Many contractors are familiar with the Davis-Bacon Act (“DBA”), the statute that requires government contractors to pay prevailing wages to workers employed in the construction, alteration, or repair of buildings or other public works.  The DBA is enforced by the Department of Labor, which is responsible for issuing the “wage determinations” that list the prevailing wages for different labor categories within a geographical area and for promulgating regulations used to implement the DBA’s requirements.

On March 18, 2022, the Department issued a notice of proposed rulemaking (“NPRM”), announcing that it intends to make a number of revisions to the DBA regulations.  In the Department’s view, these revisions represent the largest change to the DBA regulations since the last major rewrite in 1981.

The most significant changes announced in the NPRM are:

  • Incorporation by Operation of Law: The DBA currently applies via the incorporation of contract clauses and relevant wage determination(s) into the subject contract.  The proposed rule, however, would designate the DBA contract clauses and applicable wage determination(s) as effective by “operation of law,” regardless of whether they are expressly included in the covered contract.  It further provides that the Department may “grant[] a variance, tolerance, or exemption” from the automatic-incorporation provision, and further provides that “the prime contractor must be compensated for any resulting increase in wages” that accompanies the DBA becoming effective by operation of law.
  • Changes to Prevailing Wage Methodology: The NPRM includes proposed changes to the wage survey methodology used by the Department to prepare wage determinations.  This includes a change to how the Department determines the “prevailing” wage rate when there is no single rate that is paid to the majority of workers within a geographical area.  The current regulations provide that the Department is required to use a weighted average rate in such situations, but under the proposed rule the Department will instead treat a rate as prevailing if it is paid to at least 30 percent of the workers within the area.  (If there is no rate that is paid to at least 30 percent of workers, then the Department will still use an average rate).  Moreover, the NPRM will also permit the Department to adopt wage determinations promulgated by state-and-local authorities, which could potentially speed up the issuance of new wage determinations and ensure that consistent wages are paid across different types of projects.
  • Conformance Changes: When a wage determination does not include a prevailing wage rate for a class of workers that will be employed under the contract, the contractor may be required to use the Department’s “conformance” process to receive a new, “conformed” rate for that classification.  The proposed rule includes new language that is intended to reduce the need for such conformances:  it allows the Department to add a new classification to the wage determination if it is “regularly” the subject of conformance requests.  (This would be in addition to the current process for identifying new classifications via wage surveys).
  • Enforcement Changes: The proposed rule includes anti-retaliation provisions designed to protect employees that identify potential DBA violations from termination or other adverse employment actions. It also makes changes intended to strengthen the government’s ability to withhold contract payments from contractors that fail to pay the prevailing wage to their employees:  under the proposed language, a DBA violation under one contract may result in cross-withholding under a different contract with a different agency.

In our view, the first of these changes is potentially the most significant:  under the proposed rule, the clauses that incorporate the DBA “will be considered to be a part of every prime contract” within the statutory coverage of the DBA, regardless of “whether or not they are included or incorporated by reference into such contract.”

This change may create potential complications for some contractors.  As a general matter, the DBA’s statutory coverage is very broad — it applies to all contracts above $2000 that concern the construction, alteration, or repair of a “public building” or “public work.”  This language has been interpreted to encompass a wide variety of project types — ranging from the construction of new bridges to landscaping projects or even the painting of mailboxes and in some instances the Department can read the DBA as applicable even beyond its intended broad reach.  For example, in one case, it argued (unsuccessfully) that the DBA applied to the CityCenter development in Washington, DC, despite the facts that (a) the project was privately funded; and (b) neither the federal government nor the District government were a party to the construction contract.  Moreover, the DBA does not apply only to contracts with the federal government — it also may be applied, under the so-called “Related Acts,” to federally-financed construction, including, for example, state or local construction contracts that are funded with federal grant money.

The broad reach of the DBA, when combined with potential applicability to contracts that do not mention it, creates a risk that contractors may be inadvertently out of compliance with potentially serious consequences.  Failure to comply with the DBA can result in withheld contract payments, and mandatory debarment for contractors “found to have disregarded their obligations to employees and subcontractors.”

That said, the rule also provides that the Department may grant an exception to this requirement, and further provides that the prime contractor “must” be compensated for any increases in wages that occur if the DBA is incorporated into the contract by operation of law.

Nevertheless, if the proposed rule becomes final in its current form, contractors should be prepared to conduct an analysis to determine whether new contracts could potentially be DBA-covered — even if the relevant clauses are not included in the solicitation — or risk serious financial and other consequences. We therefore expect this change — as well as the other changes discussed above — to be the subject of input from industry.  To that end the NPRM solicits comments from interested parties, which are due on May 17, 2022.

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Photo of Peter Terenzio Peter Terenzio

Mr. Terenzio advises contractors across a broad range of different issues. His practice includes bid protests, contract claims and disputes, regulatory counseling, and internal investigations.

Before joining the firm, Mr. Terenzio clerked for Chief Judge Susan G. Braden of the Court of Federal Claims.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.


Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
    the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.