15d Interpretations: Application of DBRA To Types of Work and Contracts
15d00 American Recovery and Reinvestment Act of 2009 (ARRA).
- DBA coverage under ARRA
- AAM No. 207 outlined the applicability of the DBA labor standards to ARRA funded projects. The ARRA was signed by President Obama on February 17, 2009. The ARRA appropriated substantial funding for construction, alteration, and repair of federal buildings and for infrastructure projects. Federal agencies directly contracting for construction work are required by existing DBA requirements to ensure that bid solicitations and resulting contracts contain DBA labor standards and wage determinations. Federal agencies must ensure that recipients of assistance under ARRA require contractors and subcontractors to pay laborers and mechanics on federally-assisted construction projects at least the prevailing wages as determined under the DBA.
- AAM No. 208 outlined the applicability of the DBA labor standards to projects financed with the proceeds of the five tax-favored bonds listed in section 1601 of Division B of ARRA. It also highlighted the responsibilities of state and local governmental entities, contractors, and others for implementation of, and compliance with, the DBA labor standards in connection with projects financed with the proceeds of the tax-favored bonds.
- Any new clean renewable energy bond, as defined in section 54C of the Internal Revenue Code of 1986, issued after the date of the enactment of ARRA Division B
- Any qualified energy conservation bond, as defined in section 4D of the Internal Revenue Code of 1986, issued after the date of the enactment of ARRA Division B
- Any qualified zone academy bond, as defined in section 54E of the Internal Revenue Code of 1986, issued after the date of the enactment of ARRA Division B
- Any qualified school construction bond, as defined in section 54F of the Internal Revenue Code of 1986
- Any recovery zone economic development bond, as defined in section 1400U–2 of the Internal Revenue Code of 1986
- Weatherization contracts
- State Energy Program and individual homeowners
Specifically, section 1606 of Division A of ARRA states that DBA’s prevailing wage requirement applies to ARRA-appropriated construction projects, as follows: “Notwithstanding any other provision of law and in a manner consistent with other provisions of this [a]ct, all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the [f]ederal government pursuant to this [a]ct shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor….”
The language “notwithstanding any other provision of law” explicitly overrides any limitation to DBA coverage that may be contained in the other related acts. Therefore, if a construction project is funded under multiple statutes, including one with a pre-existing DBRA provision as well as ARRA, then the ARRA prevailing wage requirement applies if any such ARRA assistance is provided for the project.
Two provisions of ARRA exempt certain tribal contracts from section 1606. One provision states that section 1606 does not apply “to tribal contracts entered into by the Bureau of Indian Affairs” with the appropriations provided under ARRA for repair and restoration of roads; school improvements, repairs, and replacement construction; and detention center maintenance and repairs. A second provision states that section 1606 does not apply “to tribal contracts entered into by the [HHS Indian Health] Service" with the ARRA appropriation for Indian health facilities construction projects. Of course, even though ARRA does not apply the DBA to those projects, if the projects receive funding under another related act that requires DBA prevailing wage requirements, those requirements would continue to apply.
Prevailing wage coverage under ARRA-assisted projects must be determined in the same manner as under the DBA. ARRA-assisted projects must follow the requirements in regulations 29 CFR 1, 29 CFR 3 and 29 CFR 5.
Specifically, section 1601 of Division B of ARRA provides that the DBA’s prevailing wage requirement applies to projects financed with the proceeds of:
An entity (usually a state or local government agency) with contracting responsibility for a project financed with the proceeds of one of the five tax-favored bonds must cause or require the contracting officer for the project, at least as soon as the entity receives notice of ARRA assistance with respect to the project, to insert in full the standard DBA contract clauses found in 29 CFR 5.5(a) (and the applicable wage determination in effect at the time of notice of ARRA assistance) in bid solicitations and covered construction contracts that are in excess of $2,000 for construction, alteration or repair (including painting and decorating).
The requirement to insert the standard DBA contract clauses and attach the applicable wage determination in effect at the time of notice of ARRA assistance applies regardless of the amount or form of ARRA funding or assistance. Thus, coverage under section 1601 of Division B of ARRA can exist even if a project is financed only in part by proceeds of one of the bonds listed in section 1601. If bond proceeds are pooled in a general fund or otherwise, then every project financed in whole or in part by the pooled proceeds is subject to DBA requirements provided that other applicable coverage criteria are satisfied.
Using ARRA appropriations, the Department of Energy (DOE) awards grants under the Weatherization Assistance Program to state-level government agencies. These agencies then contract with local agencies, usually Community Action Agencies, to deliver weatherization services to eligible residents. Individuals and families apply for assistance through the local agencies. If approved for services, professionally trained weatherization assistance program technicians perform on-site audits to identify cost-effective measures that can be taken. Crews then make the repairs and improvements to increase energy efficiency. The technicians conducting the audits are typically employees of the governmental or community action agency. The repair crews typically work for contractors.
It is WHD’s longstanding position that governmental agencies are not contractors or subcontractors within the meaning of the DBA when the construction is performed by their own employees on a force account basis. See FOH 15b06. However, laborers or mechanics employed by a private, non-profit Community Action Agency cannot be considered as force account labor and will be covered under the DBA labor standards requirements when performing ARRA-assisted weatherization work. In addition, when the Community Action Agency contracts out work that is assisted with ARRA funding, the agency must apply the DBA labor standards and appropriate wage determination to the contract. Therefore, repair crews performing the duties of laborers or mechanics for a Community Action Agency or its contractors must be paid at least the DBA prevailing wage. Certain activities such as energy audits and inspections are not viewed as construction work performed by laborers or mechanics within the meaning of the DBA.
DOE, through its Office of Energy Efficiency and Renewable Energy (EERE), operates a State Energy Program (SEP) that provides grants to states that may be used to fund individual states’ SEP plans. These grants are funded in whole or in part by ARRA. An individual homeowner who receives a rebate for material and/or labor costs he or she has incurred in connection with qualifying energy efficiency and weatherization improvements to his or her home under a DOE SEP rebate program is not responsible for DBA compliance. This general interpretation addresses only whether DBA labor standards apply to individual homeowners who receive a rebate, funded in whole or in part by ARRA, to reimburse them pursuant to DOE programs for certain energy efficiency and weatherization improvements to their homes.
15d01 Carpet laying and installation of draperies.
DBRA applies to carpet laying and the installation of draperies when it is performed as an integral part of or in conjunction with new construction, alteration, or reconstruction. On federal contracts the McNamara-O’Hara Service Contract Act (SCA) applies to carpet laying when it is performed as a part of routine maintenance (e.g., replacement of worn out carpeting in a public building or a public work where no other construction is contemplated).
15d02 Clean-up work.
Cleaning work is covered by the DBRA in situations where the cleaning is performed as a condition precedent to the acceptance of a building as satisfactorily completed. For example, this would include activities such as window scraping and washing, removal of excess paint, and sweeping. Where cleaning is carried out after the construction contractor and subcontractors have finished their work, left the site, and the contracting agency has accepted the project as completed, such work would not be considered a part of the construction and would not be covered under DBRA. However, SCA may apply in the latter situation if there is a direct contract with the federal government.
15d03 Demolition work in relation to construction.
- To determine whether a demolition contract is subject to DBRA, it is necessary to look at the entire scope of that contract as well as other contracts that might be part of the same overall project. Demolition, standing alone, (except for demolition work under Urban Renewal projects authorized pursuant to the Housing Act of 1949, as amended) is not necessarily considered to be “construction, alteration, and/or repair of a public building or a public work” subject to the prevailing wage requirements of DBRA. For example, the demolition of a building because such structure is no longer needed would not in itself be a covered construction activity. However, where an existing building is being demolished and further construction activity at the site is contemplated that is subject to DBRA, DBRA would apply to such demolition, such as demolition performed to permit construction of a new building or highway (see AAM No. 190 and FOH 14d08).
- In some cases the nature of the demolition or removal work alone might be considered construction activity covered by DBA. Removal of asbestos or paint from a facility that will not be demolished would be considered to be an alteration or repair (see AAM No. 153) and certain hazardous waste removal contracts that involve substantial earth moving to remove contaminated soil and re-contour the surface may be considered construction (see AAM No. 187).
15d04 Disaster relief contracts.
DBA applies to any direct federal contract for “construction, alteration, and/or repair of a public building or public work;” therefore, DBA applies to any direct construction contracts awarded by federal agencies such as the U.S. Army Corps of Engineers, Federal Emergency Management Administration (FEMA), or the U.S. Army.
DBA labor standards also apply to federally-assisted contracts where the statute authorizing the funding requires payment of prevailing wage rates in accordance with the DBRA. An example of such a contract is a U.S. Environmental Protection Agency grant to complete sewer repair where the grant is funded by the Federal Water Pollution Control Act.
Grants for disaster relief under FEMA’s principal relief authority, the Robert T. Stafford Disaster Relief Act, are not subject to the DBA prevailing wage requirements. FEMA provides grants for disaster assistance including low-interest loans to repair or replace personal property, business disaster loans to fund repair or replacement of real estate, and assistance to state or local governments to pay costs of rebuilding a community’s damaged infrastructure.
15d05 Drilling work in various situations.
- The application of the DBA to a contract for drilling work would turn upon whether the contract is one for “construction” of “public works” within the meaning of the DBA.
- Exploratory drilling
- Soil boring prior to or during construction for the purpose of setting foundations
- Plugging of oil or gas wells
Drilling, like excavating generally, is usually considered construction activity. The critical question is whether the holes which would be dug during the course of the exploratory drilling would be “works” within the statutory term “public work”. The word “works” in the term “public works” refers typically to improvements, such as buildings, canals, or roads, rather than mere progress or activity. Consequently, exploratory drilling for the purpose of obtaining data to be used in engineering studies and the planning of a project such as a dam and reservoir, the actual construction of which has not been authorized and for which funds have not yet been appropriated, would not be within the term “work” because it relates to an activity as distinguished from a project or improvement.
Also, the holes themselves, which are opened to obtain cores and which are subsequently to be filled in or abandoned, would not be “works” because they are not improvements. The products sought by the digging are the cores of the earth and not the holes themselves. See FOH 14d02. In contrast, wells drilled to obtain a water supply for a military base or a contract for digging of test holes, which later may become “public works” or permit conversion to water wells, oil wells, or other “public works,” are covered.
Soil boring contracts are considered covered by the DBRA if they are directly related and incidental to, or an integral part of, the actual construction process. This is to be distinguished from the situation where such contracts are for the formulation of engineering plans and specifications, designs, and the conduct of site investigations. The latter activities are regarded as preliminary work, and not as a part of the construction process. See FOH 14d04.
A contract which calls for the plugging of oil or gas wells and the removal of above-ground equipment in connection with the construction of a reservoir on land containing such wells would be covered by the DBRA no matter whether the work is characterized as demolition ( i.e., the dismantling of the above-ground equipment), incidental to construction, or well drilling (i.e., the rerunning of the tubing and replacement of the cement plugs).
15d06 Landscape contracting.
Landscaping performed in conjunction with new construction or renovation work subject to DBRA is covered. In addition, elaborate landscaping activities standing alone such as substantial earth moving and rearrangement of the terrain (e.g., strip mine reclamation) may constitute construction within the meaning of the DBA, without any requirement that it be related to other construction work (see 29 CFR 5.2(i)). Landscaping which is not covered by the DBA is work to which the SCA may be applicable. (See 29 CFR 4.116.)
15d07 Military housing privatization contracts.
The Army, Navy, and Air Force are improving the condition of military housing in a project referred to as the Military Housing Privatization Initiative (MHPI). Under this initiative, in most instances, a private developer leases the land for a long term and then is responsible for constructing or renovating existing housing developments using military rental referrals to fund and maintain the newly renovated and privatized developments.
The Army, Navy, and Air Force have agreed to include DBA provisions and applicable wage determinations in all MHPI contracts and have agreed that all developers will be required to comply with the DBA labor standards provisions.
15d08 Painting and decorating.
DBRA applies to the “construction, alteration, and /or repair, including painting and decorating, of public buildings or public works." DBRA coverage has been extended to the painting or repainting of mail collection boxes, street and traffic lines, the refinishing of floors and bowling lanes, and the installation of wall covering or hanging wallpaper. Federal contracts for painting of government owned, privately occupied houses, apartments, commercial properties, etc., are also covered by the DBRA.
15d09 Public utility installation.
- Whether or not the employees of a public utility, who perform construction-type work in connection with federal and federal-assisted projects, are covered by the DBRA will depend upon the nature of the contracts involved and the work performed thereunder.
- Where a public utility is furnishing its own materials and is in effect extending its own utility system, such work is not subject to DBRA. The same conclusion would apply where the utility company may contract out such work for extending its utility system. However, where the utility company agrees to undertake a portion of the construction of a covered project such work would be subject to the DBRA labor standards requirements of the construction contract.
- For example, DBRA wage provisions of the U.S. Housing Act do not apply to a contract between a local housing authority and a city water department under which the department installs water mains in streets adjacent to a housing project; connects mains and meters to the project’s plumbing; furnishes water to the project; and operates and maintains such mains and meters without expense to the authority beyond an initial service charge, since the city is engaged essentially in the extension of its water distribution system rather than in the development of the project.
- Also, employees of a telephone company engaged in the installation of ordinary telephone facilities for a government facility under construction are engaged essentially in the extension of the telephone company’s system rather than in government construction and, therefore, are not covered by the DBA. However, removal and relocation of telephone lines at the sole option of the government to eliminate interference of the lines with construction at the project site is construction work covered by the DBA.
15d10 Sewer repair service.
- The internal inspection of sewer lines for leakage and damage through the use of closed circuit TV inspection and the simultaneous sealing of leaks or other damage in the lines as the machine inspects the sewer line is covered by DBRA. On the other hand, if the contract is only for inspection, DBRA would not apply. However, SCA would apply in the latter situation if the government was a direct party to the contract.
- When this type of work is an issue in an investigation, an area practice survey (see FOH 15f05) should be conducted to determine which classification, if any, in the applicable wage determination performs this work. In conducting the area practice survey, evidence should be gathered concerning specific projects where repair work was actually performed. If the survey does not show that a classification in the applicable wage determination has actually performed this type of work, the use of a conformed classification and rate would probably be appropriate (see 29 CFR 5.5(a)(1)(ii)).
15d11 Shipbuilding, alteration, repair, and maintenance.
The building, alteration, and/or repair of ships under government contract is work performed upon “public works” within the meaning of the DBA. Wage determinations for shipbuilding under the DBA are issued only if the location of contract performance is known when bids are solicited. However, a government contract which calls for the construction, alteration, furnishing, or equipping of a naval vessel ( i.e., U.S. Navy and U.S. Coast Guard vessels) is subject to the Walsh-Healey Public Contracts Act (PCA). A contract which calls for maintenance and/or cleaning, rather than alteration or repair, of a ship or naval vessel is a service contract within the meaning of the SCA. See FOH 13b11 and 14c06.
15d12 Steam and sand blast cleaning.
A government contract requiring steam and sand blast cleaning and water proofing is covered by the DBA. Such cleaning operations performed on public buildings are authorized for the purpose of renewing the original appearance of these buildings and are performed for the same purpose as painting and decorating which are covered by the DBA.
15d13 Supply and installation contracts.
- Installation work performed in conjunction with supply or service ( e.g., base support) contracts is covered by the DBRA where it involves more than an incidental amount of construction activity ( i.e., the contract contains specific requirements for substantial amounts of construction, reconstruction, alteration, or repair work) and such work is physically or functionally separate from and can be performed on a segregated basis from the other non-construction work called for by the contract (see 29 CFR 4.116(c)(2)). For example, DBA coverage has been extended to installing a security system or an intrusion detection system, installing permanent shelving which is attached to a structure, installing air-conditioning ducts, excavating outside cable trenches and laying cable, installing heavy generators, mounting radar antenna, and installing instrumentation grounding systems, where a substantial amount of construction work is involved.
- Whether installation work involves more than an incidental amount of construction activity depends upon the specific circumstances of each particular case and no fixed rules can be established which would address every fact situation. Factors requiring consideration include the nature of the prime contract work, the type of work performed by the employees installing the equipment on the project site ( i.e., the techniques, materials, and equipment used and the skills called for in its performance), the extent to which structural modifications to buildings are needed to accommodate the equipment ( i.e., widening entrances, relocating walls, or installing wiring), and the cost of the installation work, either in terms of absolute amount or in relation to the cost of the equipment and the total project cost.
- DBRA does not apply to construction work which is incidental to the furnishing of supplies or equipment, if the construction work is so merged with non-construction work or so fragmented in terms of the locations or time spans of its performance that the construction work is not capable of being segregated as a separate contractual requirement.
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