UNITEDSTATESGENERALACCOUNTINGOFFICE 3 REGIONAL OFFICE FEDERAL BUILDING 167~ FLOOR WEST WD SOUTH DEAREORN STREET CHICAGO, ILLINOIS 60604 3 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. Project 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. ENFORCE~NT EFFORTS MOT FULLY EFFECTIVE 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 determination. --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. -2- + 1c 3 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 (subcontractor) %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. -3- %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 -4- *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, G?Str!Z!ZF~ RegGnal Manager -5-
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)