Policy Letter dated: April 17, 2000
Signed by Dwight A. Horne
Director of Program Administration
Refer to: HIPA-30
Mr. Timothy J. Helm
Office of Enforcement Policy, Government Contracts Team
Employment Standards Administration, Wage and Hour Division
U.S. Department of Labor
Room S3018
200 Constitution Avenue NW
Washington, DC 20210
Dear Mr. Helm:
This is in reference to your March 8, 2000 letter which asked for our review of the issues raised by Ms. Dorothy P. Come's January 11, 2000 letter. Ms. Come asked why the Davis-Bacon Act does not apply to state funded highway construction projects if Federal funding was utilized for non-construction activities such as right-of-way acquisition, preliminary engineering or utility relocation work. You also asked us to advise you of any FHWA guidance regarding the applicability of the Davis-Bacon and related Acts (DBRA) where FHWA funds are used for other purposes, such as design work, right-of-way acquisition, and utility relocation work.
In the specific instance of the Pocahontas Parkway referenced in your letter and Mr. Wise's January 4, 2000 letter, FHWA authorized preliminary engineering for contract plan preparation on September 23, 1992. The project agreement between FHWA and the Virginia Department of Transportation (VDOT) in the amount of $9,669,000 (federal funds) was signed on May 5, 1993. After VDOT decided to go with the project as a privatization project, all federal funding of design was stopped and all remaining funding is being done with other than federal funds. FHWA is participating in those preliminary funds expended prior to privatization. No federal funds were ever authorized for construction.
The statutory basis for DBRA applicability in the highway program is found in Title 23 United States Code (U.S.C.) Section 113 - "Prevailing rate of wage". This Section and other definitions in Title 23 form the basis of FHWA's policy for DBRA applicability. Based on Title 23 provisions, it has been FHWA's long-standing position that DBRA is only applicable to certain Federally funded highway construction contracts. Non-federally funded highway construction contracts are not subject to DBRA coverage, regardless of the use of Federal funds in a prior phase of the project development process (such as right-of-way acquisition, preliminary engineering, etc). This policy decision is based on the language in 23 U.S.C. Section 113 and the appropriate definitions in 23 U.S.C. Section 101 (see enclosure).
Section 113(a) states in part:
"The Secretary shall take such action as may be necessary to insure that all laborers and mechanics employed by contractors or subcontractors on the construction work performed on highway projects on the Federal-aid highways authorized under the highway laws providing for the expenditure of Federal funds upon the Federal- aid systems, shall be paid wages at rates not less than those prevailing on the same type of work on similar construction in the immediate locality as determined by the Secretary of Labor..."
The phrase "... providing for the expenditure of Federal funds..." means that funds apportioned under Title 23 must be used in the funding of a construction contract for DBRA provisions to be applicable. FHWA has no approval authority for stated funded construction projects, and therefore, FHWA can not insist that DBRA provisions apply to State funded construction projects. Further, DBRA applicability is limited to those Federally funded construction projects which are on Federal-aid highways. By definition (see enclosure), roadways functionally classified as local roads or rural minor collectors are not covered.
FHWA utilizes the definition of a Federal-aid "project" and a "project agreement" in authorizing and obligating funds for any phase of a State's project development process. Our project authorizations for preliminary engineering, right-of-way acquisition, utility relocation work, and construction are separate approvals and each is generally associated with a unique Federal-aid project number and appropriate Federal-aid requirements. If a State elects to use its own funds for construction, FHWA has no statutory authority for approval of the project.
Our policy regarding the DBRA applicability to utility-let contracts and railroad-let contracts was established by our Chief Counsel's May 15, 1985 memorandum (see enclosure). In short, if a utility or railroad are letting Federally-funded contracts for the relocation of their facilities, then DBRA provisions are not applicable. If a Federally-funded highway construction contractor lets a subcontract to relocate railroad or utility facilities as part of the construction contract, then DBRA provisions apply.
We trust that this responds to your concerns. If you have any questions regarding this matter, you may contact Mr. David Cox (202.366.1561) or Gerald Yakowenko (202.366.1562) in my office.
Sincerely yours,
Dwight A. Horne
Director of Program Administration