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

ACTION: Final Rule

SYNOPSIS: To conform with three appellate court decisions, and to address situations that were not contemplated when the current regulations were promulgated in 1983, DOL is amending two related definitions in its regulations pertaining to the Davis-Bacon Act and related acts that apply to federal and federally-assisted construction projects: "site of the work" and "construction, prosecution, completion, or repair."

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

For more on the notice of proposed rulemaking (NPRM), see the September 21, 2000, FEDERAL CONTRACTS DISPATCH "Department of Labor; Labor Standards Provisions Applicable to Federally Financed and Assisted Construction Contracts."

For more on a recent change to the DOL's Davis-Bacon Act regulations which recognizes helpers on federally financed and assisted construction contracts, see the November 20, 2000, FEDERAL CONTRACTS DISPATCH "Department of Labor; Labor Standards Provisions Applicable to Helpers on Federally Financed and Assisted Construction Contracts."

EFFECTIVE DATE: January 19, 2001.

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 and DOL's Administrative Review Board (ARB) have addressed these definitions, and their ruling have caused much confusion. Because the 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 decided to revise the definitions. On September 21, 2000, DOL published an NPRM requesting comments on three proposed amendments:

  1. Revise the "site of the work" definition in Section 5.2, Definitions, to include material or supply sources, tool yards, job headquarters, etc., only where they are dedicated to the covered construction project and are adjacent or virtually adjacent to a location where the building or work is being constructed.

  2. Revise the Section 5.2 "construction" definition to provide that the off-site transportation of materials, supplies, tools, etc., is not covered, except where such transportation occurs between the construction work site and a dedicated facility located "adjacent or virtually adjacent" to the construction site.

  3. Further revise the "construction" definition to provide that transportation of portion(s) of a building or work between a secondary covered construction site and the site where the completed building or work will remain is subject to the Davis-Bacon Act. This revision would reflect the fact that new construction technologies have been developed since the publication of the 1983 regulations which make it practical and economical 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, then float the segments down-river and put them in place to form the structure being built.

Fifty comments were received in response to the NPRM, mostly from federal agencies, various states' Departments of Transportation, industry associations, and union and union-supported organizations. However, DOL was not convinced by any of the arguments against the proposed changes, so it is finalizing the proposed rule without change (except for minor editorial changes).

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

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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