- Leases as Contracts for Construction

AAM No. 176 - Basic DBA Principles

  1. AAM No. 176 provides guidance concerning the "Application of the Davis-Bacon Act to Buildings and Works Constructed and/or Altered for Lease by the Federal Government"
  2. AAM No. 176 initiates its discussion concerning leases that may be contracts covered by DBA by noting that:
    1. The DBA applies to federal and District of Columbia contracts in excess of $2,000 for the construction, alteration, and/or repair, including painting and decorating, of a public building or public work; and
    2. The terms "public building" and "public work" are defined in 29 C.F.R. § 5.2(k) to include "every building or work, the construction, prosecution, completion, or repair of which is carried on directly by authority of or with funds of a Federal agency to serve the interest of the general public regardless of whether title thereof is in a Federal agency."

AAM No. 176 Notice to Contracting Agencies on DBA Applicability to Lease/Construction Contracts

  1. On June 22, 1994, the WHD Administrator issued AAM No. 176 to advise the federal contracting agencies that in view of the Crown Point case and a May 23, 1994 Department of Justice/Office of Legal Counsel (DOJ/OLC) memorandum, DBA can apply to certain federal lease contracts that also call for construction of a public work or building. As stated in AAM No. 176:
    1. DBA application to any lease contract can be determined only by reviewing the specific facts of the particular contract.
      … [and]
      Accordingly, any lease calling for the construction, alteration, and/or repair, of a public building or public work must be analyzed under specified criteria to determine whether it is necessary to include DBA requirements in the lease.
  2. AAM No. 176 reiterates the DOJ/OLC guidance by quoting from the 1994 memorandum:
    1. Factors to be considered in determining whether a lease/construction contract calls for construction of a public building or public work may include:
    2. length of the lease,
    3. the extent of government involvement in the construction project [such as whether the building is being built to Government requirements and whether the Government has the right to inspect the progress of the work],
    4. the extent to which the building will be used for private rather than public purposes,
    5. the extent to which the costs of the construction will be fully paid for by the lease payments, and
    6. whether the contract is written as a lease solely to avoid application of the DBA.
  3. AAM No. 176 concludes by advising agencies if there are any questions concerning the applicability of DBA coverage in a lease/construction situation, please contact WHD.


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