Administration and Enforcement of Davis-Bacon Act in Projects in Waycross, Georgia

Published by the Government Accountability Office on 1977-05-26.

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

                          DOCUHEWT FESU"]

025?B - [A1792798] (Restricted)
[Administration and Inforciment of Davis-Bacon Act in Projects
in Waycross, Georgia]. May 26, 1977. 5 pp.
Report to William A. a.rtsan, Jr., Area Director, Department
                                                    GA; by Kyle
Housing and Urban Development: Atlanta Area Office,
E. Hams (for Marvin Colbs, Regional manager, Field Operations
Div.: Regional Office (Atlanta)).

Issue Area: Consumer and Worker  Protection: Standards, Laws, aid
    Regulations Enforcement  (903).
Contact: Field Operations Div.: Regional Office <Atlanta).
Budget Function: Education, Manpower, End Social Services: Other
    Labor services (505).
Authority: Davis-Bacon Act. Housing Act of 1937, as amended,
    sec. 16.
          The Department of Labor and selected Federal
contracting agencies and construction sites in Region IV were
reviewed to determine whether their enforcement effnrts     related
to the Davis-Bacon Act ensured that contractors     and
subcontractors complied with the minimum wage provisions of the
act. Findings/Conclusions: Under Federal      revenue sharing,
                                   Development (HUD) provided
Department of housing and UrbanAuthority
$783,165 to the Local Housing               i. Waycross, Georgia,
for the construction of 50 low-rent    housing  units. Several
instances were found of noncompliance    with  the act and with HUD
instructions concerning labor    standards.  Among the violations
                                        were  misclassification  of
disclosed by a liaited investigation                            and
workers, underpayments, pay at less    than  prevailing rates,
certified payrolls    not submitted. the Local Housing Authority
                4 n securing compliance with the act.
was deficient
Recommendations: HUD should perform a full labor standards
 compliance review of the Waycross project. (DJH)
                     Do 8ot mIn   available to publc    qudlng   '*    3
                             iREGIONAL OFFICE
                            MUt      ruTLAwo
                                       Smt,. N.t.
                          ATLANTA, GEORQIA 30303

                                                       MAY 2     I(i
  M'. William A. Hartmani, Jr.
  Area Director, U. S. Department of
    Housing and Urban Development
  Atlanta Area Office
  230 Peachtree Street, N, W.
  Atlanta, eorgia 30303
 Dear Wr. Hartman:
       The General Accounting Office is reviewing
 lab~r's (DOL) and Federal contracting             the Department of
 and enforcement of the labor standards provisions administration
 Act on Federal or federaly assisted construction    of the Davis-Bacon
 to the act. We are making the review at DOL         projects subject
 Fesdral contracting agencies and contractor   and  at  selected
 including Region IV.                         sites  in  various regions

       One of the projects we selected for review
 the construction. of 50 low-rent housing          in Region IV was
 Houasing Authority (IIA) in Waycross, Georgia.  for  the Local
 Housing and Urban fDvelopment (HUD) provided     The  Department of
 of the Housing Act of 1937, as amended, for    $783,165   under section 16
 this project.                                the  constructionr  of,
       The Davis-Bacon Act requires that all workers
 Federal or federally-assisted                          employed on a
                                c,.lstruction project costing in    excess
 of $2,000 be paid at least the wages and fringe
 Secretary of labor determines as prevailing        benefits which the
 the area. Every construction contract subject on similar projects in
 contain a provision stipulating that contractorsto the act must
Pay thelrworkers, at least once a week, wages and subcontractors
whichthe Secretary of Labor determtnes to         not less than those
                                              be prevailing.
      Federal contracting agencies are responsible
minimum wage orovisions of the Davis-Bacon            for enforcing the
and procedures issued by DOL. An objective   Act  pursuant   to regulations
determine whether the enforcement efforts by   of our  review  is to
contracting agencies are adequate to insure     DOL and  the  Federal
subcontractors are complying with the minimumthat contractors and
the act.                                         wage provisions of
      The HUD Atlanta Area Office has primary responsibility for
enforcing labor standards on HUD-funded construction projects in
Georgia, including the Waycrosa Housing Authority project. Although
r.dD had delegated the enforcement responsibility to the HiA, the
area office is still responsible for advising the iA concerning the
act's and HUD's complince requirements and procedures and for
monitoring the LHA's enforcement activities.
      In our opinion, the area office had not effectively monitored
the LiHA's enforcement efforts on this project. During his monthly
visits to the project, the HUD construction analyst questioned the
contracting officer and the c]-'- of the works about whethe
contractors were paying correct wages and were submitting pyolls,
but he did not attempt to examinr any payrolls or records of
employee interviews. Consequently, he did not discover the lack of
enforcement by the LHA.
     Under HUD enforcement proced"-es, the LHA is required to take
action, including the following, to insure that contractors and
subcontractors comply with the act:
     -require the contractor to submit certified copl.es of his
       own payroll and that of each. of his subcontractors for
       each workweek no later than 'Idays after the end of the
       workweek covered by the payroll;
     -interview a sufficient number of construction workers to
       determine the degree of accuracy of the records and the
       nature and extent of violations, if any;
    --conform rei tz for worker classifications employed on the
      proJect ',At not included in DOL's wage determination;,
    -examine weekly payrolls to the extent necessary to insure
      completeness and accuracy of employee names, addresses,
      job classifications, hourly wage rates, daily and weekly
      hours worked during the pay period, gross weekly wages
    e earned, deductions made from wages, and net weekly wages
    -require a certification by the contractor and each of his
      subcontractors that they have paid wage rates complying
      with the terms of the contract; and
    -retain, preserve, and enforce all its rights under the
      construction contract.

      One prime contractor and 21 subcontractors worked on the
 Waycross low-rent housing construction project. We identified
 following instances                                           the
                     of noncompliance with the act as
                                                    r with HUD
 instructions concerning labor standards.

      -None of the contractors submitted certified payrolls
        weekly and 11 subcontractors did not submit payrolls
        at all. The IHA did not have a procedure to insure
        the timely receipt of all certified payrolls.
      --Neither IHA nor HUD representatives interviewed con-
        struction workers.
      --The LHA and the prime contractor did not follow conformance
         procedures. The certified payrolls, or daily construction
         reports for those subcontrac+rs who did not subait payrolls,
         included eight worker classifications that were .ot shown
         on the DOL wage determination.
     -Tahe LHA made partial payments on the basis of false
       certifications by the prime contractor that he and his
       subcontractors had complied with the wage rate provisions
       of the contract..
     -Payroll examinations by the clerk of the works were inadequate
       to insure that contractors corpited with labor standards.
       Although the clerk of the works ,.old us that he reviewed
       the payrolls, there was no evidence that he identified and
       corrected any violations. Also, there was no evidence
       when the clerk of the works received or reviewed the oi
      payrolls. Early detection and correction of the violations
      noted below could have saved time and money for everyone
     Our limited examination of certified payrolls
LHA disclosed the following wage payment violations submitted to the
                                                     and inaccuracies.
     -IHutto Brothers Paint Contractors classified two employees
      as painter helpers although the classification was not
      included in the wage determination. Because the contractor
      and the contracting officer did not conform  a rate for this
      classification, the employees should have been paid at the
      rate issued for the classification of work actually performed.
      Based on the painter rate Issued in DOL's wage determination,
      these employees were underpaid about $543.

     --Do Good Tile Company classified one employee as a tile
       setter helper although the classification was not included
       in the wage determination. In the absence of a conformance
       agreement between the contractor and the contracting officer,
       this employee should have been paid at the rate issued for
       the classification of work actually performed. Based on the
       tile setter's rate issued in DOL's wage determination, this
       employee was underpaid about $264.
     --Douglas Tile Company paid .?our soft floor layers $0.63 ar,
       hour less than the prevailing wage rate, resulting in an
       underpayment of about $198.00.
     --Glen DeLoach Construction Company and Murray Staples Garden
       Center classified employees as form setters and agriculture
       workers, respectively. The wage determination did not include
       rates forx either of these classifications and the contractors
       a-d contracting officer did not conform the rates.
     For those subcontractors who did not submit payrolls, we reviewled
the Daily Construction Reports prepared by the clerk of the works,
visited one subcontractor, and contacted four other subcontractors
by telephone. Our review disclosed that Davis Roofing Conpany paid
one roofer $3.00 an hour and three roofes.$3.50 an hour rather than
the predetermined wage rate of $5.00 an hour. On the basis of work
hours recorded in the daily construction reports, we estimate that
these four employees were underpaid more than $740.
     Four subcontractors classified employees in crafts not included
in the wage determination as follows:
     -Economic Exterminators classified two employees as
       termite spray operators;
     -- Boyd Dry Wall Company classified six employees as drywall
        hangers or drywall finishers;
     -Waycaoss Insulating Company classified twc. employees as
       insulators; and
     -- Chauncy Brother, Dry Wall Company classified four employees
        as drywall hangers or drywall finishers.
The LHA contracting officer and the prime contractor lid not conform
wage rates for any of these classifications. Because certified
payrolls mere not prepared and wage rates for these classifications
were not obtained in our survey, we did not determine if these
employees were underpaid.

      In view of the contractors' violations
 and the deficiencies in the LHA's handling offound  in our limited test
                                                labor standards
 enforcement, adequate assurance of compliance with the provisions
 the Davis-Bacon Act--as implemented by DOL and HUD regulations--wasof
 lacking. We discussed our findings with your labor relations
 who said tha* he would look into the violations.                specialist,

      We believe that HUD,. as the primary enforcement agency, should
perform a full labor standards compliance review of the
housing                                                 Waycross
        project to insure that all provisions cf the act have been
and that all violations are uncovered. When this review             met
                                                         is  completed,
we would appreciate betag advised of the results and of any
taken by HUD on noncompliance and contractor violations.     actions
also like to know what steps are planned to insure that the would
Bacon Act is adequately enforced cn future projects.
     A copy of this letter is being sent to the Acting Regitcnal
Administrator, Department of Housing and Urban Development,
                                                             Region IV,
and to the Regional Administrator, Employment Standards Administration,
Department of Labor, Region IV.

                                  Sincerely yours,

                                 Marvin Colbs
                                 Regicnal Manager
cc:   Acting Regional Administrator, HUD, Pegion IV
      Regional Administrator, ESA, DOL, Region IV