Review of Administration and Enforcement of the Davis-Bacon Act

Published by the Government Accountability Office on 1977-03-08.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    UNITEDSTATESGENERALACCOUNTINGOFFICE                                                 3
                                        REGIONAL            OFFICE
                              FEDERAL     BUILDING        167~   FLOOR     WEST
                                   WD   SOUTH    DEAREORN         STREET
                                   CHICAGO,          ILLINOIS       60604
                                                                   March 8, 1977

Mr. John Kane, Area Director
U.S. Department of Housmg and Urban Development
Milwaukee Area OffIce
744 N. 4th Street
Mzlwaukee, Wlsconsln   53203

Dear Mr. Kane:

       The General Accounting     Offzce 1s reviewfng      the Department of Labor's
(DOL) and Federal contracting        agencies'   admz.nlstratlou  and enforcement   of
rmnimum wage rate determinations        issued for Federal or federally-assisted
construction   projects   SubJeCt    to the labor standard provisions       of the
Davis-Bacon   Act.    The review is being performed at DOL and selected
Federal contracting     agencies and contractor      sites in various    regltons.  In
Region V we reviewed     two Department of Housing and Urban Development
(HUD) funded projects     adminlstered     by the Milwaukee Area Office.

       The Davis-Bacon Act requires         that all workers employed on a Federal
or federally-assisted         construction   project    costing in excess of $2,000
be paid minImum wages and fringe benefits              and that these be based on
rates the Secretary         of Labor determines      as prevailing    on similar  proJects
zn the area.       Every construction      contract    subject to the act must contain
a provision     stipulating     that contractors      and subcontractors     must pay the
workers at least once a week wages not less than those determined by the
Secretary     to be prevailmg.

      Federal contracting      agencies are responsible      for enforcing      the
vonzmum wage provlssons      of the Davis-Bacon     Act.    Enforcement is carried
out pursuant to regulations       and procedures    issued by DOL which is also
responsible   for coordinating      and monitorfng    the enforcement    activities of
Federal agencies.     An objective     of our review was to determine whether
the enforcement   efforts    by DOL and Federal contracting        agencies are ade-
quate to ensure that contractors         and subcontractors     are complying wrth
the minimum wage provisions       of the act.

      We  reviewed enforcement      and monitoring                       practices of the Milwaukee
Axea Office and the respectz.ve grantees for                             the two HUD funded construe-       *
tson projects     shown as follows.
          and            'Construction                                                  DOL wage
       location                cost              program              Grantee         determination

Extension of open            $125,600       Cormnunity           Sheboygan                  76-WI-14,
  pedestrian mall                          development           Dept. of City               3/18/76&i
  Sheboygan, Wi.                                                 Development

One duplex and 13     $290,000              Section        8     Wisconsin                  76-m-41,
  single family                                                  Housing Finance             4/S/76
  homes, Beloit,  Wi.                                            Authority

S/The project    determinatzon    instructed  the grantee                  to use DOL area
   wage determination     WIS 75-2048, 3/14/75.


       The Milwaukee Area Office is responstble          for enforcing   wage standards
on HUD funded construction        projects   in Wisconsin and instructing     grantees
on thefr responsibilities        under the act.    Accordingly,     the Area Office
sponsored training      workshops on how to enforce the labor standards and
delegated   enforcement     responsibilities    to the grantees.

         HUD instructlons   require    grantees take actions,  including the follow-
ing,     to ensure contractors      and subcontractors  comply with the act.

         --Obtain   and review    weekly    certified          payrolls,

         -1ntervlew   a sufficient      number of employees at the construction
            site and ascertain     that they are pald the proper wage.

         --Conform worker     classifications           that    are not covered     by the wage

         --Obtaxn written     evidence that        each apprentfce          fs registered      by the
            appropriate   State or Federal         agency.

       The Area Office retained          responsibility        for monitoring     the grantees'
enforcement      practices      at the Sheboygan and Beloit projects.               In addftion,
the Area Offme         retained    responsibility       for tnterviewing      construction
workers at the Beloit site.             However, HUD representatives           vi&ted      the
Beloit   project     only once and did not visit            the Sheboygan site.

                The   grantees' enforcement efforts     on the Sheboygan and Beloit
     projects         are discussed below.
     Sheboygan project
             Five prime contractors     and one subcontractor worked on the
     *construction    project for extending the open pedestrian mall.      These
      contractors    employed about 52 laborers and mechanics.     Our inquiries
      fdentzffed   the following    instances of noncompliance with the act.

            --Neither     the grantee nor HUD representatives       interviewed
               construction    workers.
            --The grantee did not follow conformance procedures.        The
               certified payrolls included seven worker classifications
               that were not shown on the wage deter&nation.
           --Two contractors    did not submit certified payrolls weekly
              and two did not submit payrolls at all.    The grantee did
          * not have a procedure to ensure timely receipt of
              cert%fied payrolls.

            --The grantee dfd not obtain registration           papers for one
               apprentice who worked on the project.
            --The grantee omitted the applicable area wage dererminatian
               from the contract specifications, although the project
               wage detemnation   was hncluded.
            We examined one certified    payroll for three of the five prime
     cant ractors  and one subcontractor    as follows.
                                                                         Pay period
            Contractor                       Location                      ended
       Peters Construction                Milwaukee, Wi.                   6/26/76
       Schielke Electric                  Sheboygan Falls,    Wi,           6/4/76
       R. P. Honold Co.                   Sheboygan, WI.                    713176
       Buteyn Excavating                  Sheboygan, Wf,                   6/19/76
     %Our limited payroll examination disclosed           one wage payment violation
    ;and other inaccuracies  summarized below.

            --Peters underpaid a carpenter $3.50. The contractor used an
               obsolete union pay scale which was $0.20 an hour lower than
               the wage rate shown in the wage determination.
            --Peters,   Honold, and Buteyn submitted Inaccurate certified
               payrolls that did not &gree with wage rates and/or hours
               worked shown on supporting payroll and time records.

%lOit      prOJ@Ct

       One prime contractor    and 13 subcontractors worked ou the project
 for construction     of one duplex and 13 single family homes. The
zcontractors    employed 55 laborers  and mechanacs.

        In July and October 1976 HUD representatives                      reviewed      the
grantee's     enforcement practices on thm and other                      proJects.        HUD
reported    that the grantee had not:

        --interviewed       employees,

        -established        procedures   to ensure       that      contractors        submitted
           required     payrolls;    and

        --resolved      underpayments     of wages.

        While some corrective     actdons were initiated     by the grantee, our
inquiries     indicated instances     of noncompliance   with the act or weak-
nesses fn enforcement       as shown below.

        --HUD interviewed    only one of the 55 employees who worked on the
           project,   and the grantee did not interview  any employees.

        --The grantee did not follow conformance procedures            in every
           instance.     One contractor    used an "Insulator"   classificatLon
           for which a wage deternnnation        had not been requested.       As the
           result    of our lnqulry,    the grantee requested clarification       of
           two other classifications       used by one subcontractor.

        --The grantee normally   received            certified       payrolls     on a monthly
           basis instead of weekly.

       We examined        one certified    payroll      for      10 of the 13 subcontractors
as follows.

                                                                                        Pay period
                     Contractor                       Location                            ended

        City Wide Insulation                      Rockford,     Il.                        8/25/76
        Bob Salberg                               Rockford,     Il.                        7114176
        Kepp Plumbmg & Heating                    Janesville,       Wi.                    8/25/76
        Wilson & Shipler                          Belolt,     Wi.                          7/17/76
        Gary Mtieal                               Rockford,     Il.                        g/24/76
        McGrath Electric                          Jauesville,       Wi,                    g/22/76
        S & S Construction                        Oregon, Il.                              8/28/76
        Rockford Ploorcrafters                    Rockford,     Il.                      lOj29j76
        Alpine Decorators                         Rockford,     Il.                      10/22/76
        Hallmark Drywall       -+                 Madzson, Wi..                          11/12/76

*Our l%nited payroll  exarmnation    andrelated            inquirfes    identified       the
 following  wage payment violations.

       --City   Wide paid an insulator  $2.85 an hour less than the
          rate included  in the wage determination.     Since the insulator
          worked 4-l/2 hours on the project,     he was underpaid $12.83.

       --Hallmark     paid two laborers      $3.35 an hour less than the rate
          included    in the wage detemnation.          The two laborers
          delivered     drywall   and performed cleaning       services at the
          project   site and at other constructJ^on         sites.      Hallmark did
          not report the two laborers         on the certlfled       payrolls    and
          did not allocate      their time among the various          jobs.     There-
          fore, we could not quantafy the underpayment.

     In our opinion,   the grantees             and HUD were ineffective in assuring
that contractors   complied with the             labor standards of the Davis-Bacon
Act and that employees working on               the Sheboygan and Beloit projects
had been paid the wages stipulated               by DOL.

        Since HUD 1s responsible         for enforcing       the provisions       of the act,
we are referring        these matters to you for appropriate              investigation    of
contractors'     violations     and the grantees'        failure    to carry out enforce-
ment responsibilities.          We would appreciate          being advised of the
results     of any investigations        and actions taken by HUD and the grantees
on noncompliance        and contractors'     violations.

      A copy of this letter  is being sent to the Regaonal Administrator,
Department of Housing and Urban Development,    Region V, Chicago, Illmois,
and to the Regional Administrator,    Employment Standards Adminlstratlon,
Department of Labor, Region V, Chicago, Illmois.

                                            Sincerely    yours,

                                            RegGnal Manager