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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: September 21, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Labor; Labor Standards Provisions Applicable to Federally Financed and Assisted Construction Contracts

SOURCE: Federal Register, September 21, 2000, Vol. 65, No. 184, page 57269

AGENCIES: Department of Labor (DOL), Employment Standards Administration, Wage and Hour Division

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: DOL is proposing to amend two related definitions in its regulations pertaining to the Davis-Bacon Act and related acts that apply to federal and federally-assisted construction projects: (1) "site of the work" to conform with three appellate court decisions that concluded the definition was contrary to the language of the Davis-Bacon Act that limits coverage to workers employed "directly upon the site of the work"; and (2) "construction, prosecution, completion, or repair" to address situations that were not contemplated when the current regulations were promulgated in 1983.

EDITOR'S NOTE: The DOL regulations pertaining to the Davis-Bacon Act are in Title 29 of the Code of Federal Regulations, Labor; Part 5, Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction (Also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act).

DATES: Comments must be received on or before October 23, 2000.

ADDRESSES: Send comments to T. Michael Kerr, Administrator, Wage and Hour Division (Attention: Government Contracts Team), Employment Standards Administration, U.S. Department of Labor, Room S-3018, 200 Constitution Avenue, NW, Washington, DC 20210; fax: 202-693-1432.

FOR MORE INFORMATION CONTACT: Timothy Helm, Office of Enforcement Policy, Government Contracts Team, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Room S-3018, 200 Constitution Avenue, NW, Washington, DC 20210; 202-693-0574.

SUPPLEMENTAL INFORMATION: The Davis-Bacon Act requires that construction contracts contain a provision requiring the payment of minimum wages to "all mechanics and laborers employed directly upon the site of the work..." In 1983, DOL issued regulations which provided a two-part definition of "site of the work": (1) "the site of the work is the physical place or places where the construction called for in the contract will remain when work on it has been completed and...other adjacent or nearby property used by the contractor or subcontractor in such construction which can reasonably be said to be included in the site" (paragraph (l)(1) of 29 CFR 5.2, Definitions); and (2) "fabrication plants, mobile factories, batch plants, borrow pits, job headquarters, tool yards, etc." are part of the site of the work provided they are "so located in proximity to the actual construction location that it would be reasonable to include them," and are "dedicated exclusively, or nearly so, to performance of the contract or project") (29 CFR 5.2(l)(2)). Paragraph 29 CFR 5.2(l)(3) goes on to state that the fabrication plants, batch plants, borrow pits, tool yards, job headquarters, etc., "of a commercial supplier or materialman which are established by a supplier of materials for the project before the opening of bids and not on the project site, are not included in the site of the work." As DOL points out, "facilities such as batch plants and borrow pits are not covered if they are ongoing businesses apart from the federal contract work."

In addition, the definition of "construction, prosecution, completion, or repair" in 29 CFR 5.2(j)(1) covers "all types of work done on a particular building or work at the site thereof, including work at a facility which is dedicated to and deemed a part of the site of the work...including without limitation (i) alteration, remodeling, installation (where appropriate) on the site of the work of items fabricated off-site; (ii) painting and decorating; (iii) manufacturing or furnishing of materials, articles, supplies or equipment on the site of the building or work...; and (iv) transportation between the actual construction location and a facility which is dedicated to such construction and deemed a part of the site of the work..."

Three court cases have addressed these definitions:

However, subsequent to these decisions, the DOL's Administrative Review Board (ARB) addressed the Davis-Bacon Act's "site of the work" provision in Bechtel Contractors Corporation (Prime Contractor), Rogers Construction Company (Prime Contractor), Ball, Ball and Brosamer, Inc., (Prime Contractor), and the Tanner Companies, Subcontractor (ARB Case No. 97-149, March 25, 1998, reaffirming ARB Case No. 95-045A, July 15, 1996). This case involved a dispute over whether the Davis-Bacon provisions applied to work performed at three batch plants established and operated in connection with construction work on the Central Arizona Project (CAP), a construction project consisting of 330 miles of aqueduct and pumping plants. The batch plants were located less than one-half mile from various pumping stations that were being constructed as part of the project. The ARB ruled that interpretation of 29 CFR 5.2(l)(1) requires examination of the question of whether the temporary facilities are so "located in virtual adjacency" to the site of the work that it would be reasonable to include them. The ARB found that there was no basis for excluding the batch plant workers since they were employed on sites of the work to the same extent as the workers who cleared the land and the workers who inventoried, assembled, transported or operated tools, equipment or materials on nearby or adjacent property.

Because of the confusion produced by these various rulings, and the fact that three court decisions have taken issue with the regulatory definitions of the statutory terms "construction, prosecution, completion, and repair" and "site of the work", DOL has decided to revise the definitions.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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