oversight

Review of Administration and Enforcement of Minimum Wage Rate Determinations Under the Davis-Bacon Act

Published by the Government Accountability Office on 1977-04-27.

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

                         DOCUMINT RESUME

02263 - [A1392386] (Restricted)
[Review of Administration and Enforcement of Minisun Wage Rate
Determinations under the Davis-Bacon Act]. 20144. April 27,
1977. 7 pp.
Report to Col. Jimmy Williams, Wing Commander, Department of the
Air Force: Castle AFBe CA; by William N. Conrardy, Regional
Manager, Field Operations Div.: Regional Office (San Francisco).
Issue Area: Federal Procurement as Goods and Services (1900);
    Personnel hanagesent and Compensation: Compensation (305).
contact: Field Operations Div.: Regional Office (San Francisco).
Budget Function: National Defense: Department of Defense -
    Procurement 6 Contracts (058); General Government: Central
    Personnel managesent (805).
Authority: Davis-Bacon Act.
         The 10O is currently reviewing the Department of
Labor's and Federal contracting agencies' administration and
enforcement of minimum wage rate determinations used for
federally-asuisted construction projects subject to the labor
standard provisions of the Davis-Bacon Act. One of the projects
reviewed was the construction of a commissary for Castle AFB,
Merced, California.  Findings/Conclusions: Several deficiencies
noted in Castle's enforcement of the Act, involved certified
payroll checks, employee interviews conforming rates, apprentice
certifications and ratios, and contract administration. The GAO
believes that the lack of adequate training for contract
administrators along with the minisal tine spent enforcing the
Act are the major causes of violations found. Recommsendations:
CLstle AFB should perform a full labor standards compliance
review of the comsissary project to ensure that all provisions
of the Act have been net and that all violations are uncovered.
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                          'a' aftomiil              1available to      I      ea-ig

                             UNITED STATES GENERAL ACCOUNTING OFFICE
                                                REGIONAL OFFICE
                                           WI FOX PLAZA. M1 MARKIT STR'ET
                                         ScN FRANCISCO,   CALIFORNIA       94102
                                                    (413) $10U0
MVInW.Y RI'TOt
  20144

             Colonel Jimmy Williams                                                APR 27 1977
             Wing Coumander
             Castle Air Force Base
             Merced, California 95342

             Dear Colonel Williams:

                  The General Accounting Office is performing a review of the
             Department of Labor's (DOL) and Federal contracting agencies'
             administration and enforcement of mininum wage rate determinations
             used-for Federal or federally--assisted construction projects sub-
             ject to the labor standard provisions of the Davis-Bacon Act. Our
             review is being performed at DOL and other selected Federal con-
             tracting agencies and contractor sites in various regions, including
             DOL's Region IX in San Francisco, California.
                      One of the projects selected for review in Region IX was the
                 construction of a commissary for Castle AFB, Merced, California.
                 The initial construction contract price for this project was
                 $813,916.
                      The Davis-Bacon Act requires that all workers employed on a
                 Federal 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 in the area.
                 Every construction contract subject to the Act must contain a provi-
                 sion 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 prevailing.

                      Federal contracting agencies are responsible for enforcing the
                 minimum wage provisions of the Davis-Bacon Act. Enforcement is
                 carried out pursuant to regulations and procedures issued by DOL
                 which is also responsible for coordinating and monitoring 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 adequate to insure that contractors
                 and subcontractors are complying with the minimum wage provisions of
                 the Act.

                 Enforcement effort lacking on
                 the Castle AFI project

                      Castle AFB has primary responsibility for enforcing the minimum
                 wage rate standards on all projects on the base in excess ef $2,000.
The Procurement Division has two contract administrators respon-
sible for labor standards enforcement. Guidance comes in the
form of the Armed Services Procurement Regulations (ASPR),
chapter 18--Labor Standards for contre. 3 involving construction,
and corresponding Air Force and Strategic Air Command (SAC)
supplements.

     Harris Construction Company of Fresno, California, was the
prime contractor and employed 16 subcontractors on the Castle AFB
commissary project. We performed a limited review of Castle's
enforcement responsibilities for the contract by reviews of certi-
fied payroll documents, compliance checks (employee interviews),
and contractor payroll records at the prime contractor and five of
the subcontractors. We also hela discussions with the contract
administrators.

     Deficiencies in Castle's enforcement of the Act were found in
the areas of certified payroll checPs, employee interviews, con-
forming rates, apprentice certifications and ratios, and in contract
administration. Our findings are described below.

Certified payroll checks

     --Harris Construction Company and its subcontractors did
       not submit certified payrolls to Caetle AFB in a timely
       manner. Although the regulations require these payrolls
       to be received by the contracting agency within 7 days
       after the close of the pay period, the contract adminis-
       trator received them up to 4 weeks late.
     --Dressler Floor Covering Company employed a laborer at a
      wage below the prescribed Davis-Bacon rate. The laborer
      earned a flat $4.50 per hour when his hourly rate should
      have been $10.74, with fringe benefits. Dressier Company
      underpaid this employee $193.29. A check for this amount
      minus deductions was received by Castle and f rwarded to
      the employee.
    --Two laborers for RACO, Inc., were not paid their full
      health and welfare benefits package prescribed by the
      contract. Since the company's fringe benefits were less
      than those DOL determined to be prevailing in the area,
      these two employees were due the cash difference. The
      two employees were underpaid $55.48 and $48.89. The
      contract administrator stated that RACO had been informed
      of these underpayments and had mailed the payments to DOL
      for disbursement.




                                 2
--RACO, Ic,., submitted two certified payroll documents
  which reglected to include a daily breakdown of the
  hours ,corked- Castle's contract administrator notified
  the contractor and asked for corrected payrolls.

--Ferrero Electric only listed a journeyman electrician's
  total hours worked on the Castle project. They neglected
  to list hours wo' ked daily, the hourly rate of pay, or
  che withholdings of the individual. An enforcement
  check by us and Castle showed that no violations existed.

--- J. & T. General Engineering, Inc., employed three
    laborers. Each worked the same number of hours at the
    same rate--two claiming one exemption and one with three
    exemptions, yet each person receiveu the same net wages.
    In following up this discrepancy, we were unable to
    locate the owner after he had completed only 85 percent
    of the contract work. Neither the owner or his five
    employees who worked on the Castle project ould be
    located for questioning; therefore, we wetr. unable to
    determine if the employer had taken unauthorized deduc-
    tions from the employees.

--Our examination of Harris Construction's certified pay-
  roll showed an employee worked 40 hours and was paid for
  only 33½ hours. The contractor's time cards and cancelled
  checks revealed that the employee actually worked 33½
  hours and had been correctly paid. From these records
  it wart apparent that a typographical error had been made.

--Zerbe Roofing Company showed an apprentice roofer working
  9 hours in 1 day but did not receive overtime pay. A
  note to the payroll document stated that this hour of
  overtime was not paid since the roofer's union considers
  overtime only after 40 hours per week. The labor stand-
  ards provisions in the contract state that any work over
  8 hours per day is overtime and must be paid at a minimum
  of time and one-half.. When the contractor was notified
  of the error he stated that the employee did not, in
  fact, work the 9 hours on the questioned day. The ninth
  hour was paid at the regular rate according to the
  employer because the job had ended and the union contract
  allowed aa hour for travel. A signed statement from the
  employee confirmed this.




                              3
     In our opinion, all of the above errors found in our limited
review could have been found and alleviated had the payroll docu-
ments been thoroughly examined. All of the certified payrolls
had been stamped by the contract administrator as reviewed; how-
ever, he admitted that these documents were only spot checked.

Employee interviews

     The Air Force supplement to the ASPR requires that an employee
interview or compliance check be made within 14 calendar days after
work begins. Subsequent on-site compliance checks will be made on
a continuing basis at no less than 4-week intervals. In reviewing
the 11 interviews conducted by contract administrators, the follow-
ing problems were found.

     --Six of the employee interviews were not conducted in the
       required 4-week period. Three of these were between
       1 and 3 weeks late.

     --Three of the employees interviewed accounted ftr 6 of
       the 11 interviews. So, in fact, only eight selp>rate
       individuals were interviewed. These eight employees
       represented only 7 percent of the 112 employees working
       on the project.

     --Only 5 of the 17 contractors were represented by these
       interviews along with only 5 of the 15 crafts utilized
       on the project.

     We believe that the numoer of interviews performed on this proj-
ect were not reasonable or adequate in relation to the total
employees, contractors, and crafts. Greater coverage may have dis-
closed some of the errors we found in the certified payrolls.

Conformance of rates

      In our limited review of the payroll documents we identified
two crafts for which rates did not exist in the wage determination
and were not questioned by Castle's contract administrator. These
were the rates paid for termite crewmen and refrigeration mechanics.
The contract requires that employee classifications not listed on
the wage determination be conformed by the contractor and contract-
ing officer, with notification sent to DOL. These rates should be
conformed to insure that the employees are receiving the proper
wage.




                                  4
Apprentice certifications and ratios

     Castle AFB is required to insure apprentices, when employed,
work in proper ratios to journeymen on base projects. In order
to fulfill this requirement the contracting officer must have the
proper apprentice Journeyman ratios by craft. DOL and ASPR regu-
lations require that the contractor must submit these ratios to
either DOL or the contracting agency. After analysis of the con-
tract files and discussion with the contract administrator the
following apprenticeship violations were found to exist:

     --Castle AFB did not review the apprentice to journey-
       man ratios to see if they were in compliance. Although
       the contract administrator was aware of Castle's
       responsibility to insure apprentice ratios, he had
       never seen these ratios nor asked the contractors to
       submit them. He stated that he did not have the time
       necessary to enforce this provision of the Act.

     --Two of the 10 apprentices who worked on the project did
       not have certifications of their apprenticeship programs
       on file at Castle. Further review showed that both
       employees were misclassified on the certified payroll
       documents. The payrolls listed these two employees as
       a carpenter apprentice and plumber apprentice, respec-
       tively, when in fact the first had been a drywall
       trainee and the latter a refrigeration mechanic apprentice.
       Underpayments may have occurred from having these appren-
       tices working for crafts other than the craft for which
       they were certified. We have referred these cases to
       DOL who will notify Castle of any underpayments.

     --We found three cases where apprentices worked a whole
       week without a journeyman's supervision. Ratios of
       apprentices to journeymen require the presence of at
       least one journeyman. Where the apprentice works alone
       for a day or longer, he should be paid at the wage rate
       for the classification of work he actually performed. We
       referred these cases to DOL for further review who, upon
       completion, will notify Castle of any underpayments to
       the apprentices.

Contract administration

     Currently Castle AFB has two contract administrators responsible
for handling all of the Davis-Bacon type contracts. This responsi-
bility involves following three to five contracts simultaneously from




                                   5
 "cradle to finish." These contract administrators estimate
                                                              that
 only 2.5 percent of their total time is devoted towards
                                                          the actual
 enforcement of labor standards. Most of their tire is
                                                         spent work-
 ing on the paper work involved in preparing a project for
                                                            bid and
 processing these bids.
     The training received by the contract administrators at
Castle on the Davis-Bacon was in the form of a historical
                                                           overview
of the Act including general enforcement procedures. The
tract administrators stated they believe that training     two con-
                                                       was general
but adequate. However, Castle's Executive Procurement
                                                       NCO stated
that due to the generality of the training he recommended
                                                           that a
more specific training program be given in labor standards
enforcement.

     The Procurement Division Chief Administrator stated that
Division's first mission is to get projects built according    his
                                                             to
specifications within the allotted time. The enforcement
                                                          of labor
standards is secondary to this goal. This official stated
                                                            that in
order to adequately enforce the Davis-Bacon Act he would
                                                         need an
additional two contract administrators.

     We believe that the lack of adequate training along with
                                                                the
minimal amount of time spent in enforcing the Davis-Bacon
                                                           Act are
the major causes of the violations found in our audit.
                                                         Contract
administrators have had difficulties certifying apprentice
                                                            ratios,
conforming rates, making adequate and a sufficient number
                                                           of
employee interviews and compliance checks, and making
                                                       adequate
reviews of certified payrolls. Better enforcement of
                                                       the Act along
with additional training should help insure that labor
                                                        standards
are better enforced.

Action requested

     In view of the Lontractor's violations found in our limited
test, and the deficiencies in Castle's handling of labor
                                                          standards
enforcement, adequate assurance was lacking that the provisions
                                                                 of
the Davis-Bacon Act were being complied with in accordance
                                                            with
regulations issued by DOL and the ASPR. We believe that
                                                          Castle AFB,
as the primary enforcement agency, should perform a full
                                                          labor
standards compliance review of the commissary project to
                                                          insure
that all provisions of the Act have been met and that all
                                                           violations
are uncovered. When this review is completed, we would
                                                         appreciate
being advised of the results and of any actions taken by
                                                          Castle AFB




                                  6
on noncompliance and contractor violations. We would also like
to know what steps are planned to insure that the Davis-Bacon
Act is adequately enforced.

     A copy of this letter is being sent to the Regional Adminis-
trator for Employment Standards, Department of Labor, Region IX,
San Francisco, California.
                                 Sincerely yours,


                                          Conrardf
                                  Wlliam NM
                                 William N. Conrardy
                                 Regional Manager




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