- Leases as Contracts for Construction
AAM No. 176 - Basic DBA Principles
- 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"
- AAM No. 176 initiates its discussion concerning leases that may be contracts covered by DBA by noting that:
- 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
- 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
- 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:
- DBA application to any lease contract can be determined only by reviewing the specific facts of the particular contract.
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.
- AAM No. 176 reiterates the DOJ/OLC guidance by quoting from the 1994 memorandum:
- Factors to be considered in determining whether a lease/construction contract calls for construction of a public building or public work may include:
- length of the lease,
- 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],
- the extent to which the building will be used for private rather than public purposes,
- the extent to which the costs of the construction will be fully paid for by the lease payments, and
- whether the contract is written as a lease solely to avoid application of the DBA.
- 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.
Consulting Services We Provide
- Review public works preconstruction contracts
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