GAO 

United States Government Accountability Office

Report to the Senate Republican Leader

RECOVERY ACT

Officials’ Views Vary 

on Impacts of 

Davis-Bacon Act 

Prevailing Wage 

Provision 

February 2010 

GAO-10-421 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 2010

RECOVERY ACT

Officials’ Views Vary on Impacts of Davis-Bacon Act 

Prevailing Wage Provision 

Highlights of GAO-10-421, a report to the 

Senate Republican Leader 

Forty programs are newly subject to Davis-Bacon requirements as a result of 

the Recovery Act’s prevailing wage provision, according to federal agency 

officials. Of these, 33 programs existed prior to the Recovery Act and are 

subject to Davis-Bacon requirements for the first time under the act, while 7 

are newly created programs. Together, the 40 programs account for about 

$102 billion of the $309 billion that was appropriated by the Recovery Act for 

projects and activities. However, a smaller amount of these funds will be 

subject to Davis-Bacon requirements because not all of the funds will be used 

for construction activities and only a portion of those funds will be used to 

pay labor wages. 

Expected Impact of Davis-Bacon Requirements on Program Costs and Goals as Reported by 

Federal Officials Responsible for 40 Programs Newly Subject to those Requirements

Expected impact of: 

Little to 

no impact 

Moderate 

impact 

Large 

impact Other a Total

Prevailing wage requirement on program 

costs 23 4 4 9 40

Administrative requirements on program 

costs 18 6 7 9 40

Davis-Bacon requirements on program goals 27 5 1 7 40

Davis-Bacon requirements on Recovery Act 

goal of preserving or creating new jobs 26 3 4 7 40

Source: GAO analysis of information from interviews and correspondence with federal officials. 

a

This category includes those that responded do not know, unclear, too soon to tell, or mixed impact. 

For those programs that are newly subject to Davis-Bacon requirements, 

officials had mixed views on the impact of these requirements on program 

costs and goal achievement. In some cases, officials said Davis-Bacon 

requirements would have little or no impact on program costs for a few 

reasons, such as (1) the program having a small amount of construction 

activities, (2) prevailing wage rates that were in line with expectations, and (3) 

companies’ previous experience with weekly payrolls. In other cases, officials 

said the requirements would have a moderate to large impact on program 

costs and/or goals. For example, officials from the Department of Energy’s 

(DOE) Energy Efficiency and Conservation Block Grants program anticipated 

a potentially large cost impact as a result of the significant amount of funds to 

be spent on construction labor wages. Officials from DOE’s Weatherization 

Assistance Program reported that weatherization projects in buildings taller 

than four stories will require workers to be paid a commercial prevailing wage 

rate under the Davis-Bacon Act that is higher than what would otherwise be 

used and could potentially reduce the number of homes weatherized. 

Additionally, weatherization officials said that Davis-Bacon requirements 

affected the program’s timing because prevailing wage rates for 

weatherization workers were not fully available until September 2009. 

Further, officials from the Department of Housing and Urban Development’s 

Lead Hazard Reduction Program noted that Davis-Bacon requirements would 

require a more detailed payroll tracking system that could be particularly 

burdensome for small companies. Those officials also explained that because 

administrative costs are likely to increase, the department is in the process of 

increasing the cap on how much recipients can spend on administrative costs. 

The American Recovery and 

Reinvestment Act of 2009 

(Recovery Act) has the broad 

purpose of stimulating the 

economy. It includes substantial 

appropriations for construction 

projects that, under the act’s 

prevailing wage provision, are 

subject to Davis-Bacon Act 

requirements. That is, contractors 

must pay laborers and mechanics 

who work on those projects at least 

the prevailing wage rates set for 

their local area by the Secretary of 

Labor. In addition, contractors 

must submit certified payrolls and 

pay their workers weekly. 

Prior to the Recovery Act, some 

federal programs with construction 

projects were already subject to 

Davis-Bacon Act requirements. 

Others, however, are subject to the 

requirements for the first time 

because the Recovery Act extended 

the requirements to all 

construction projects supported by 

the act. 

GAO was asked to (1) identify the 

programs that are newly affected 

by the Recovery Act’s prevailing 

wage provision and (2) examine 

the extent to which that provision 

is expected to affect each of those 

newly affected programs. GAO 

obtained data from 27 agencies and 

spoke with federal, state, and local 

officials as well as contractors 

involved with the newly affected 

programs. 

Although GAO is not making 

recommendations in this report, 

these findings may be helpful in 

considering and designing 

legislation with similar objectives. 

View GAO-10-421 or key components. 

For more information, contact Patricia A. 

Dalton at (202) 512-3841 or 

daltonp@gao.gov. 
Page i GAO-10-421 

Contents 

Letter 1

Background 5 

Federal Agency Officials Reported That 40 Programs Are Newly 

Subject to Davis-Bacon Requirements because of the Recovery 

Act’s Prevailing Wage Provision 7 

Program Officials’ Views on Davis-Bacon Requirements 11 

Agency Comments and Our Evaluation 19 

Appendix I GAO Contact and Staff Acknowledgments 21 

Tables 

Table 1: Programs That are Newly Subject to Davis-Bacon 

Requirements under the Recovery Act by Agency 7 

Table 2: Expected Impact of Davis-Bacon Requirements on 

Program Costs as Reported by Federal Officials 

Responsible for 40 Programs Newly Subject to the DavisBacon Act Requirements 12 

Table 3: Expected Impact of Davis-Bacon Requirements on the 

Ability to Achieve Program and Recovery Act Goals, as 

Reported by Federal Officials Responsible for 40 Programs 

Newly Subject to the Davis-Bacon Act Requirements 17 

Abbreviations 

DOE Department of Energy 

Recovery Act American Recovery and Reinvestment Act of 2009 

TIGER Transportation Investment Generating Economic 

 Recovery 

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 Recovery Act 
United States Government Accountability Office

Washington, DC 20548 

 

February 24, 2010 

The Honorable Mitch McConnell 

Republican Leader 

United States Senate 

Dear Leader McConnell: 

The nation faces what is generally reported to be the most serious 

economic crisis since the Great Depression. In response, the American 

Recovery and Reinvestment Act of 2009 (Recovery Act) was enacted to 

promote economic recovery, make investments, and minimize and avoid 

reductions in state and local government services.1

 In early 2009, the 

Congressional Budget Office estimated that the combined spending and 

tax provisions in the Recovery Act will cost an estimated $787 billion from 

2009 through 2019. Of that total, more than a third comes from Division A 

of the act, which provides substantial funding for, among other things, 

construction and infrastructure projects.2

 These projects, which are 

supported by various federal agencies, encompass construction, 

alteration, and repair efforts for roads, bridges, public transit, water 

systems, and federal buildings and facilities. 

Under the Recovery Act’s prevailing wage provision, all construction 

projects funded directly by or assisted in whole or in part by the federal 

government through Division A of the act are subject to the requirements 

of the Davis-Bacon Act.3

 That is, all laborers and mechanics employed by 

contractors and subcontractors must be paid at least the prevailing wage 

rate, including fringe benefits, in the local area in which they are 

employed, as determined by the Secretary of Labor. In addition, 

contractors are required to pay these workers weekly and submit weekly 

certified payroll records to the contracting or administering agency. Prior 

Recovery Act

 

1

Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009). 

2

The Recovery Act consists of two divisions, Division A and Division B. Division A—titled 

“Appropriations Provisions” in the act—consists primarily of discretionary spending, with 

some exceptions. Examples of discretionary projects and activities include federal 

construction projects and certain research activities. Division B consists of mainly 

mandatory spending and revenue provisions, with some exceptions, and includes tax, 

unemployment, health, state fiscal relief, and some other provisions. 

3

Pub. L. No. 111-5, § 1606, 123 Stat. 115, 303 (Feb. 17, 2009). 

Page 1 GAO-10-421 
 

to the Recovery Act, numerous federal programs that included 

construction projects were subject to the Davis-Bacon Act. Because these 

programs were already required to comply with Davis-Bacon 

requirements, they were not newly affected by the Recovery Act’s 

prevailing wage provision. However, because the Recovery Act extended 

Davis-Bacon requirements to all construction projects that it supported 

through Division A of the act, some federal programs became subject to 

these requirements for the first time. 

In this context, you asked us to (1) identify programs that are newly 

affected by the Recovery Act’s prevailing wage provision and (2) examine 

the extent to which that provision is expected to affect each of those 

newly affected programs. Separately, we are also reporting on the extent 

to which federal requirements, including Davis-Bacon requirements, are 

expected to affect the timing of Recovery Act projects.4

To identify programs that are newly affected by the Recovery Act’s 

prevailing wage provision, we requested data from 27 of the agencies that 

received funding under Division A of the act.5

 Although the Recovery Act 

was initially estimated to provide $787 billion in spending and tax 

provisions, we focused on the appropriation portion because the act’s 

prevailing wage provision only applied to Division A.6

The 27 federal agencies we reviewed consisted of departments and 

independent agencies that received funding for almost all projects under 

the act. Specifically, the departments of 

• Agriculture 

• Commerce 

• Defense 

 

4

GAO, Recovery Act: Project Selection and Starts Are Influenced by Certain Federal 

Requirements and Other Factors, GAO-10-383 (Washington, D.C.: Feb. 10, 2010). 

5

GAO and the Recovery Act Accountability and Transparency Board received small 

amounts of Recovery Act funds to conduct oversight activities—not for construction 

purposes—and were excluded from our analysis, since by definition they will not have 

Recovery Act programs that are newly subject to Davis-Bacon Act requirements. 

6

The Recovery Act’s prevailing wage provision—Section 1606—only applied to the 

provisions in Division A of the act. Section 1601 in Division B of the act applied DavisBacon requirements to projects financed with certain tax-favored bonds. 

Page 2 GAO-10-421 Recovery Act
 

• U.S. Army Corps of Engineers7

• Education 

• Energy 

• Health and Human Services 

• Homeland Security 

• Housing and Urban Development 

• Interior 

• Justice 

• Labor 

• State 

• Transportation 

• Treasury 

• Veterans Affairs 

The independent agencies included the 

• Corporation for National and Community Service 

• Environmental Protection Agency 

• Federal Communications Commission 

• General Services Administration 

• National Aeronautics and Space Administration 

• National Endowment for the Arts 

• National Science Foundation 

• Small Business Administration 

• Smithsonian Institution 

• Social Security Administration 

• U.S. Agency for International Development 

We asked each agency to specify which of its programs were newly 

subject to Davis-Bacon requirements under the Recovery Act. We verified 

the agency-provided data with agency officials and checked their 

appropriation figures with appropriation values in the Recovery Act. We 

also interviewed officials from the Department of Labor and the 

Congressional Research Service to learn about the universe of newly 

subject programs and the application of Davis-Bacon requirements. 

To examine the extent to which the Recovery Act’s prevailing wage 

provision is expected to affect each newly affected program, we 

conducted semi-structured interviews with federal officials from most of 

 

7

The U.S. Army Corps of Engineers is the part of the Army that has both military and 

civilian responsibilities. 

Page 3 GAO-10-421 Recovery Act
 

these programs, and for the other programs we obtained federal officials’ 

written responses to our questions. We also interviewed state and local 

officials in the 16 states and the District of Columbia that we are reviewing 

for our bimonthly reports to Congress on Recovery Act implementation.8

These 16 states are Arizona, California, Colorado, Florida, Georgia, Illinois, 

Iowa, Massachusetts, Michigan, Mississippi, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, and Texas.9

 We also conducted interviews 

with, and obtained relevant documentation from, two national contractor 

associations (Associated General Contractors of America and Associated 

Builders and Contractors); a national union (AFL-CIO); the National 

Association of State Auditors, Comptrollers and Treasurers; the National 

Association of Counties; and the National Governors Association. To 

further understand how Davis-Bacon requirements might affect specific 

programs that are newly subject to those requirements, we interviewed 

and collected additional data from state and local officials and contractors 

associated with five of the programs that fell within the scope of our 

work.10 We selected these five programs because they existed prior to the 

Recovery Act, are currently being implemented, and have a significant 

portion of their funding going toward construction activities. The local 

officials and contractors interviewed were referrals identified by federal 

and state officials. We ensured a range of officials and contractors were 

selected by asking for contacts from geographically disbursed states for 

different Recovery Act programs. The examples we provide in this report 

are illustrative only and not generalizable. 

We conducted this performance audit from September 2009 to February 

2010 in accordance with generally accepted government auditing 

 

8

The Recovery Act specifies several roles for GAO, including conducting bimonthly reviews 

of selected states’ and localities’ use of funds made available under the act. The fourth 

report in response to the act’s mandate is GAO, Recovery Act: Status of States’ and 

Localities’ Use of Funds and Efforts to Ensure Accountability, GAO-10-231 (Washington, 

D.C.: Dec. 10, 2009). 

9

The states selected for our bimonthly reviews contain about 65 percent of the U.S. 

population and are estimated to receive collectively about two-thirds of the 

intergovernmental federal assistance funds available through the Recovery Act. We 

selected these states and the District of Columbia on the basis of federal outlay projections; 

percentage of the U.S. population represented, unemployment rates, and changes; and a 

mix of states’ poverty levels, geographic coverage, and representation of both urban and 

rural areas. 

10The five programs were the Weatherization Assistance Program, State Energy Program, 

Clean Water State Revolving Fund, Drinking Water State Revolving Fund, and the Lead 

Hazard Reduction Program. 

Page 4 GAO-10-421 Recovery Act
 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

The Davis-Bacon Act requires contractors and subcontractors working on 

federally funded contracts in excess of $2,000 to pay at least locally 

prevailing wages to laborers and mechanics.11 The act covers both new 

construction and the alteration or repair of existing public buildings and 

works. The Department of Labor sets prevailing wage rates for various job 

categories in a local area on the basis of periodic surveys it conducts of 

contractors, unions, public officials, and other interested parties.12 The 

Davis-Bacon Act stems from a Depression-era practice of transporting 

workers from lower-paying areas to bypass local workers who would 

demand a higher wage. The prevailing wage requirement was meant to 

prevent this practice by ensuring that workers on federal projects were 

paid at least the locally prevailing wage. Congress has extended this 

requirement beyond projects funded directly by the federal government by 

including Davis-Bacon Act prevailing wage provisions in numerous related 

laws under which federal agencies assist construction projects through 

grants, loans, guarantees, insurance, and other methods. Examples of 

related laws include the Federal-Aid Highway Acts, the Housing and 

Community Development Act of 1974, and the Federal Water Pollution 

Control Act.13 Contractors on projects subject to Davis-Bacon 

requirements may also be subject to additional prevailing wage 

requirements under state and local laws. 

Background 

In addition to paying no less than locally prevailing wages, contractors for 

construction projects that are subject to the Davis-Bacon Act must pay 

their workers on a weekly basis and submit weekly certified payroll 

records. The federal contracting or administering agency has primary 

 

11Laborers and mechanics include workers whose duties are manual or physical in nature, 

including workers who use tools or perform a trade. Typically, a wage determination will 

have prevailing wage rates for different occupations and classifications. 

12The local area used in making a wage determination will normally be a county. 

13For a list of Davis-Bacon related laws, see 29 C.F.R. Part 1, Appendix A, Statutes Related 

to the Davis-Bacon Act Requiring Payment of Wages at Rates Predetermined by the 

Secretary of Labor.

Page 5 GAO-10-421 Recovery Act
 

responsibility for enforcing these requirements, while the Department of 

Labor has coordination and oversight responsibilities, including the 

authority to establish regulations and investigate compliance with labor 

standards as warranted. 

The prevailing wage provision in section 1606 of the Recovery Act broadly 

applies Davis-Bacon requirements to all construction projects funded 

directly or assisted by the federal government under Division A of the 

act.14 It reinforces Davis-Bacon Act coverage of construction projects 

where the federal government is a party to the contract, extends it to

projects assisted in whole or in part by Division A of the act, and overri

any limitation to Davis-Bacon coverage in related laws under which 

federal agencies provide financial assistance, such as grants and loan 

guarantees, to recipients to use for construction projects. It also extends 

the prevailing wage requirement to some federally assisted projects th

would not otherwise be subject to that req

des 

at 

uirement. 

 

14Both the Bureau of Indian Affairs’ Construction appropriation provision and the Indian 

Health Service’s Indian Health Facilities appropriation provision included an exemption for 

certain tribal contracts from Section 1606. 

Page 6 GAO-10-421 Recovery Act
 

According to federal agency officials, 40 programs are newly subject to 

Davis-Bacon requirements as a result of the Recovery Act’s prevailing 

wage provision, as shown in table 1.15 These programs are spread across 

12 of 27 federal agencies that received funding under Division A of the ac

Most of the programs existed prior to the Recovery Act and are subject to 

Davis-Bacon requirements for the first time under the act, while some are 

newly created programs. 

t. 

Federal Agency 

Officials Reported 

That 40 Programs Are 

Newly Subject to 

Davis-Bacon 

Requirements 

because of the 

Recovery Act’s 

Prevailing Wage 

Provision 

Table 1: Programs That are Newly Subject to Davis-Bacon Requirements under the Recovery Act by Agency 

Dollars in millions 

Agency Program 

Recovery Act 

funding

Department of Commerce Broadband Technology Opportunities Programa $4,700

Department of Education State Fiscal Stabilization Funda53,600

Department of Energy Biomass Program 787

Clean Coal Power Initiative 800

Electricity Delivery and Energy Reliability Program 4,500

Energy Efficiency and Conservation Block Grants 3,200

Fuel Cell Technologies Program 43

Geothermal Technologies Program 400

Industrial Carbon Capture and Storagea1,520

Industrial Technologies Program 266

Innovative Technology Loan Guarantee Programb,c 4,000

Solar Energy Technologies Program 118

State Energy Program 3,100

 

15Other provisions in the Recovery Act define the scope or reiterate the application of 

Davis-Bacon requirements to projects supported through Recovery Act appropriations for 

the Department of Housing and Urban Development’s Green Retrofit Program for 

Multifamily Housing, the Department of Energy’s Innovative Technology Loan Guarantee 

Program, and the Department of Transportation’s Transportation Investment Generating 

Economic Recovery Discretionary Grants. 

Page 7 GAO-10-421 Recovery Act
 

Dollars in millions 

Agency Program 

Recovery Act 

funding

Vehicle Technologies Program 2,815

Weatherization Assistance Program 5,000

Wind and Hydropower Technologies Program 140

Department of Health and Human 

Services 

Capital Improvement Program and Facility Investment Program for 

Health Centers 1,500

National Center for Research Resources Extramural Construction 

Program 1,000

Department of Homeland Security Recovery Act Assistance to Firefighters Fire Station Construction 

Grantsa

210

Department of Housing and Urban 

Development 

Green Retrofit Program for Multifamily Housinga,c

250

Lead Hazard Reduction Program 100

Tax Credit Assistance Programa2,250

Department of the Interior Challenge Grant Program 40

Colorado River Basin Salinity Control Program 10

Fish and Wildlife Coordination Act 20

Recreation Resources Management Program 10

Water Reclamation and Reuse Program 135

Department of Justice Correctional Facilities on Tribal Lands Program 225

Edward Byrne Memorial Justice Assistance Grant Program 2,000

Transitional Housing Assistance Grants for Victims of Domestic 

Violence, Dating Violence, Stalking, or Sexual Assault Program 50

Department of Transportation Supplemental Grants for Assistance to Small Shipyards 100

Transportation Investment Generating Economic Recovery 

Discretionary Grants a,c 1,500

Department of the Treasury Community Development Financial Institutions Financial and Technical 

Assistance Program 90

Native American Community Development Financial Institutions 

Assistance Program 8

Environmental Protection Agency Clean Water State Revolving Fund 4,000

Diesel Emission Reduction Act Grants 300

Drinking Water State Revolving Fund 2,000

Leaking Underground Storage Tank Program 200

National Science Foundation Academic Research Infrastructure Program—Recovery and 

Reinvestment 200

Major Research Equipment and Facilities Construction 400

Total, 40 programs $101,587

Source: GAO analysis of federal agency data. 

Note: The numbers in this table are rounded to the nearest million. 

Page 8 GAO-10-421 Recovery Act
 

a

This program was newly created by the Recovery Act. 

b

Public Law 111-47 rescinded $2 billion from the $6 billion provided for the Innovative Technology 

Loan Guarantee Program under the Recovery Act. 

c

The Recovery Act provision for this program includes a Davis-Bacon Act provision. 

These 40 programs account for about $102 billion of the $309 billion that 

was appropriated by the Recovery Act for projects and activities, but a 

smaller amount of these funds will be subject to Davis-Bacon requirements 

because not all of the funds will be used for construction activities and 

only a portion of those funds will be used to pay labor wages. For 

example, the Environmental Protection Agency’s Diesel Emission 

Reduction Act Grants program—intended to accelerate emission 

reductions from older diesel engines—received $300 million under the 

Recovery Act. Program officials reported that less than 10 percent of those 

funds will be used for construction activities, and less than 5 percent of 

the funds will likely be spent on labor wages.16 Officials for another 

program—the Department of Education’s State Fiscal Stabilization Fund, 

which accounts for more than half of the $102 billion available for 

programs that are newly subject to Davis-Bacon requirements—expected 

only a small percentage of the program’s funds to be used for construction 

activities.17 Moreover, none of the federal officials responsible for the 40 

programs expected more than half of their program’s Recovery Act 

funding to be spent on labor wages covered by the Davis-Bacon prevailing 

wage requirement. 

All 40 programs that are newly subject to Davis-Bacon requirements have 

the federal government providing recipients with financial assistance, such 

as grants and loan guarantees, that can be used for construction activities. 

Thirty-three of the 40 programs existed prior to the Recovery Act. Federal 

officials responsible for 27 of the 33 existing programs reported that their 

programs were not previously subject to Davis-Bacon requirements 

because existing law did not require their projects to comply with those 

requirements. For example, the Department of Energy’s Weatherization 

Assistance Program—which enables low-income families to reduce their 

 

16The program objective of the Environmental Protection Agency’s Diesel Emission 

Reduction Grants program is to reduce diesel emissions. The agency will award grants to 

address the emissions of in-use diesel engines by promoting a variety of cost-effective 

emission reduction strategies, including switching to cleaner fuels; retrofitting, repowering, 

or replacing eligible vehicles and equipment; and implementing idle reduction strategies. 

17The State Fiscal Stabilization Fund, administered by the Department of Education, was 

created in part to help state and local governments stabilize their budgets by minimizing 

budgetary cuts in education and other essential government services, such as public safety. 

Page 9 GAO-10-421 Recovery Act
 

energy bills by making long-term energy efficiency improvements to their 

homes—has been in place since 1976 but had not been required to comply 

with Davis-Bacon requirements prior to the Recovery Act.18 Officials for 5 

other existing programs reported that their programs were not previously 

subject to Davis-Bacon requirements because they did not previously fund 

construction projects. For example, prior to the Recovery Act, the 

Department of Energy’s Industrial Technologies Program funded research 

and development projects that did not involve construction work, while 

the Recovery Act provided the program funding for construction activities 

covered by Davis-Bacon requirements.19 Officials for one existing program 

did not provide a response in time for our report about why their program 

was not previously subject to Davis-Bacon requirements. Finally, officials 

for 7 of the 40 programs stated that their programs were newly created by 

the Recovery Act. Officials for 2 of these new programs—the Department 

of Commerce’s Broadband Technology Opportunities Program and the 

Department of Education’s State Fiscal Stabilization Fund—indicated that, 

while these programs were subject to Davis-Bacon requirements for the 

first time under the Recovery Act, existing law would have made their 

projects subject to the requirements regardless of the Recovery Act’s 

prevailing wage provision.20 Officials for the other 5 new programs 

indicated their projects would not have been subject to Davis-Bacon 

requirements if not for the Recovery Act. 

The 40 programs were in different stages of implementation at the time of 

our review. Most program officials reported that financial assistance 

awards had been made and that some level of project implementation was 

under way. For example, the Department of Housing and Urban 

Development’s Lead Hazard Reduction Program—which provides grants 

 

18The Recovery Act appropriated $5 billion for the Weatherization Assistance Program, 

which the Department of Energy is distributing to each of the states, the District of 

Columbia, and seven territories and Indian tribes. The program seeks to assist low-income 

families by making such long-term energy-efficiency improvements to their homes as 

installing insulation; sealing leaks; and modernizing heating equipment, air circulation fans, 

and air conditioning equipment. 

19The Department of Energy’s Industrial Technologies Program partners with U.S. industry 

in a coordinated program of research and development, validation, and dissemination of 

energy efficiency technologies and operating practices. 

20The Department of Commerce’s National Telecommunications and Information 

Administration administers the Recovery Act’s Broadband Technology Opportunities 

Program, which manages competitive grants to a variety of entities for broadband 

infrastructure, public computer centers, and innovative projects to simulate demand for, 

and adoption of, broadband. 

Page 10 GAO-10-421 Recovery Act
 

to states, localities, and Indian tribes to abate lead hazards and make 

homes healthy—had awarded its Recovery Act grants by May 2009 and 

reported that abatement efforts were under way.21 Officials responsible for 

some programs indicated that applications were under review and that 

Recovery Act projects were not yet being implemented. For example, 

Department of Transportation officials reported they were in the process 

of reviewing applications for the Transportation Investment Generating 

Economic Recovery (TIGER) Discretionary Grants program in advance of 

a February 2010 award deadline.22

Federal, state, and local officials involved with the 40 Recovery Act 

programs that are newly subject to Davis-Bacon requirements differed on 

whether those requirements would increase program costs. However, 

these officials generally did not expect Davis-Bacon requirements to 

inhibit their ability to achieve Recovery Act and program goals. Federal 

officials responsible for most of the programs did not expect Davis-Bacon 

requirements to affect the timing of their program’s Recovery Act efforts, 

though officials for some programs expected an impact. 

Program Officials’ 

Views on Davis-Bacon 

Requirements 

Program Officials Differed 

on Whether Davis-Bacon 

Requirements Would 

Increase Programs’ Costs 

Federal officials responsible for programs that are newly subject to DavisBacon requirements—the prevailing wage rate requirement and the 

administrative requirements associated with weekly payroll processes—

had mixed views on the extent to which they expected these requirements 

to affect program costs, as table 2 shows. 

 

21The Department of Housing and Urban Development’s Lead Hazard Reduction Program 

has made nearly $100 million in Recovery Act funding available to help eliminate dangerous 

lead-based paint and other health and safety hazards from low-incomes homes. 

22The Department of Transportation’s TIGER Discretionary Grants program will award 

grants for capital investments in surface transportation infrastructure on a competitive 

basis to projects that have a significant impact on the nation, a metropolitan area, or a 

region. 

Page 11 GAO-10-421 Recovery Act
 

Table 2: Expected Impact of Davis-Bacon Requirements on Program Costs as 

Reported by Federal Officials Responsible for 40 Programs Newly Subject to the 

Davis-Bacon Act Requirements 

Little to no 

impact

Moderate 

impact 

Large 

impact Othera

Total

Prevailing wage rate 23 4 4 9 40

Administrative 

requirements 18 6 7 9 40

Source: GAO analysis of information from interviews and correspondence with federal officials. 

a

This category includes those that responded do not know, too early to tell, or mixed impact. 

Officials for the 40 programs provided a range of explanations for the 

extent to which the prevailing wage rate requirement might impact 

program costs. Specifically: 

• Little to no impact. Department of Energy officials responsible for two 

programs said construction firms generally pay prevailing wage rates as a 

standard practice and therefore the prevailing wage rate requirement 

would have no impact on program costs. According to other program 

officials, the impact would be small because a relatively small amount of 

program funds are to be spent on construction activities that are subject to 

Davis-Bacon requirements. For example, Department of Justice officials 

responsible for the Transitional Housing Assistance Grants for Victims of 

Domestic Violence, Dating Violence, Stalking, or Sexual Assault Program 

said only a small number of grantees requested funds for construction and 

that less than 5 percent would be allocated for this purpose.23 Department 

of Energy officials responsible for the Geothermal Technologies program 

noted that the prevailing wage rates were in line with what they expected, 

and Electricity Delivery and Energy Reliability program officials said 

existing wage rates paid by utility companies were generally high already 

 

23The Department of Justice’s Transitional Housing Assistance Grants for Victims of 

Domestic Violence, Dating Violence, Stalking, or Sexual Assault Program focuses on a 

holistic, victim-centered approach to provide transitional housing services that move 

individuals into permanent housing. Grants support programs that provide assistance to 

victims of domestic violence, dating violence, sexual assault, and stalking who are in need 

of transitional housing, short-term housing assistance, and related support services. 

Page 12 GAO-10-421 Recovery Act
 

so any increase in wage expenses due to prevailing wage rates would 

probably be minimal.24

• Moderate impact. Officials from the Department of Energy’s 

Weatherization Assistance Program explained that the prevailing wage 

rate requirement will have at least a moderate impact on program costs. 

They explained that weatherization projects in buildings taller than four 

stories will require that workers be paid commercial prevailing wage rates 

that are higher than the wage rates that would otherwise be used for 

weatherization projects.25 Department of Energy officials responsible for 

the Wind and Hydropower Technologies program explained that the 

prevailing wage rates for construction workers are sometimes 20 percent 

higher than what would have been paid for similar work and could 

increase labor costs by 20 percent.26 Conversely, these officials said the 

payment of higher wages could attract a more highly trained laborer and 

thus possibly result in savings in rework or in adherence to safety 

guidelines.27

 

24The Department of Energy’s Geothermal Technologies Program develops innovative 

geothermal energy technologies to find, access, and use the nation’s geothermal resources. 

The department’s Electricity Delivery and Energy Reliability program supports activities to 

modernize the electric grid. 

25The Department of Labor determined that revised prevailing wage rates for 

weatherization workers were limited to multifamily residential buildings of four or fewer 

stories. However, the department’s commercial prevailing wage rates (which apply to 

plumbers, carpenters, and other laborers) apply to multifamily residential buildings of five 

or more stories. As a result, local agencies conducting weatherization work on multifamily 

units in high-rise buildings must pay their workers wage rates that can be significantly 

higher than what local agencies pay weatherization workers for residential housing units. 

26The Department of Energy’s Wind and Hydropower Technologies Program leads the 

nation’s efforts to improve the performance, lower the costs, and accelerate the 

deployment of wind and water power technologies through partnerships with the 

Department of Energy’s national laboratories to conduct research and development 

activities through competitively selected, cost-shared research and development projects 

with industry and in partnership with federal, state, and other stakeholder groups. 

27Some studies we reviewed in 2008 also concluded that higher wages attracted highquality, highly skilled labor; enhanced productivity; and possibly offset potential labor cost 

savings from lower wages. These studies were performed by the National Alliance for Fair 

Contracting, a labor management organization, and the Construction Labor Research 

Council, an organization that researches construction labor costs, and were conducted in 

1995 and 2004. We reported this in GAO, Federal-Aid Highways: Federal Requirements for 

Highways May Influence Funding Decisions and Create Challenges, but Benefits and Costs 

Are Not Tracked, GAO-09-36 (Washington, D.C.: Dec. 12, 2008). 

Page 13 GAO-10-421 Recovery Act
 

• Large impact. Department of Energy officials from the State Energy 

Program explained that in some of the areas hardest hit economically, 

construction workers are paid less than the prevailing wage rate for the 

county.28 Therefore, paying the Davis-Bacon prevailing wage rate will 

increase costs. Likewise, Department of Justice officials responsible for 

the Correctional Facilities on Tribal Lands Program explained that in some 

cases the prevailing wage rate may be significantly higher than what the 

tribe would normally pay for construction.29 Department of Energy 

officials responsible for the Energy Efficiency and Conservation Block 

Grants program anticipated a potentially large impact as a result of the 

large number of grantees and significant proportion of funds that would be 

spent on construction labor wages.30

State and local officials we interviewed also had mixed views about the 

expected impact of the prevailing wage rate requirement on program 

costs. District of Columbia weatherization officials explained that the 

prevailing wage rates were generally in line with what they would expect 

to pay and some state weatherization officials in California said the 

prevailing wage rates may be less than what some service providers are 

currently paying. Data provided by State Energy Program officials in 

Georgia indicated that contractor wage rates are higher than Davis-Bacon 

prevailing wage rates in a subset of counties. Conversely, Iowa state 

weatherization officials explained that the average cost increase would be 

about 9 percent per home, and one local Lead Hazard Reduction Program 

official reported that, based on historical experience, the prevailing wage 

rate requirement could increase program costs by 10 to 13 percent per 

home. One Mississippi contractor we interviewed said the wage rates 

would not have an impact on costs because the hourly rates that the 

 

28The goals established for the Department of Energy’s State Energy Program are to 

increase energy efficiency to reduce energy costs and consumption for consumers, 

businesses, and government; reduce reliance on imported energy; improve the reliability of 

electricity and fuel supply and the delivery of energy services; and reduce the impacts of 

energy production and use on the environment. 

29The Department of Justice’s Correctional Facilities on Tribal Lands Program assists tribes 

in cost effectively constructing and renovating correctional facilities associated with the 

incarceration and rehabilitation of juvenile and adult offenders subject to tribal 

jurisdiction. This funding allows tribes to explore community-based alternatives to help 

control and prevent jail overcrowding due to alcohol and other substance abuse. 

30The Department of Energy’s Energy Efficiency and Conservation Block Grants program 

funds competitive and formula grants to units of local and state government and Indian 

tribes to develop and implement projects to improve energy efficiency and reduce energy 

use and fossil fuel emissions in their communities. 

Page 14 GAO-10-421 Recovery Act
 

company pays its employees are and always have been higher than the 

Davis-Bacon rates. 

As table 2 also shows, federal officials reported mixed views on the extent 

to which they expected Davis-Bacon administrative requirements, such as 

paying workers weekly, to affect program administrative costs. For 

example: 

• Little to no impact. Department of Health and Human Services officials 

responsible for the Capital Improvement Program and Facility Investment 

Program for Health Centers said the requirements should have no impact 

on program costs since grantees were asked to include Davis-Bacon 

compliance in their proposals. Department of Energy officials responsible 

for the Solar Energy Technologies program expected the administrative 

requirements to have a small impact because less than 5 percent of funds 

will be used for construction-related activities subject to Davis-Bacon 

requirements. Department of Housing and Urban Development officials 

responsible for the Green Retrofit Program for Multifamily Housing said 

the administrative requirements would have a small impact because the 

grant recipients had previous experience with the Davis-Bacon 

requirements through other federal housing programs and were 

accustomed to requirements such as paying workers on a weekly basis.31

Environmental Protection Agency officials responsible for the Diesel 

Emission Reduction Act Grants program said the impact would be small 

because the majority of the grant funds are used to purchase equipment 

and are therefore not subject to the administrative requirements. These 

program officials added that while the requirements are new to most 

grantees, the grantees will become familiar with them over time. 

• Moderate impact. State Energy Program officials noted that many 

construction companies involved with their projects do not maintain 

payroll records sufficient to meet Davis-Bacon requirements, and as a 

result, the administrative requirement to pay workers weekly may add to 

their administrative costs. 

 

31The Green Retrofit Program for Multifamily Housing makes grants and loans to existing 

Department of Housing and Urban Development-assisted multifamily eligible property 

owners to facilitate utility-saving and other green building benefits by retrofitting accepted 

properties for reduced energy demand, reduced water consumption, lower operating costs, 

improved resident quality of life (including comfort, and indoor air quality), and reduced 

overall impact on the environment. 

Page 15 GAO-10-421 Recovery Act
 

• Large impact. Federal officials responsible for the Weatherization 

Assistance Program and the Lead Hazard Reduction Program said DavisBacon administrative requirements would require a more detailed payroll 

tracking system, which would be particularly burdensome for small 

companies. According to Weatherization Assistance Program officials, 

smaller companies are the ones, generally speaking, that do not usually 

have experience with the Davis-Bacon requirement for certified weekly 

payrolls. For these employers, who often employ fewer than five people, it 

is particularly burdensome to certify payrolls weekly. Lead Hazard 

Reduction Program officials explained that additional administrative 

duties necessary for weekly payroll processing will increase administrative 

costs. To accommodate this increase, the agency is in the process of 

increasing the cap on how much recipients can spend on administrative 

costs from 10 to 15 percent of their award. 

State and local officials we interviewed had mixed views on the impact of 

Davis-Bacon administrative requirements on program costs. Clean Water 

State Revolving Fund officials in Georgia and the District of Columbia said 

they do not anticipate any additional costs as a result of the administrative 

requirements, whereas program officials in Mississippi and New Jersey 

noted the requirements would likely increase project costs.32 Local 

agencies involved with the Weatherization Assistance Program in 

California, Michigan, New York, and Ohio reported hiring new staff to 

process Davis-Bacon paperwork, and local weatherization officials from 

California noted that the administrative requirements might be particularly 

burdensome on smaller businesses. Local officials responsible for a Lead 

Hazard Reduction program in New York said their subcontractor is 

familiar with the administrative requirements, and the subcontractor has 

not indicated that these requirements are problematic. 

 

32The Environmental Protection Agency’s Clean Water State Revolving Fund provides funds 

to states to establish state loan revolving funds that finance infrastructure improvements 

for public wastewater systems and other water quality projects. 

Page 16 GAO-10-421 Recovery Act
 

Program Officials 

Generally Expected DavisBacon Requirements to 

Have Little Impact on 

Achieving Program and 

Recovery Act Goals 

Despite these potential cost increases for some Recovery Act programs, 

most federal officials said the Davis-Bacon requirements will have little, if 

any, impact on their ability to support their program and Recovery Act 

goals. Federal officials responsible for 15 of the 40 programs said DavisBacon requirements would have no impact on their program’s ability to 

achieve its goals, and officials from 12 programs reported that the 

requirements would have little impact (see table 3). However, federal 

officials from four programs—the Weatherization Assistance Program, 

State Energy Program, Energy Efficiency and Conservation Block Grants, 

and Correctional Facilities on Tribal Lands Program—noted that the 

Davis-Bacon requirements could have a large impact on their ability to 

support the Recovery Act goal of preserving or creating new jobs. For 

example, Weatherization Assistance Program officials said that DavisBacon requirements will have a large impact in urban areas because they 

have to pay commercial construction rates to weatherize buildings over 

four stories tall. These commercial construction wage rates are higher 

than the wage rates officials were expecting to pay and officials said 

program goals would be affected because they will have to reduce the 

number of homes weatherized. 

Table 3: Expected Impact of Davis-Bacon Requirements on the Ability to Achieve 

Program and Recovery Act Goals, as Reported by Federal Officials Responsible for 

40 Programs Newly Subject to the Davis-Bacon Act Requirements 

Little to no 

impact

Moderate 

impact 

Large 

impact Othera

Total

Program goals 27 5 1 7 40

Recovery Act goalsb26 3 4 7 40

Source: GAO analysis of information from interviews and correspondence with federal officials. 

a

This category includes those that responded do not know, unclear, too soon to tell, or mixed impact. 

b

Data reported here are focused on the Recovery Act goal of preserving or creating new jobs. 

State and local officials we interviewed and collected data from also 

reported that the Davis-Bacon requirements would generally have little 

impact on their ability to achieve program and Recovery Act goals. 

California state officials responsible for the State Energy Program stated 

that even though the requirements may have been an inhibiting factor for 

some applicants, they do not believe that the requirements will negatively 

affect the ability to achieve energy policy goals. While Ohio state officials 

responsible for weatherization said their program goals have not been 

affected, District of Columbia Lead Hazard Reduction program officials 

said they had to reduce the number of homes to be treated. Florida 

Page 17 GAO-10-421 Recovery Act
 

officials responsible for the Clean Water State Revolving Fund and 

Drinking Water State Revolving Fund programs reported that the addition 

of Davis-Bacon requirements had little impact on their program’s ability to 

support the underlying Recovery Act goals, such as creating jobs, in part 

due to the ultra-competitive behavior during the economic downturn and 

the enormous demand for environmental infrastructure 

funding. Conversely, Michigan state weatherization officials said the 

requirements might affect their ability to support the Recovery Act goal of 

job creation, especially for smaller businesses and contractors. According 

to these officials, some smaller local contractors who performed 

weatherization work before the Recovery Act sometimes may not have the 

capacity to take advantage of the Recovery Act weatherization work 

because of requirements such as the weekly payroll certifications. 

Program Officials 

Generally Did Not Expect 

Davis-Bacon Requirements 

to Affect the Timing of 

Recovery Act Efforts 

According to federal officials responsible for most programs that are 

newly subject to Davis-Bacon requirements, the requirements are not 

likely to affect the timing of their program’s Recovery Act efforts. 

However, officials for some programs expected an impact on their 

program’s timing. 

Federal officials for 23 of the 40 programs said they did not expect DavisBacon requirements to affect their program’s timing. For example, an 

official for the National Science Foundation’s Academic Research 

Infrastructure Program—Recovery and Reinvestment noted that while 

they had to spend time consulting with the Office of Management and 

Budget and the Department of Labor on Davis-Bacon requirements, this 

effort had not significantly altered the program’s timing.33 Federal officials 

for 2 programs were uncertain about how Davis-Bacon requirements might 

affect their program’s timing, while officials for 7 programs did not provide 

a response in time for our report. 

In contrast, federal officials for 8 programs expected Davis-Bacon 

requirements to have an impact on the timing of their program’s Recovery 

Act efforts. For example, officials with the Department of Energy’s 

Weatherization Assistance Program stated that Davis-Bacon requirements 

had significantly affected their program’s timing because the program is 

newly subject to the requirements so prevailing wage rates for 

 

33The Academic Research Infrastructure Program—Recovery and Reinvestment is intended 

to enhance the nation’s existing research facilities to enable next-generation research 

infrastructure that integrates shared resources across user communities. 

Page 18 GAO-10-421 Recovery Act
 

weatherization workers were not immediately available. Some states 

decided to wait to begin weatherizing homes until the Department of 

Labor had determined county-by-county prevailing wage rates for their 

state to avoid having to pay back wages to weatherization workers who 

started working before the prevailing wage rates were known.34 For 

example, state weatherization officials in Arizona said that all but one of 

their local service providers decided to wait to weatherize homes using 

Recovery Act funds until the prevailing wage rates were determined 

because they were concerned about the time required to reconcile 

differences in wage rates. The timing of the Weatherization Assistance 

Program’s Recovery Act efforts was also affected by concerns about 

complying with Davis-Bacon requirements. For example, Pennsylvania 

weatherization officials stated that delays occurred because some local 

agencies had initially submitted management plans that had not included 

language describing how they would comply with those requirements. 

Officials with the Department of Energy’s Energy Efficiency and 

Conservation Block Grants and State Energy Program also expected 

Davis-Bacon requirements to affect the timing of their Recovery Act 

efforts, while officials with the Department of Housing and Urban 

Development’s Lead Hazard Reduction Program reported that grantees 

were provided additional time to complete their work plans to ensure 

contractors understood the requirements. 

We provided a draft of this report to all 27 agencies and the Office of 

Management and Budget for their review and comment. Two agencies 

provided technical comments that were incorporated into the report as 

appropriate. The other agencies had no comments. We also provided a 

copy of relevant sections of the report to GAO teams responsible for 

reviewing Recovery Act work in the states mentioned in this report. In 

some cases, those teams forwarded relevant sections to officials within 

those states. We included these comments as appropriate. 

Agency Comments 

and Our Evaluation 

 

34In July 2009, the Department of Energy and the Department of Labor issued a joint 

memorandum to Weatherization Assistance Program grantees authorizing them to begin 

weatherizing homes using Recovery Act funds, provided they paid construction workers at 

least the Department of Labor’s wage rates for residential construction, or an appropriate 

alternative category, and compensated workers for any differences if the Department of 

Labor established a higher local prevailing wage rate for weatherization workers. The 

Department of Labor completed its initial determination of wage rates for weatherization 

workers in each county in the United States by September 3, 2009. The wage rates were 

revised in December 2009. 

Page 19 GAO-10-421 Recovery Act
 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to all 27 agencies reviewed in 

this report, and other interested parties. The report will also be available 

at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or daltonp@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this report. GAO staff who made major contributions to this 

report are listed in appendix I. 

Sincerely Yours, 

t 

Patricia A. Dalton 

Managing Director, Natural Resources 

 and Environmen

Page 20 GAO-10-421 Recovery Act
Appendix I: 

A

GAO Contact and Staff 

cknowledgments 

Page 21 GAO-10-421 

Appendix I: GAO Contact and Staff 

Acknowledgments 

Patricia A. Dalton, (202) 512-3841 or daltonp@gao.gov

Other key contributors to this report were Mark Gaffigan, (Director), Ric 

Cheston (Assistant Director), Kim Gianopoulos (Assistant Director), David 

Marroni (Analyst-in-Charge), Angela Miles, and Alise Nacson. Important 

contributions were also made by Anne Rhodes-Kline, Carol Herrnstadt 

Shulman, and Barbara Timmerman. 

 Recovery Act 

GAO Contact 

Staff 

Acknowledgments 

(361131) 
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