continuing working relationship for the exchange of pertinent wage information and for such cooperation as may be needed for the accurate determination of minimum wage rates. 3. Require that, where appropriate and in accordance with labor practices, helper and trainee classifications be included in the Department's wage determinations, to facilitate the employment of semiskilled and untrained persons on federally financed construction projects. CHAPTER 4 PROPOSED REVISION OF THE DAVIS-BACON ACT The Congress may wish to consider a revision of the Davis-Bacon Act to increase the minimum contract cost (presently $2,000) which is subject to wage determination. We believe that an amount between $25,000 and $100,000 would be more representative of present-day costs of construction projects. We believe also that an increase in the minimum contract cost would substantially reduce the number of wage determinations to be issued by the Department without appreciably affecting the wage stabilization objectives of the act. CONTRACT COST SUBJECT TO MINIMUM WAGE DETERMINATIONS The minimum contract cost of $2,000 reflected the economic situation between the years 1931 and 1935 when the prevailing wage legislation was originally enacted and amended. The legislative history of the act indicates that the Congress was concerned at that time with protecting those areas in which federally awarded construction was to be undertaken by enabling them to resist the downward pressures on construction wage rates and working conditions in a severely depressed economy. To obtain some indication of the range of construction costs for projects requiring wage determinations, we reviewed 600 of the 827 wage determinations issued by the Department during fiscal year 1965 and fiscal year 1969 for construction projects in the States of Maine, Maryland, New Mexico, and Rhode Island. These 600 wage determinations were selected by us because the contracting agencies' wage determination requests showed the estimated construction costs of the proposed projects to be about $663 million. Of the 600 wage determinations, 274, or about 46 percent, covered projects estimated to cost under $100,000. In the aggregate, they totaled about $5 million, or less than 1 percent of the total estimated construction cost of $663 million. Of these 274 projects, 191, or about 70 percent, were under $25,000. These 191 projects represented about two tenths of 1 percent of the total construction cost of $663 million but accounted for close to 32 percent of the 600 determinations issued. (See app. II for a tabulation of these determinations.) A study by the Department in 1960 and a study by a private consultant in 1963 both recommended that the contract cost cutoff amount be raised from $2,000 to $25,000. The 1960 study pointed out that raising the contract cost amount would reduce the Department's work load substantially, without doing any significant damage to the principle of prevailing wage maintenance. Four States have amended their prevailing wage legislations to provide that minimum contract costs requiring wage determinations be within $25,000 to $75,000. The lower cost construction projects often involve maintenance, painting and repairs, and additions and alterations and normally are small jobs which have little, if any, impact on the wage levels in the area. A reduction in the number of wage rate determinations issued yearly would permit the Department's wage determination staff to (1) make more thorough investigations, (2) conduct more frequent detailed onsite wage surveys, and (3) adequately resolve protests or problems that may arise in arriving at factual determinations. The reduction in volume of contracts subject to wage determinations would benefit the contracting agencies, because less time would be required to make requests for wage determinations, review the determinations that are issued, and enforce the rates established. MATTER FOR CONSIDERATION BY THE CONGRESS We recommend that the Congress consider the desirability of amending the Davis-Bacon Act to increase the minimum contract cost subject to wage determinations from the $2,000 now stated in the law to an amount between $25,000 and $100,000, which would be more representative of present-day costs of construction projects. APPENDIX I GENERAL ACCOUNTING OFFICE REPORTS TO THE CONGRESS ON REVIEWS OF WAGE RATE DETERMINATIONS Review of Wage Rate Determinations for Construction of Capehart Housing at the Marine Corps Schools, Quantico, Virginia (B-145200, June 6, 1962). Wage Rates for Federally Financed Housing Construction Improperly Determined in Excess of the Prevailing Rates for Similar Work in Southeastern Areas of the United States (B-146842, August 13, 1964). Wage Rates for Federally Financed Building Construction Improperly Determined in Excess of the Prevailing Rates for Similar Work in New England Areas (B-146842, January 26, 1965). Wage Rates for Federally Financed Housing Construction Improperly Determined in Excess of the Prevailing Rates for Similar Work in the Dallas-Fort Worth, Texas, Area (B-146842, March 26, 1965). Review of Determinations of Wage Rates for Construction of Carters Dam, Georgia (B-156269, December 14, 1966). Need for More Realistic Minimum Wage Rate Determinations for Certain Federally Financed Housing in Washington Metropolitan Area (B-164427, September 13, 1968). Construction Costs for Certain Federally Financed Housing Projects Increased Due to Inappropriate Minimum Wage Rate Determinations (B-146842, August 12, 1970). |