Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey
Published: 2011-03-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Procedures for determining Davis-Bacon prevailing wage rates, which must be paid to workers on certain federally funded construction projects, and their vulnerability to the use of inaccurate data have long been an issue for Congress, employers, and workers. In this report, GAO examined (1) the extent to which the Department of Labor (Labor) has addressed concerns regarding the quality of the Davis-Bacon wage determination process, and (2) additional issues identified by stakeholders regarding the wage determination process. GAO interviewed Labor officials, representatives from contractor associations and unions, contractors, and researchers; conducted site visits to three Labor regional offices; and analyzed data from Labor's wage survey database.
section_title: What GAO Found
paragraphs: Recent efforts to improve the Davis-Bacon wage survey have not addressed key issues with timeliness, representativeness, and the utility of using the county as the basis for the wage calculation. Labor has made some data collection and processing changes; however, we found some surveys initiated under the new processes were behind Labor's processing schedule. Labor did not consult survey design experts, and some criticisms of the survey and wage determination process have not been addressed, including the representativeness and sufficiency of the data collected. For example, Labor cannot determine whether its wage determinations accurately reflect prevailing wages because it does not currently calculate response rates or analyze survey nonrespondents. And, while Labor is required by law to issue wage rates by the "civil subdivision of the state," the goal to issue them at the county level is often not met because of insufficient survey response. In the published results for the four surveys in our review, Labor issued about 11 percent of wage rates for key job classifications (types of workers needed for one or more of Labor's construction types) using data from a single county. The rest were issued at the multi-county or state level. Over one-quarter of the wage rates were based on six or fewer workers. Little incentive to participate in Labor's Davis-Bacon wage surveys and a lack of transparency in the survey process remain key issues for stakeholders. Stakeholders said contractors may not participate because they lack resources, may not understand the purpose of the survey, or may not see the point in responding because they believe the prevailing wages issued by Labor are inaccurate. While most stakeholders said the survey form was generally easy to understand, some identified challenges with completing specific sections. Our review of reports by Labor's contracted auditor for four published surveys found most survey forms verified against payroll data had errors in areas such as number of employees and hourly and fringe benefit rates. Both contractor association and union officials said addressing a lack of transparency in how the published wage rates are set could result in a better understanding of the process and greater participation in the survey. GAO suggests Congress consider amending its requirement that Labor issue wage rates by civil subdivision to allow more flexibility. To improve the quality and timeliness of the Davis-Bacon wage surveys, GAO recommends Labor obtain objective expert advice on its survey design and methodology. GAO also recommends Labor take steps to improve the transparency of its wage determinations. Labor agreed with the second recommendation, but said obtaining expert survey advice may be premature given ongoing changes. We believe obtaining expert advice is critical for improving the quality of wage determinations.

section_title: Letter
paragraphs: Procedures for determining Davis-Bacon prevailing wage rates, which  must be paid to workers on certain federally funded construction projects,  have long been an issue for Congress, employers, and workers. Concerns  have focused on the Department of Labor’s (Labor) procedures for  determining prevailing wages and their vulnerability to the use of  inaccurate data. In the 1990s, we issued two reports that found process  changes were needed to increase confidence that wage rates were based  on accurate data. A third report, issued in 1999, found changes planned by  Labor, if successfully implemented, had the potential to improve the  survey process used to determine local prevailing wages. However, in  2004, Labor’s Office of Inspector General (OIG) found Labor’s approaches  had not resolved past concerns, and wage data errors and the timeliness of  surveys continued to be issues. More recently, the passage of the  American Recovery and Reinvestment Act of 2009 (Recovery Act)  focused attention on the need for accurate and timely wage  determinations, with more than $300 billion estimated to come from  Division A of the act which provides substantial funding for, among other  things, federally funded building and infrastructure work potentially  subject to Davis-Bacon wage rates.
To address these issues, you asked us to examine Labor’s current  implementation of the Davis-Bacon Act. We assessed (1) the extent to  which Labor has addressed concerns regarding the quality of the Davis- Bacon wage determination process and (2) additional issues identified by  stakeholders regarding the wage determination process.
To assess the extent to which Labor has addressed concerns regarding the  quality of the wage determination process, we reviewed relevant federal  laws and regulations, interviewed Labor officials, and reviewed agency  documents on current survey practices and compared them with guidance  on data quality and survey design from the Office of Management and  Budget (OMB) and Labor. OMB designed its guidance on data quality to  ensure agencies meet basic information quality standards for objectivity,  utility, and integrity of information before it is disseminated. We  conducted site visits to three of Labor’s five regional offices that process  Davis-Bacon wage surveys—Northeast region (Philadelphia), Southeast  region (Atlanta), and Southwest region (Dallas)—to interview regional  staff who, Labor officials said, were conducting surveys under Labor’s  recently revised processes. In addition, we conducted a site visit to the  Construction Industry Research and Policy Center (CIRPC) at the  University of Tennessee, which is contracted by Labor to estimate the  potential number of construction projects to be included in a specific  survey and conduct some aspects of the survey process. We also  compared 12 surveys for specific types of construction projects performed  under Labor’s new processes against its revised processing timelines to  assess whether the surveys were on schedule. Further, we analyzed data  from Labor’s Automated Survey Data System (ASDS) for wage rates from  the 2005 surveys of Florida and Maryland and the 2006 surveys of  Tennessee and West Texas Metropolitan. We selected these surveys  because results were recently published (in 2009 or 2010) and they  represented geographic diversity to the extent possible. We conducted  analyses on the geographic level at which rates were issued (i.e., county,  group, supergroup, or statewide) and the number of workers used to  calculate wage rates. In addition, we analyzed data from Labor’s Wage  Determination Generation System to determine the proportion of union- prevailing to nonunion-prevailing wage rates and the age of currently  published wage rates. We assessed the reliability of the data we used by  reviewing pertinent system and process documentation, interviewing  knowledgeable officials, and conducting electronic testing on data fields  necessary for our analysis. We found the data we reviewed reliable for the  purposes of our analysis.
To assess what additional issues were concerns for stakeholders, we  conducted approximately 30 interviews with a nonprobability selection of  representatives from academia, contractor associations, contractors, and  unions and performed a content analysis of their responses. For more  information on our scope and methodology, see appendix I.
We conducted this performance audit from September 2009 through  March 2011 in accordance with generally accepted government auditing  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.
subsections: section_title: Background
paragraphs: The Davis-Bacon Act was enacted in 1931, in part, to protect communities  and workers from the economic disruption caused by contractors hiring  lower-wage workers from outside their local area, thus obtaining federal  construction contracts by underbidding competitors who pay local wage  rates. Davis-Bacon generally requires employers to pay locally prevailing  wages and fringe benefits to laborers and mechanics employed on  federally funded construction projects in excess of $2,000. The Recovery  Act requires all laborers and mechanics employed by contractors and  subcontractors on projects funded directly or assisted by the federal  government through the Recovery Act also be paid at least the prevailing  wage rate under Davis-Bacon. Our previous work found 40 programs,  such as the Weatherization Assistance Program, newly subject to Davis- Bacon requirements as a result of the Recovery Act’s prevailing wage  provision. Of these, 33 programs existed prior to the Recovery Act but  were subject to the Davis-Bacon requirements for the first time, and 7  were newly created programs. In 2009, federally funded construction and  rehabilitation, including projects funded through the Recovery Act, totaled  about $220 billion.
Labor administers the Davis-Bacon Act through its Wage and Hour  Division, which conducts voluntary surveys of construction contractors  and interested third parties on both federal and nonfederal projects to  obtain information on wages paid to workers in each construction job  classification by locality. It then uses the data submitted on these survey  forms to determine local prevailing wage and fringe benefit rates. In 2002,  Labor began conducting simultaneous statewide surveys for all four of its  construction types: highway, residential, building, and heavy. Labor  describes highway construction as the construction, alteration, or repair of  roads, streets, highways, runways, alleys, trails, parking areas, and other  similar projects not incidental to building or heavy construction.  Residential construction includes single-family homes and apartment  buildings that are not more than four stories. If a structure that houses  people is over four stories or if it houses machinery, equipment, or  supplies, it is considered building construction. Heavy construction  generally includes any project that does not fall into the other three  categories—for example, dam and sewer projects.
Labor determines which states it will survey each year based on a variety  of factors, including the date of a state’s most recent survey, planned  federal construction, and complaints or requests from interested parties  on current wage determinations. The calculated wage and fringe benefit  rates that result from the surveys are posted online in wage  determinations and used by contractors working on federal construction  projects to prepare bids and pay workers.
subsections: section_title: Past Concerns and Efforts to Improve the Wage Determination Process
paragraphs: Both GAO and the Labor OIG have reported concerns with Labor’s wage  determination process. In 1996, we found Labor had internal control  weaknesses that contributed to lack of confidence in the wage  determinations, including limitations in Labor’s verification of wage and  fringe benefit data, its computer capabilities, and an appeals process that  was difficult for interested parties to access. In 1997, the OIG found  much of the data it examined to be inaccurate and potentially biased due  to weaknesses in survey methodology.
For fiscal year 1997, Congress directed $3.75 million toward improvements  to the wage determination process. Using five criteria—feasibility/viability,  timeliness, accuracy, completeness, and cost—Labor evaluated two options:    Reengineering: Apply new technologies and processes to the existing  Davis-Bacon survey program to increase participation in and improve the  accuracy and timeliness of the surveys.
Reinvention: Use existing Bureau of Labor Statistics (BLS) data,  specifically data from BLS’s Occupational Employment Statistics survey  and National Compensation Survey, as the primary basis for Davis-Bacon  wage determinations.
In 1999, as Labor was evaluating these options, we again reviewed the  wage determination process and found, in response to a directive from a  congressional committee and our recommendation, Labor had  implemented a program to verify a sample of wage survey data, including  verifying data on site using employer payrolls. However, we agreed with  the OIG that verification efforts be viewed as temporary steps until more  fundamental reforms could be made to Labor’s survey methodology. We  also found that reengineering or reinvention had the potential to improve  the accuracy and timeliness of the wage determination process.
In January 2001, Labor reported to Congress it would pursue  reengineering. Labor concluded that reinvention (using BLS data) would  have the benefits of accuracy and timeliness, but presented challenges,  including difficulty in determining fringe benefits and in producing wage  estimates for a broad range of construction job classifications.  Reengineering, which included improvements to the wage survey form  (including a scannable form and online version) and a computer system to  assist with data clarification and analysis, would make it feasible to survey  every area of the country for all four construction types no less than every  3 years, Labor concluded.
In 2004, the Labor OIG found Labor’s reengineering had not resolved past  concerns. In a sample of wage survey forms (known as WD-10s) from  before and after reengineering, the OIG found errors in almost 100 percent  of verified survey forms. The OIG said these errors occurred even with a  revised WD-10, the introduction of an online WD-10, and efforts by Labor  analysts to review and correct data. Mistakes in survey data included  respondents using incorrect peak weeks, miscounts in the number of  workers in each job classification, and misreporting of wage rates—for  example, reporting one wage rate for a job classification when two or  more wage rates existed. In addition, the OIG reported concerns about  bias because only contractors with the personnel to complete WD-10s may  respond and some may not participate to avoid involvement with the  government. The OIG also found that higher participation by either unions  or nonunion contractors could potentially weight the wage and benefit  rates in their favor. Finally, the OIG noted there had been little  improvement since its 1997 review in the time required to issue wage  determinations.
section_title: Current Survey Process
paragraphs: The current survey process, which conducts statewide surveys for all  construction types, consists of five basic phases (see fig. 1).
Prior to the start of a survey, Labor identifies the state, construction types,  and survey time frame—the time period in which a construction project  needs to be active to meet survey criteria—and requests that CIRPC provide  a report on active construction projects for the identified time frame,  construction type, and geographical area. F.W. Dodge Reports for those  projects are then ordered and reviewed to ensure they meet the basic  criteria of the survey. Once a survey is scheduled, Labor usually conducts  pre-survey briefings for interested parties to clarify survey procedures and  provide information on how data should be submitted. Labor then sends  surveys to general contractors identified through the Dodge Reports and  relevant interested parties in the area to be surveyed. (See app. II for a copy  of the wage survey.) It also requests information from federal agencies on  construction projects that meet survey criteria. A follow-up letter is sent to  general contractors who do not respond. Subcontractors, identified by the  general contractors, are also sent an initial letter with a survey and a follow- up letter if they do not respond. Completed wage survey forms are returned  by either contractors or interested parties and are reviewed, under a  contract with Labor, by CIRPC, which matches submitted information with  its construction project and forwards it to the appropriate Labor regional  office. The regional offices clarify missing, ambiguous, or inconsistent  information to the extent possible, and pull random samples of wage survey  forms to verify by phone or on site. Officials request that supporting payroll  documentation be sent to the regional office. For on-site verification, Labor  contracts with a private accounting firm whose auditors review payroll  records. Any discrepancies between the wage survey form and the  contractor’s payroll records are reviewed and corrected in the survey data  by Labor regional staff. Contractors selected for verification, who are not  able or willing to provide payroll records, can still be included in the survey  in most cases. See appendix III for a more detailed description of the wage  determination process.
Labor uses several procedures to calculate wage rates and determine if it has  sufficient information from collected and verified surveys to issue a wage  determination—a compilation of prevailing wage rates for multiple job  classifications in a given area. In determining a prevailing wage for a specific  job classification, Labor considers sufficient data to be the receipt of data on  at least three workers from two different employers in its designated area  who have that job. Then, in accordance with its regulations, Labor uses a “50- percent rule” to calculate the prevailing wage. The 50-percent rule states the  prevailing wage is the wage paid to the majority (over 50 percent) of workers  employed in a specific job classification on similar projects in the area. If the  same rate is not paid to a majority (over 50 percent) of workers in a job  classification, the prevailing wage is the average wage rate weighted by the  number of employees for which that rate was reported. In cases where the  prevailing rate is also a collectively bargained, or union, rate, the rate is  determined to be “union-prevailing.” According to Labor’s policy, union- prevailing wage rates in wage determinations can be updated when there is a  new collective bargaining agreement (CBA) without Labor conducting a new  survey. Nonunion-prevailing wage rates are not updated until a new survey is  conducted. To issue a wage determination for a construction type in a given  area, Labor must, according to its procedures, also have sufficient data to  determine prevailing wages for at least 50 percent of key job classifications.  Key job classifications are those determined necessary for one or more of the  four construction types.
By statute, Labor must issue wage determinations based on similar projects  in the “civil subdivision of the state” in which the federal work is to be  performed. Labor’s regulations state the civil subdivision will be the  county, unless there are insufficient wage data. When data from a county  are insufficient to issue a wage rate for a job classification, a group of  counties is created by combining a rural county’s data with data from one or  more contiguous rural counties. A metropolitan county’s data are combined  with data from other counties in the state within the metropolitan statistical  area (MSA). If data are still insufficient to issue a wage rate, a supergroup is  created by combining a rural county’s data with data from additional  contiguous rural counties, or a metropolitan county’s data are combined  with county data from other MSAs or the consolidated MSA counties.  Finally, if this supergroup still does not provide sufficient wage data to issue  a wage rate for a job classification, a statewide rate is created by combining  data for all rural counties or all metropolitan counties in the state. Counties  are combined based on whether they are metropolitan or rural, and cannot  be mixed. Once wage determinations are issued, an interested party may  seek reconsideration and review through an appeals process. See figure 2  for an example of how wage data from Miami-Dade County, Florida, are  combined, as needed, with data from other counties to create group,  supergroup, and state wage rates.
section_title: Recent Efforts to Improve Data Collection and Processing Have Not Yet Addressed Key Issues with Survey Quality
subsections: section_title: Labor’s Changes to Survey Data Collection and Processing May Not Achieve Expected Results
paragraphs: Labor has taken several steps over the last few years to address issues  with its Davis-Bacon wage surveys, including completing a number of  open surveys and changing how it collects and processes some survey  data in its efforts to improve timeliness and accuracy. However, these  efforts may not achieve Labor’s desired results. We found some surveys  initiated under the new process are behind schedule and some published  wage rates are based on outdated data.
In 2007, Labor officials decided not to initiate any new surveys in order to  finalize and publish results from 22 open surveys, which accumulated after  Labor began conducting statewide surveys in 2002. Regional office  officials said it was difficult and time-consuming to clarify and verify data  in these surveys because contractors often did not have easy access to  records for survey data which, in some cases, had been submitted several  years earlier. As of September 1, 2010, results from 20 of the 22 surveys  were published and results from the remaining 2 were in the process of  being published. Officials said once results from all 22 surveys are  published, they will be able to focus on more recent surveys, which will  reduce delays in processing and increase accuracy because more recently  collected information is easier and less time-consuming to clarify and  verify with contractors.
Labor also changed how it collects survey data for its four construction  types after it conducted an informal review in 2009. Labor officials said  they had been using a “one size fits all” approach to surveys and were not  accounting for differences in types of construction activity, the  demographic characteristics of a given state, and available sources of  wage data. To address these differences, Labor began surveying some of  its four construction types separately instead of surveying all construction  types simultaneously in a given state. Labor also began using certified  payrolls as the primary data source for highway surveys. Labor officials  said most highway construction has a federal component and certified  payrolls provide accurate and reliable wage data. Officials also said using  certified payrolls eliminates the need for on-site verification of reported  wage data, although Labor continues to survey interested parties.  Officials estimate these efforts will reduce processing time for highway  surveys by more than 80 percent, or from about 42 months to 8 months.
Labor adjusted its survey processes for residential, building, and heavy  construction types as well. For surveys of residential construction, Labor  plans to phone contractors and unions and visit contractor associations to  increase a historically low response. Officials said these collection  methods will be possible because of the small number of residential  projects compared to other construction types. Labor began conducting a  new residential survey in 2010. For building and heavy construction, Labor  started a pilot with five surveys in 2009, adjusting survey time frames— the time period in which a construction project has to be active for it to  meet survey criteria—to better manage the quantity of data received.  Labor found its previous 1–year survey time frame produced, in some  cases, too many or too few responses for building and heavy surveys.  Instead, by adjusting the survey time frame to account for the number of  projects in a particular region (with shorter time frames for areas in which  there are many active projects), Labor expects to reduce the time needed  to process surveys and determine prevailing wages. Overall, Labor  estimates these changes will reduce processing time for building and  heavy surveys by approximately 54 percent, or from about 37 months to 17  months.
Labor also revised its approach to processing data for all surveys. Labor’s  regional offices began reviewing and analyzing survey forms when they  are received rather than waiting until a survey closes. Labor officials said  this processing of data in “real time” will improve timeliness and accuracy  because survey respondents will be better able to recall the submitted  information when contacted by regional office staff for clarification and  verification.
While it is too early to fully assess the effects of Labor’s 2009 changes, our  review found timeliness is still an issue and improvements expected from  processing changes may not be fully realized. Of the 16 surveys started  under Labor’s new processes at the time of our review, we were unable to  analyze the timeliness of 4—3 highway surveys and 1 building and heavy  survey—because of unclear dates in Labor’s data. A senior Labor official  said regional offices differed as to when they recorded dates for key  survey activities, and we found some recorded dates were out of sequence.  During the course of our review, the senior Labor official said regional  offices will consistently enter key dates for future surveys, which will  allow Labor to better assess whether new processes are improving  timeliness.
Of the remaining 12 surveys for which we were able to assess timeliness, 8  were highway surveys for which Labor requested certified payrolls. Of  those 8, we found 6 were behind schedule, 1 was on schedule, and 1 had  not started as of September 1, 2010 (see fig. 3). A senior Labor official  said staff did not immediately start processing all certified payrolls— requested for all federal projects within a specific 1-year period—when  they were received because of regional office workloads. As a result, some  certified payroll data were months old before Labor surveyed interested  parties. For example, as of September 1, 2010, certified payroll data for the  Florida 2009 highway survey were 8 months old, though Labor had not yet  surveyed interested parties. Moreover, processing certified payrolls may  be labor-intensive and time-consuming. A senior Labor official said the  agency cannot predict how many certified payrolls will be submitted by  state departments of transportation and often receives boxes of  documents for each survey. Some regional office officials said extracting  information from certified payrolls is difficult because of inconsistent  formats and frequently requires clarification with contractors. To address  these potential delays, a senior Labor official said they are considering  collecting certified payrolls monthly from states with upcoming surveys,  and processing the payrolls as they are received.
The remaining 4 surveys were building and heavy surveys and all were  behind schedule as of September 1, 2010 (see fig. 4).
In conducting a “universe” or “census” survey of all active construction  projects within a designated time frame and area, Labor accepts data from  a variety of sources, including contractors and interested parties. As a  result, the number of returned survey forms and the time required to  clarify data can vary widely. For example, for 14 surveys conducted under  past processes, the number of survey forms received for each ranged from  less than 2,000 to over 8,000, and the average processing time for data  clarification and analysis ranged from 10 months to more than 40. After  the 2009 changes, Labor estimates survey data clarification and analysis  will take about 1 to 7 months, depending on construction type. Some of  the anticipated time savings, particularly for building and heavy surveys, is  based on managing fewer forms because of its focus on the number of  projects in a particular region rather than a 1-year time frame. However, by  accepting data submitted by contractors and interested parties on any  relevant project as part of its universal survey approach, Labor is limited  in its ability to predict how many forms will be returned and the time  needed to process them. The more time required, the more likely wage  rates will be outdated when published in wage determinations. In addition,  Labor cannot entirely control when it receives survey forms. Though  Labor officials said processing survey forms as they are received will  improve timeliness, some regional office officials told us this “real time”  processing approach has a limited effect because the bulk of the forms are  returned on the last day of a survey. Additionally, officials in two of the  three regional offices we visited said this new approach is not  substantially different from their previous procedure. Since our site visits,  a senior Labor official said analysts at regional offices have noticed a  difference between processing forms in “real time” and their previous  procedure, and that increased use of online submissions is expected to  help reduce last-minute survey returns. To address such challenges, OMB  guidance suggests agencies consider the benefits and costs of conducting  a sample survey instead of a census survey. According to OMB, a sample  can be used to ensure data quality in a way that is often more efficient and  economical than a census.
The fact that Labor is behind schedule on surveys even with the new 2009  processes may affect the agency’s ability to update the many published  nonunion-prevailing wage rates, which are several years old. Labor’s fiscal  year 2010 performance goal was for 90 percent of published wage rates for  building, heavy, and highway construction types to be no more than 3  years old. Our analysis of published rates for these three construction  types found 61 percent were 3 years old or less as of November 12, 2010.  However, this figure is somewhat misleading because it includes both  union-prevailing and nonunion-prevailing wage rates, which differ in how  they are updated. Union-prevailing rates, which constitute almost two- thirds of the over 650,000 published building, heavy, and highway rates,  may be updated when new CBAs are negotiated, and we found almost 75  percent of those rates were 3 years old or less as of November 12, 2010.  However, 36 percent of nonunion-prevailing rates, which are not updated  until Labor conducts a new survey, were 3 years old or less, and almost 46  percent were 10 or more years old. One regional office official and two  stakeholders we interviewed said Labor, in some cases, has had to update  nonunion-prevailing rates without a new survey because they no longer  complied with the federal minimum wage. Moreover, wage rates at the  time of publication may reflect wage data from several years prior due to  processing delays. For example, of the 20 open surveys for which Labor  had published results as of September 1, 2010, 9 published in 2009 or 2010  were based on data 5 or more years old at the time of publication and, of  those, 3 were based on data 7 or more years old. Though these survey  results were only recently published, the age of the wage data they contain  means those states will likely need to be resurveyed soon.
Several of the union and contractor association officials we interviewed  said the age of the Davis-Bacon nonunion-prevailing rates means they  often do not reflect actual prevailing wages. As a result, they said it is  more difficult for both union and nonunion contractors to successfully bid  on federal projects because they cannot recruit workers with artificially  low wages but risk losing contracts if their bids reflect more realistic  wages. Labor officials said the only way to correct the age disparity  between union- and nonunion-prevailing rates is to conduct surveys more  frequently; however, some regional office officials said the goal to survey  each area every 3 years is not feasible with current processes. Those who  said it is feasible cited the need for adequate technology and staffing,  which they said is not in place in all regional offices.
section_title: Critical Problems with Labor’s Wage Survey Methodology Still Hinder Quality
paragraphs: Although Labor has made recent changes to data collection and  processing, some critical problems with its survey methodology have not  been addressed. Our review identified persisting shortcomings in the  representativeness of survey results and the sufficiency of data gathered  for Labor’s county-focused wage determinations.
subsections: section_title: Representativeness
paragraphs: OMB guidance states that agencies need to consider the potential impact  of response rate and nonresponse on the quality of information obtained  from a survey, and suggests agencies consult with trained survey  methodologists when designing surveys to address this issue. Rather than  conducting a formal evaluation of the wage survey process and consulting  with experts in survey design and methodology, a senior Labor official  said the agency based changes on an informal review that drew on staff  experiences. While our prior work has shown it is reasonable and  desirable to obtain input from knowledgeable staff, technical guidance  from experts is considered critical to ensure the validity and reliability of  survey results.
Labor cannot determine whether its Davis-Bacon survey results are  representative of prevailing wage rates because it does not currently  calculate response rates or conduct a nonresponse analysis. According to  OMB, response rate calculation and nonresponse analysis are important  because a low response rate may mean survey results are misleading or  inaccurate if those who respond to a survey differ substantially and  systematically from those who do not respond. A Labor official said that  when the agency started conducting statewide surveys in 2002, it stopped  calculating overall response rates because of the large volume of data  received and challenges in tracking who submitted specific information. In  addition, the official said Labor could not collect enough data to meet its  then-standard of data on at least six workers from three different  employers for each job classification, so it changed the standard to its  current three workers from two employers. This standard can be met  using data from a single county, multiple counties within a state, or  statewide. Also, aside from a second letter sent automatically to survey  nonrespondents, Labor does not currently have a program to  systematically follow up with or analyze all nonrespondents. Labor’s own  procedures manual recognizes nonresponse as a potential source of  survey bias and indicates there is a higher risk nonrespondents will be  nonunion contractors because they may have greater difficulty in  compiling wage information or be more cautious about reporting wage  data. Despite this guidance, regional office officials said they spend the  bulk of their time clarifying data received. Of Labor’s published wage rates  as of November 12, 2010, about 63 percent were union-prevailing; in  contrast, about 14 percent of construction workers nationwide were  represented by unions in 2010, according to BLS figures. Several of the  stakeholders we interviewed said the fact that Labor does not ensure the  representativeness of the survey responses reduces the accuracy of the  published wage rates. In addition, some regional office officials said  statistical sampling may make wage rates more accurate, although they  cautioned that some contractors or interested parties may not support a  change to sampling if it meant they would be excluded from participating  in the survey.
During the course of our review, a senior official said Labor is taking steps  to again calculate response rates, beginning with updates to the survey  database and changes to the survey form, which will more clearly identify  who submitted wage information. However, because Labor has not yet  fully implemented these changes, it is unclear if they will lead to improving  the quality of the survey.
section_title: Utility of County Focus
paragraphs: Although its regulations state the county will normally be the civil  subdivision for which a prevailing wage is determined, Labor is often  unable to issue wage rates for job classifications at the county level because  it does not collect enough data to meet its current sufficiency standard of  wage information on at least three workers from two employers. In the  results from the four surveys we reviewed—Florida 2005, Maryland 2005,  Tennessee 2006, and West Texas Metropolitan 2006—Labor issued about 11  percent of wage rates for key job classifications using data from a single  county (see fig. 5). About 22 percent of the wage rates were issued at the  group level (combined data from a group of counties within the same state)  and about 20 percent at the supergroup level (combined data from other  groups of counties within the same state). Almost 40 percent of the wage  rates were issued at the statewide level incorporating data from either all  metropolitan or all rural counties in the state. The remaining 7 percent  were issued for combined counties for which the geographic calculation  level was not available. (For more information on how the geographic level  of issued wage rates varied by construction type and by metropolitan and  rural rates, see app. I.)
In 1997, Labor’s OIG reported that issuing rates by county may cause wage  decisions to be based on an inadequate number of responses. In our  review of the four surveys, we found one-quarter of the final wage rates for  key job classifications were based on wages reported for six or fewer  workers (see fig. 6). (For more information on how the number of workers  used to determine rates varied by construction type and by metropolitan  and rural rates, see app. I.)
In the surveys we reviewed, we also found Labor sometimes determined  prevailing wages based on small amounts of data even in metropolitan  areas. For example, in the 2005 survey of building construction in Florida,  the prevailing wage rate for a forklift operator in Miami-Dade County was  based on wages reported for five workers statewide.
The statutory requirement to issue Davis-Bacon prevailing wages based on  a “civil subdivision of the state” also limits Labor’s options to address  inadequate data. For example, Labor is not able to augment its survey data  with data from other sources because those sources may draw from other  geographic areas, such as MSAs, which are not the same as civil  subdivisions. Officials from Labor’s survey contractor, CIRPC, said one  way to improve accuracy is to survey areas other than counties. CIRPC  officials said the current wage survey uses arbitrary geographic divisions,  in contrast to other groupings, such as the economic areas used by the  Bureau of Economic Analysis, which are based on relevant regional  markets that frequently cross county and state lines. These groupings,  they said, are more reflective of area wage rates. Some stakeholders said  the focus on county-level wage rates results in the publication of illogical  rates. One contractor association representative said metropolitan  statistical areas would be more appropriate in New York, for example,  because there is a larger difference in wages between upstate and  downstate New York than between the counties containing the cities of  Rochester, Syracuse, and Buffalo. Another contractor association  representative said the geographic divisions used by Labor for prevailing  wages are illogical for projects not confined to a single county, offering the  example of a contractor paving a road that crossed a county line and who  was forced to pay workers different wage rates based on which side of the  line they worked.
section_title: Little Incentive to Participate and Lack of Transparency Remain Key Issues for Stakeholders
subsections: section_title: Many Stakeholders Reported Contractors Lack Incentive to Participate in Davis-Bacon Surveys
paragraphs: In our interviews with stakeholders about additional issues with Labor’s  wage determination process, they provided several reasons why contractors  have little or no incentive to participate in the Davis-Bacon wage survey.  First, 19 of 29 stakeholders said contractors may not have the time or  resources to respond. An employee for one contractor said she had  returned the wage survey but might not have had she known it was  voluntary because her company was short-staffed. Other stakeholders said  contractors might not see the survey as a priority. Second, 16 stakeholders  said contractors either may not understand the purpose of the survey or do  not see the point in responding because they believe the prevailing wages  issued by Labor are inaccurate. Third, 10 stakeholders said contractors may  be reluctant to provide information to the government because they view it  as proprietary or fear that doing so will subject them to audits. Finally, 8  stakeholders said contractors who do not work on public projects may not  understand the survey is soliciting wage data from private as well as public  projects so they do not think they need to respond. For instance,  representatives from one state contractor association said some contractors  believe the wage survey only serves to perpetuate established rates because  wage surveys sent by Labor may have the names of projects subject to  Davis-Bacon already entered on the form.
Officials we interviewed in Labor regional offices echoed many of these  concerns. They said contractors either think their survey responses will  not make a difference in the determination of prevailing wages or are  unaware they are being asked to submit information on private projects. A  contributing factor, one official said, is that the survey announcement  letter may not clearly communicate it is soliciting information on both  public and private construction. In our review of the contractor  announcement letter, we found it states that requested information will be  used to set prevailing wages and asks the contractor to fill out the wage  survey for the construction project listed on the form and any additional  projects that fit survey criteria. But the letter does not specifically state  that Labor is soliciting data for both public and private projects. (See app.  IV for copies of the survey announcement letters sent to contractors and  interested parties.) Additionally, some regional office officials said larger  contractors may be more likely to respond because they have more  resources, including administrative personnel, to complete the survey  form. They said contractors also may not respond because they find the  form complicated or do not understand its importance. Yet if contractors  call the regional office and Labor staff have an opportunity to explain the  reason for the survey and answer questions, many of those callers seem  more receptive to participating, some regional office officials said.
A lack of survey participation by those on private construction projects could  result in Labor having to use data from federal projects, which are already  paying Davis-Bacon wages, to set prevailing wages for building and  residential construction. Per its regulations, Labor uses federal project data in  all highway and heavy surveys, but it only uses federal project data in building  and residential surveys when it lacks sufficient data from nonfederal  projects. In the results from the four surveys we reviewed, almost one- quarter of the building wage rates and over two-thirds of the residential rates  for the 16 key job classifications, such as carpenter and common laborer,  included federal data. (For more information on how the percentage of  federal data varied by metropolitan and rural rates, see app. I.)
section_title: Stakeholders Reported Survey Form Was Generally Easy to Understand, but Most Forms Reviewed Had Errors
paragraphs: While 19 of the 27 contractors and interested parties we interviewed said  the wage survey form, which Labor officials said was last updated in 2004,  is generally easy to understand, some identified challenges in completing  specific sections. For example, five stakeholders said it is difficult to  know which job classification applies to their workers. Representatives  from one national contractor association said they had previously  informed Labor the survey form does not reflect nonunion industry  practices and contractors may not track data in a way that makes it easy to  fill out the form. As a result, they said most nonunion contractors opt not  to return the wage survey rather than attempt to break down their data to  fit its format. Other state contractor association representatives said  workers on some construction sites today perform tasks across multiple  job classifications; for example, a carpenter may also perform some tasks  of a laborer. Yet the survey form asks contractors to provide wages for a  worker by a single job classification. In addition, officials from one state  local union said, to assist contractor participation in the survey, they  created and distributed their own spreadsheet for contractors to fill out  because they thought it would be more easily understood than Labor’s  wage survey form.
Labor reported to Congress in 2006 that use of the scannable survey form  resulted in submission of more complete data, but our analysis of reports  for four state surveys found most verified forms still had errors. During on- site verification, Labor’s contracted accounting firm compares clarified  wage survey data to a sample of contractor payroll records and reports any  discrepancies. These auditor reports show mistakes occurred most often in  the number of employees reported in each job classification, listed hourly  and fringe benefit wage rates, and project dollar value, some of which were  also issues in the 2004 Labor OIG report. A senior Labor official said one  reason contractors make errors on the form may be because they fill it out  from memory rather than consulting their payroll records. Officials said they  expect such errors to decrease under the new survey processes as Labor  analysts clarify contractor-submitted data sooner.
Some of these errors may be due to the fact that Labor did not pretest its  current survey form with respondents. Officials said they are planning  another update to address portions of the form that consistently confuse  respondents. These include not having a place to note an “interested  party,” rather than a “contractor” or “subcontractor,” is filling out the  survey form, as well as improvements to the section on job classifications  and fringe benefits. Labor officials said they have solicited input on  potential revisions from CIRPC; their on-site verification contractor; the  U.S. Census Bureau, which is contracted to mail out the survey forms for  Labor; and their regional offices. During our interviews, a Labor official  said the agency would like to solicit input on proposed changes from  survey respondents, but could not provide specifics. Although part of  Labor’s on-site verification process is to ask contractors questions about  using the current form, Labor needs feedback on proposed changes to  assess whether they will accomplish the goals of eliminating confusion  and reducing errors. OMB guidance states that careful questionnaire  design and pretesting can reduce measurement error and provide insights  into how alternative wording can affect survey respondents’ answers.  Pretesting the new survey form with respondents to ensure changes  achieve the desired results will be particularly important given that a  Labor official said changing the form is a major undertaking.
Labor officials did not have a specific time frame for implementing the  new form because they said they are waiting for upgrades to the wage  survey data system and their first priority is improving the online version  of the form. Planned improvements to the online version include allowing  respondents to save information rather than having to complete a survey  before exiting. Seven stakeholders we interviewed agreed the ability to fill  out the form online was important, but four of the seven were unaware it  was already an option.
section_title: Key Wage Determination Information Is Sometimes Confusing or Missing for Users
paragraphs: Labor’s Davis-Bacon prevailing wage rates are publicly reported online at  Wage Determinations Online for use by contractors and others to prepare  bids for and pay workers on federal construction projects. While 6 of 27  stakeholders we interviewed said the general contractor provided the  necessary wage information or they found the online wage determinations  relatively easy to use, others reported problems. For example, while OMB  and Labor guidance on data quality states that “influential” financial  information provided by the agency should include a high level of  transparency on data and methods, 15 stakeholders said there is a lack of  transparency in the wage determinations because key information is not  available or hard to find. In addition, both union and nonunion  stakeholders said Labor’s wage determination Web site should more  clearly present information on the number of workers and wage rates used  to calculate prevailing wages for each job classification. Labor currently  makes some of this information available in a report known as a WD-22.  The printed WD-22 provides, for each job classification, information on the  final prevailing wage and fringe benefit rates, the total number of workers  reported, and the method of rate calculation—for example, whether the  rate was based on a majority or an average (see fig. 7). A WD-22 is created  for each state survey by construction type, but this information is not  available on Labor’s wage determination Web site. A senior Labor official  said the WD-22 information is currently available upon request; though,  the agency is considering posting it online along with other information  used to determine wage rates.
In the listing above, the "SU" designation means that rates  listed under the  identifier do not reflect collectively bargained wage and  fringe benefit  rates.  Other designations indicate unions whose rates have  been determined  to be prevailing.
Labor also changes the date at the top of a wage determination each  calendar year in a “roll-over” process. Officials said the date is changed to  inform users the posted wage rates are valid for the current year, but the  wage rates contained in the determination are not necessarily updated. In  the Florida example (see fig. 8), the date at the top of the wage  determination is October 8, 2010, but wage rates associated with the “SU,”  or survey, designator on the lower half of the page are from May 22, 2009,  the publication date of the survey used to set those rates.
A senior Labor official was not aware of users confusing the roll-over date  on the wage determination with the survey publication date. However,  OMB guidance states that when disseminating information products to  users, key variables should be defined and the time period covered by the  information and the date last updated should be provided. Not clearly  explaining each of these dates within the wage determination reduces the  transparency of when the last survey was conducted for an area, especially  if many years have passed. Additionally, if the wage determination only  contains union-prevailing rates, it does not contain any information about  when the area was last surveyed.
Finally, 9 of 27 stakeholders said missing wage rates are also a challenge.  Specific job classifications may be missing from a wage determination if  Labor received insufficient survey data. If job classifications are missing,  contractors do not know what to bid on federal projects because they do  not know what they will have to pay some workers, workers do not know  what pay they will receive, and federal contracting agencies cannot  accurately estimate costs. When a wage rate for a job classification is  missing from the wage determination, it must be requested from Labor  through a conformance process. While federal projects have contracting  officers who typically request the conformance on behalf of the contactor,  eight stakeholders said the contracting officers may not be familiar with  the prevailing wages or the conformance process. Representatives from  one national contractor association said the difficulty of bidding on  projects when wage rates are missing, and then having to file a  conformance request in order to know what to pay, can deter smaller  contactors who might otherwise be interested in federal work. A Labor  official said the rates issued via conformance requests—an average of over  3,000 per year were filed in fiscal years 2007, 2008, and 2009—are only  good for the specific project on which they are issued and many are  repeated requests for job classifications for workers who operate specific  pieces of highway construction equipment. The best way to reduce  conformance requests, the official said, is to conduct surveys that report  wage rates for all job classifications.
section_title: Some Stakeholders Are Not Aware of Labor’s Outreach Efforts
paragraphs: The pre-survey briefing is one of Labor’s primary outreach efforts to  inform stakeholders about an upcoming survey. These briefings are  conducted by regional office staff either before or at the start of a survey.  A headquarters Labor official said regional offices notify state contractor  associations and work through the Building & Construction Trades  Department to notify unions about pre-survey briefings and ask them to  pass the information along to their members. While the official said there  is no required number of pre-survey briefings, regional office officials said  they ranged from one briefing for two states to five briefings within one  state for recent surveys depending on a state’s size and characteristics.  Officials said they generally hold separate briefings for unions and  nonunion contractors/contractor associations. The presentation includes  information on how wage and fringe benefit data are obtained and  compiled, sufficiency requirements for issuing rates and wage  determinations, and the process for filing conformances and wage  determination appeals. A headquarters official said they are currently  revising the presentation’s information on how to fill out the survey form.
Stakeholder awareness of the pre-survey briefings was mixed. In three  states surveyed for building and heavy construction in either 2009 or  2010—Arizona, North Carolina, and West Virginia—all the union  representatives we interviewed said they were aware of the pre-survey  briefing and representatives from four of the six state contractor  associations we interviewed said they were aware a briefing had been  conducted. Of the 12 contractors we interviewed in Florida and New  York who were last surveyed in 2005 and 2006, respectively, none were  aware that a briefing had been conducted prior to the survey. Several  regional office officials said the pre-survey briefings for unions generally  have greater attendance than those for contractors. While one stakeholder  said copies of the slides were provided at the briefing, a Labor  headquarters official said the information is not available online for those  who are unable to attend in person. Seven of 27 stakeholders indicated  that alternative approaches, such as webinars or audioconferences, might  be helpful ways to reach additional contractors.
CIRPC officials said more outreach by Labor could improve the accuracy  of the surveys because contractors would better understand why and how  the surveys are conducted, thereby encouraging more to participate. They  said they previously recommended that Labor wage analysts call  contractors prior to survey distribution to make them aware of the survey  and to assure them their submitted data would be protected. OMB  guidance states that sending a letter in advance of a survey to alert  respondents can improve response rates. A senior Labor official said they  are conducting pre-survey briefings instead of calling respondents in  advance.
section_title: Conclusions
paragraphs: For more than a decade, reviews of the Davis-Bacon wage survey have  highlighted methodological problems in the determination of wages paid  to workers on federally funded construction projects. In response to those  criticisms, Labor has improved its process, most recently seeking out new  data sources for some construction types and adjusting the data collection  and processing time frames. Yet without clear tracking of key survey dates  and the time spent in various processing activities, Labor cannot assess if  its changes are improving survey timeliness and thus the accuracy of  published wage rates. Additionally, these efforts do not effectively address  some key issues with how data are collected. Because Labor has not  conducted checks over the past several years on the representativeness of  the data it receives, it cannot have high confidence its results accurately  reflect prevailing wages, no matter how diligently its staff work to clarify  and verify submitted data. If the resultant prevailing wage rates are too  high, they potentially cost the federal government and taxpayers more for  publicly funded construction projects or, if too low, they cost workers in  compensation. While Labor officials rightly used experience and corporate  knowledge in designing recent changes to survey methodology, they did  not enlist objective survey expertise to ensure methods were sound and in  accordance with best practices. Survey methodology that does not follow  best practices lowers confidence in the process and puts participation by  private contractors at risk.
Labor’s regulatory goal to issue wage rates at the county level may also  limit its ability to improve survey representativeness and timeliness. Labor  often must combine data from multiple counties to meet its own relatively  low sufficiency standards to publish wage rates for specific job  classifications which, in the end, may reflect the wages for as few as three  employees from two contractors for an entire state. The statutory  requirement to issue prevailing wages by “civil subdivision of the state”  limits Labor’s ability to account for relevant regional markets that cross  county or state boundaries or to tap into data based on other geographic  groupings. Use of other data sources to augment Davis-Bacon survey data  could shorten the time needed to publish wage rates and reduce the  number of conformances that contractors must file for missing wage rates.
Given the voluntary nature of the survey, participants who take the time to  respond should have confidence their information will be considered in  determining prevailing wages. They should also be able to understand how  their information is used. Increased transparency in how the wage rates  are calculated and improved clarity in published wage determinations  would provide stakeholders assurance the wage rates are accurate and  encourage greater participation of the construction employer community.
section_title: Matter for Congressional Consideration
paragraphs: To improve the quality of Labor’s Davis-Bacon wage survey data, Congress  may wish to consider amending the language of the Davis-Bacon Act to  allow Labor to use wage data from geographic groupings other than civil  subdivisions of states, such as metropolitan statistical areas or Bureau of  Economic Analysis’ economic areas.
section_title: Recommendations for Executive Action
paragraphs: To improve the quality and timeliness of Labor’s Davis-Bacon wage  surveys, we recommend that the Secretary of Labor direct the Wage and  Hour Division to enlist the National Academies, or another independent  statistical organization, to evaluate and provide objective advice on the  survey, including its methods and design; the potential for conducting a  sample survey instead of a census survey; the collection, processing,  tracking, and analysis of data; and promotion of survey awareness.
To improve the transparency of wage determinations while maintaining  the confidentiality of specific survey respondents, we recommend that the  Secretary of Labor direct the Wage and Hour Division to publicly provide  additional information on the data used to calculate its Davis-Bacon wage  rates, such as the number and wages of workers included in each wage  rate calculation, and to clearly communicate the meaning of various dates  and codes used in wage determinations in the same place the prevailing  wage rates are posted.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to Labor for review and comment. The  agency provided written comments, which are reproduced in appendix VI.  Labor agreed with our recommendation to improve the transparency of  the wage determinations and indicated it is taking steps to do so. However,  the agency said our recommendation to obtain objective expert advice on  its survey design and methodology may be premature because additional  changes are currently being implemented or will be implemented based on  a 2004 review of the program by McGraw-Hill Construction Analytics. The  McGraw-Hill review was a process evaluation that assessed many aspects  of the wage survey; however, Labor officials did not indicate during our  interviews that the results of that evaluation were serving as the  foundation for their recent changes nor was the evaluation referred to in  documentation Labor provided regarding its recent changes. Moreover,  the McGraw-Hill report did not address certain issues related to the  survey’s design and methodology. Therefore, we continue to believe that  Labor should have an independent statistical organization provide advice  on survey methods for the following reasons:    Labor cites examples of improvements to its processes and information  technology systems so that surveys can be completed and published in a  more timely manner. We also cited many of these data collection and  processing changes in our report along with the agency’s expected  reduction in processing times for highway, building, and heavy surveys.  The survey timelines, which we used to assess whether surveys conducted  under new processes were on schedule, were provided to us by the agency  and included reductions in and elimination of various survey steps. Yet  according to those agency timelines, many of the surveys were behind  schedule. Labor commented it has reduced the time to publish survey  results for building and heavy construction from several years to an  average of 2 years. However, we believe it may face challenges staying on  schedule if it cannot more accurately predict how many survey forms it  will receive and the time required to process them. Possibilities to better  predict the number of survey responses, such as statistical sampling rather  than the current census survey, could be explored with survey experts.
Labor also noted, as we did in our report, that it is again working to  calculate response rates and we believe this is a step in the right direction.  However, only calculating response rates will not ensure that the data  Labor is using to calculate prevailing wages are truly representative of the  wages being paid in a particular area. If a response rate is low—some  wage rates are calculated on as few as three workers—then Labor must  also analyze nonrespondents to ensure that those who received a survey  but did not respond do not significantly differ from those who responded.  Survey expertise could assist with this critical data quality check to help  ensure prevailing wages are representative of wages actually paid to  workers.
Labor commented that the current survey form was not recently  redesigned, but is a scannable version of the form that was last updated in  2004. We adjusted our report language accordingly. The agency also noted  that errors on wage survey forms typically result from errors in the  information provided by survey respondents rather than errors made by  Wage and Hour Division employees. We agree; however, we believe the  fact that respondents continue to make some of the same errors in  completing the wage survey form that were identified by the Labor OIG in  2004 is a concern. Labor did not pretest the current form with survey  respondents to ensure clarity, which could partially explain why  contractors and interested parties made errors. A professional survey  methodologist could develop a pretesting plan to address issues that affect  the quality of the survey data, such as respondent comprehension,  retrieval, judgment, and response formulation.
We believe it is critical for Labor to obtain expert methodological advice  because this would allow the agency to make course corrections before  time and money are spent implementing new procedures that may  increase the speed of processing data, but not sufficiently address its  quality. While Labor indicated the cost of contracting for an expert review  is a concern, not ensuring the quality and representativeness of the data  can be costly in other ways: the federal government could pay more for  construction than it needs to or workers may earn less than they should.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from its  issue date. At that time, we will send copies of this report to the Secretary  of Labor, relevant congressional committees, 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 have questions about this report, please contact me at  (202) 512-7215 or sherrilla@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 VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our review examined (1) the extent to which the Department of Labor  (Labor) has addressed concerns regarding the quality of the Davis-Bacon  wage determination process and (2) the additional issues identified by  stakeholders regarding the wage determination process. To address these  objectives, we  reviewed key documents, including past GAO and Department of Labor  Office of Inspector General (OIG) reviews of the program, agency  documents on recent changes to the wage survey process, and relevant  federal laws and regulations;  interviewed agency officials and representatives from organizations with  whom the agency contracts some aspects of the survey process;    analyzed (1) data from Labor’s Automated Survey Data System (ASDS),  Wage Determination Generation System (WDGS), and the Davis-Bacon  survey schedule Web site (http://www.dol.gov/whd/programs/  dbra/schedule.htm); (2) reports produced by Labor’s contracted  accounting firm for on-site verification of submitted payroll records; and  (3) Labor’s conformance logs for fiscal years 2007 through 2009;    conducted site visits to three of Labor’s five regional offices that conduct  Davis-Bacon wage surveys, as well as to the Construction Industry  Research and Policy Center (CIRPC), which is contracted to assist Labor  with the wage survey process;  interviewed approximately 30 stakeholders, including representatives  from academia, contractor associations, and unions, as well as individual  contractors and performed a content analysis of their comments; and    attended a Labor prevailing wage conference.
We conducted this performance audit from September 2009 through  March 2011 in accordance with generally accepted government auditing  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.
subsections: section_title: Review of Key Documentation and Interviews with Agency Officials
paragraphs: To evaluate how Labor has addressed past concerns with the quality of the  Davis-Bacon wage determination process, we reviewed past reports,  reviewed key agency documents, and interviewed Labor officials. We  reviewed two Labor OIG reports and their associated recommendations,  as well as our own previous work. In addition, we reviewed agency  correspondence with Congress and the Office of Management and Budget  (OMB) describing Labor’s changes to the wage determination process  based on past program audits, the effectiveness of those changes, and  planned future changes.
To assess recent changes made to the wage survey process and their  expected outcomes, we interviewed officials and reviewed agency  documents, such as the Davis-Bacon manual of operations and Labor’s  revised timelines for building, heavy, and highway surveys starting in 2009.  Using Labor’s revised timelines, we calculated the expected reduction in  the amount of time from the start of each survey to publication of wage  rates. To assess whether Labor’s surveys under the new processes were on  schedule, we reviewed an ASDS Individual Time Tracking Report by  Activity/Survey for October 1, 2009, through September 1, 2010, that  provided the number of staff hours logged in each survey activity for the  pilot building and heavy surveys and highway surveys started under the  new processes. We then compared the last activity in which staff hours  had been logged for each survey with its expected activity based on the  date the regional office entered the survey into ASDS and Labor’s new  timelines. We could not calculate the exact number of days surveys were  ahead of or behind schedule because Labor did not have a report that  reliably recorded the date a survey moved from one activity to the next.  Additionally, for one state building and heavy survey and three state  highway surveys, we could not calculate the actual timelines because the  dates in the data provided by Labor were out of sequence.
Labor officials provided inconsistent guidance on which activity in their  timelines reflected the actual start of a survey; however, for various  reasons, we used the date the survey was recorded as being entered into  the database for our analysis of whether the surveys were on schedule.  During our review, a senior Labor official indicated the appropriate survey  start date was the date the survey was entered into ASDS by regional  office officials. Toward the end of our review, the official indicated the  correct start date was the date surveys were first mailed to contractors or  interested parties because each region had its own method for when it  entered surveys into ASDS. For example, some regions entered surveys  when they planned them while others entered surveys when they ordered  Dodge Reports. We believe using the date surveys were first mailed as the  start date would exclude certain key activities on Labor’s survey timeline,  such as ordering, receiving, and cleaning the Dodge Report data for  building and heavy surveys and inputting interested party lists for highway  surveys. Nonetheless, we conducted an additional timeliness analysis  using alternative start dates based on Labor’s concerns. Given that Labor  officials were concerned the regional offices may enter building and heavy  surveys into ASDS before actually starting them, we used the date the  Dodge data were requested, which is the second step in the new process.  For the building and heavy surveys we reviewed, none of them changed  status based on the alternative start date. In other words, all were still  behind schedule. For highway surveys, we used the date surveys were first  mailed to interested parties as the start date for the alternative analysis.  For the highway surveys we reviewed, only one changed status from  behind schedule to ahead of schedule. Therefore, based on the limited  changes to our findings from using alternative start dates, as well as the  fact that the alternative start dates exclude parts of the survey process on  which Labor had been working to improve timeliness and for which staff  had logged hours, we decided to conduct our analysis using the original  date provided by Labor (the date the regional offices entered the survey  into ASDS).
To assess the adequacy of Labor’s current wage survey methodology we  compared it with survey guidance published by OMB and Labor.
section_title: Analysis of Survey Data
paragraphs: We used data from ASDS to evaluate the geographic level at which rates  were issued and the number of workers used to issue rates. For both  analyses, we used data from four surveys—Florida 2005, Maryland 2005,  Tennessee 2006, and West Texas Metropolitan 2006—that were issued in  2009 or 2010. We selected these surveys because they were recently  published and represented geographic diversity, to the extent possible, in  terms of the Labor regional offices that conducted the surveys. The data  from the surveys we reviewed included the following construction types:  Florida—building, heavy, highway, and residential; Maryland—building,  heavy, and residential; Tennessee—building, heavy, highway, and  residential; and West Texas Metropolitan—building and residential. The  survey results included metropolitan and rural rates for all construction  types with the exception of the Maryland heavy construction type and the  West Texas survey, which only included metropolitan rates.
To evaluate the geographic level at which wage rates were issued, we  analyzed, for each survey in our review, the “calculation basis” field on  Labor’s WD-22 form, which indicates whether the wage rate for each job  classification was determined based on county-level data, multi-county  data, or statewide data. We were unable to determine the geographic level  for rates that had been combined in the final WD-22 so we reported them  separately. Regional office officials said they may combine rates from  counties with the exact same wage and fringe benefit data in the final WD- 22. However, the rates being combined may have been calculated at  different geographic levels—for example, one county’s rates may have  been calculated at the group level while another county’s rates may have  been calculated at the supergroup level. Because the geographic level at  which rates for each combined county were calculated is not reported on  the WD-22, we reported the percentage of these rates separately. We  analyzed geographic levels for key job classifications only because nonkey  job classifications cannot be issued at the supergroup or state level. Key  job classifications are those determined by Labor to be necessary for one  or more of the four construction types, as follows:    Building Construction: bricklayer, boilermaker, carpenter, cement  mason, electrician, heat and frost insulators/asbestos workers/pipe  insulators, iron worker, laborer-common, painter, pipefitter, plumber,  power equipment operator, roofer, sheet metal worker, tile setter, and  truck driver.
Heavy Construction and Highway Construction: carpenter, cement  mason, electrician, iron worker, laborer-common, painter, power  equipment operator, and truck driver.
Residential Construction: bricklayer, carpenter, cement mason,  electrician, iron worker, laborer-common, painter, plumber, power  equipment operator, roofer, sheet metal worker, and truck driver.
Table 1 provides the percentage of wage rates issued at each geographic  level by construction type and metropolitan or rural designation for the  four surveys we reviewed.
We also used WD-22 data to determine the number of workers used to  calculate wage rates for all key job classifications for the four surveys in  our review. Using the “total number reported” column in WD-22 reports,  we calculated the number of workers whose wage rates were included in  each wage rate calculation for key job classifications. We reported the  data by quartiles with the exception of the “3 workers” category, which we  broke out separately because it is the minimum number of workers for  which Labor must receive data in order to issue a wage rate for a job  classification. Table 2 provides the percentage of key job classification  rates issued by number of workers, construction type, and metropolitan or  rural designation for the four surveys we reviewed.
Finally, we used WD-22 data to determine the percentage of wage rates  that included federal data. We calculated this percentage for the building  and residential construction types for the surveys in our review because  Labor uses federal data for these construction types only when it has  insufficient survey data, whereas federal data are used in all highway and  heavy surveys. Table 3 provides the percentage of key job classification  wage rates using federal data by construction type and metropolitan or  rural designation for the four surveys we reviewed.
To determine the age of wage rates, we used WDGS data on published  wage rates provided by Labor officials on November 12, 2010. We analyzed  the age of wage rates for building, heavy, and highway construction  because Labor considered only those construction types in its fiscal year  2010 performance goal. We analyzed the age of wage rates in two ways:  first, combining nonunion- and union-prevailing wage rates together, as  Labor does, and then separately to identify any trends by type of rate.
To determine the age of data used to calculate prevailing wage rates for  the 22 open surveys that accumulated since Labor began conducting  statewide surveys, we analyzed survey time frames and cutoff dates from  Labor’s Davis-Bacon and Related Acts survey schedule Web site  (http://www.dol.gov/whd/programs/dbra/schedule.htm) and interviewed  Labor officials.
To assess the number of wage survey forms, or WD-10s, that had errors  and the types of errors that most commonly occurred, we analyzed on-site  verification reports prepared by Labor’s contracted accounting firm for the  four states in our review. We analyzed the verification reports to  determine what percentage of wage survey forms that were verified had  errors and what type of errors occurred. To identify and categorize the  errors, we recorded if the accounting firm marked an error in the  following fields: project value, construction type, additional  trade/classification, employee classification, work performed, paid under  collective bargaining agreement (CBA), number of employees, peak week,  hourly rate, fringe benefit, health and welfare, pension, holiday and  vacation, apprentice training, and other. We counted a wage survey form  as having multiple errors if it had an error in more than one category.
To determine the average number of conformance requests filed for  missing classifications in fiscal years 2007 through 2009, we used the  “tracking number” field in Labor’s conformance request log. We counted  the number of requests with distinct tracking numbers, excluding entries  that did not have tracking numbers, and then calculated the average over  the 3-year period.
To assess the reliability of the data we used in our analyses, we performed  the following steps: (1) reviewed pertinent system and process  documentation, (2) interviewed agency officials knowledgeable about the  data and system during each regional office site visit, and (3) performed  electronic testing of required data fields. We found the data we reviewed  to be reliable for our purposes.
section_title: Regional Office Site Visits
paragraphs: To obtain information from staff who clarify and analyze survey  information, we conducted site visits to three of the five Labor regional  offices that process Davis-Bacon wage surveys—Northeast region  (Philadelphia, Pennsylvania); Southeast region (Atlanta, Georgia); and  Southwest region (Dallas, Texas)—as well as CIRPC at the University of  Tennessee. At each regional office, we interviewed the director of  enforcement, the regional wage specialist, the senior wage analyst, and  wage analysts. At CIRPC, we interviewed the associate directors, the  senior wage analyst equivalent, and wage analysts. Also, to gain a  thorough understanding of how wage analysts process survey data and  document decisions, we interviewed staff at each regional office about  ASDS. We selected our site visit locations based on the fact that Labor  headquarters officials said these regional offices were currently  conducting surveys using new processes. Additionally, we visited CIRPC  to determine how contractors are selected for survey participation and on- site verification, and how CIRPC provides support to the regional offices  in implementing the new survey processes.
section_title: Interviews with Stakeholders
paragraphs: To determine what additional issues stakeholders may have with the wage  determination process, we initially explored surveying contractors and  union officials in states where Labor had recently conducted a wage  survey. We believed it was important for us to survey contractors who had  recently received a wage survey from Labor so they could recall their  experience of responding to the wage survey or their reasons for not  responding. However, Labor officials had concerns about us surveying  contractors in states where Labor had completed wage survey data  collection, but was still in the process of contacting contractors for data  clarification and verification. Labor officials believed contractors might  get confused if they received requests for information from more than one  agency and were concerned our activities might affect their efforts. We  agreed with these concerns. Therefore, instead of surveying contractors,  we opted to conduct semi-structured interviews with a wide variety of  Davis-Bacon stakeholders. Also, in order to solicit opinions directly from  contractors but not interfere with Labor’s ongoing efforts, we interviewed  a small number of individual contractors in states that had been surveyed  less recently but where the results of those wage surveys had been  published. Given that it had been a few years since Labor sent wage survey  forms to these contractors, we believed we would obtain better  information through personal interviews than a survey.
We conducted semi-structured interviews with approximately 30  representatives from academia, contractor associations, unions, and  individual contractors. Our semi-structured interview protocol allowed us  to ask questions of numerous organizations and individuals, offering each  interviewee the opportunity to respond to the same general set of  questions, but also allowed for flexibility in asking follow-up questions  and, in limited circumstances, for the omission of questions when  appropriate. For example, we did not ask representatives from academia  about filling out the survey form or attending pre-survey briefings because  they would typically not be involved in these activities. In our findings, we  noted cases in which we did not ask all stakeholders a particular question.
To select representatives from academia, we conducted a literature review  to identify studies that reviewed or evaluated the Davis-Bacon wage  survey process. To obtain opinions from both unionized and nonunionized  contractors, we interviewed representatives from the national  organizations of the Associated Builders and Contractors, Inc. (ABC) and  the Associated General Contractors of America (AGC). To obtain views  from construction unions, we interviewed representatives from the AFL- CIO and the International Brotherhood of Electrical Workers (IBEW). We  selected IBEW because it has one of the largest memberships among  construction industry unions and electricians are considered a key class  for all four of Labor’s construction types.
To obtain a state-level perspective from contractors’ associations and  unions, we interviewed representatives from state ABC and AGC chapters,  as well as IBEW locals in Arizona, North Carolina, and West Virginia. We  chose these three states because they had been surveyed in 2009 or 2010  by different Labor regional offices. In addition, because Arizona, North  Carolina, and West Virginia have low to medium levels of workers  represented by unions, according to the Bureau of Labor Statistics (BLS),  we interviewed representatives from ABC and AGC in New York, the state  with the highest level of unionization.
We also interviewed individual contractors in New York and Florida. We  chose New York and Florida because they had been surveyed fairly  recently and represented diversity in geography and the percentage of all  workers represented by unions. To select contractors, we requested  Labor data including the lists of contacts who had been sent wage survey  forms and who had returned them. Then, to the extent possible, we  matched the data using the contact identification field to determine which  contacts had responded or not responded. In each state, we identified the  counties with the highest number of respondents because there were  fewer respondents than nonrespondents. We selected certain ZIP codes  within each selected county based on the highest concentration of  respondents, as well as site visit logistics. We then ordered the list of  respondents and nonrespondents by ZIP code and called contractors  asking them to meet with us. If we were unable to reach a contractor or if  a contractor declined, we moved to the next contractor on the list and  continued until we had a mix of respondents and nonrespondents who  agreed to be interviewed.
We conducted a content analysis on the information gathered through the  stakeholder interviews. Interview responses and comments were  categorized by an analyst to identify common themes. A pretest of the  themes was reviewed by the engagement’s methodologist before all  comments were categorized. The categorization of the comments was then  independently checked, and agreed upon, by another analyst for  verification purposes. While we selected our stakeholders to include a  wide variety of positions, the opinions expressed are specific to those we  interviewed and are not generalizable.
section_title: Prevailing Wage Conference
paragraphs: We attended Davis-Bacon-related sessions of Labor’s November 2010  prevailing wage conference in Cleveland, Ohio, to obtain additional  stakeholder perspectives on the wage determination process and use of  published wage determinations through observation of Labor’s  presentations and question and answer sessions.
section_title: Appendix II: Wage Survey Form (WD-10)
paragraphs: II: Wage Survey Form (WD-10)
section_title: Appendix III: Labor’s Wage Determination and Appeals Process under the Davis-Bacon Act
paragraphs: The Davis-Bacon Act requires that workers employed on federal  construction contracts valued in excess of $2,000 be paid, at a minimum,  wages and fringe benefits that the Secretary of Labor determines to be  prevailing for corresponding classes of workers employed on public and  private projects that are similar in character to the contract work in the  civil subdivision of the state where the construction takes place.
To determine the prevailing wages and fringe benefits in various areas  throughout the United States, Labor’s Wage and Hour Division periodically  surveys wages and fringe benefits paid to workers in four basic types of  construction: building, residential, highway, and heavy. 2, 3 Labor collects  data through statewide surveys, except in large states, such as Texas and  California. Labor’s regulations state that the county will normally be the  civil subdivision at which a prevailing wage is determined, although Labor  may consider wages paid on similar construction in surrounding counties  if it is determined there has not been sufficient similar construction  activity within the given area in the past year. Data from projects in  metropolitan counties are considered separately from those in rural  counties. If similar construction in surrounding counties, or in the state, is  not sufficient, Labor may consider wages paid on projects completed more  than 1 year prior to the start of a survey.
Wage rates are issued for a series of job classifications in each of the four  basic types of construction, so each wage determination requires the  calculation of prevailing wages for many different trades, such as  electrician, plumber, and carpenter. Labor’s wage determination process  consists of five basic stages:  1.  Planning and scheduling surveys to collect data on wages and fringe  benefits in similar job classifications on comparable construction  projects.
The process described here is based on Labor regulations, procedures manuals and  documents, and statements by officials. GAO did not verify whether all procedures were  followed in all cases.
Heavy construction is a catch-all grouping that includes projects not properly classified  under the other three types of construction; for example, dredging and sewer projects.
2.  Conducting surveys of employers and interested parties, such as  representatives of unions or contractor associations.  3.  Clarifying and analyzing respondents’ data.  4.  Issuing the wage determinations.  5.  Reconsideration and review of wage determinations through an  appeals process.
subsections: section_title: Stage 1: Planning and Scheduling Surveys
paragraphs: Labor attempts to survey the complete “universe” of relevant construction  contractors active within a particular area during a specific period of time.  Labor schedules surveys by identifying those areas and construction types  most in need of a survey, based on criteria that include    age of the most recent survey;    volume of federal construction in the area;  requests or complaints from interested parties, such as state and county  agencies, unions, and contractor associations; and    evidence that wage rates in a region have changed.
Labor uses two management tools, the Regional Survey Planning Report  and the Uniform Survey Planning Procedure, to help prioritize planned  surveys. The Regional Survey Planning Report is provided by CIRPC at the  University of Tennessee and contains information about construction  activity nationwide, including the number and value of active projects, the  number and value of federally owned projects, the date of the most recent  survey in each county, and whether the existing wage determinations for  each county are union-prevailing, nonunion-prevailing, or a combination of  both. Labor uses the Uniform Survey Planning Procedure to weigh the  need for surveys by area and construction type.
Once Labor designates an area and construction type (i.e., building,  residential, highway, or heavy) for a survey, it proposes a survey time  frame, or reference period during which the construction projects  considered in the survey must be “active.” Generally, the preliminary time  frame is the preceding 12-month period, the survey start date is  approximately 3 months after the survey is assigned, and the survey cutoff  date is 4 to 6 months from the start date, depending on the size of the  survey. However, the survey time frame, start date, and cutoff date may be  shortened or lengthened based on individual circumstances of the survey.  Once these parameters are established, Labor enters the survey  information into ASDS.
To identify projects that meet the established survey criteria (the  designated area, construction type, and survey time frame), Labor uses  F.W. Dodge data produced in reports known as Dodge Reports. Labor  supplements these data with information provided by contractors listed in  the Dodge Reports, by industry associations, and from regional office files  to find additional relevant construction projects. Analysts at CIRPC screen  the data to ensure projects selected meet the criteria before the survey  begins. Projects must be of the correct construction type, be in the correct  geographic area, fall within the survey time frame, and have a value of at  least $2,000. CIRPC also checks for duplicate project information to  minimize contacts to a contractor working on multiple projects that meet  survey criteria.
section_title: Stage 2: Conducting Surveys
paragraphs: Labor notifies contractors and interested parties—including contractor  associations, unions, government agencies, and Members of Congress—of  upcoming surveys by posting survey information on its Web site, sending  letters, and conducting pre-survey briefings. Contractor and interested party  records are sent to the U.S. Census Bureau, which distributes the  notification letters encouraging participation in the survey. Labor’s regional  offices arrange pre-survey briefings with interested parties prior to or at the  start of a survey to clarify survey procedures and provide information on  how to complete and submit wage survey forms, known as WD-10s.
Data requested on the WD-10 form include a description of the project and  its location; the contractor’s name and address; the project value and start  and end dates; the wage rate and fringe benefits paid to each worker on  the project; and the number of workers employed in each job  classification during the week of peak activity for that classification. The  peak week for each job classification is the week when the most workers  were employed in that particular classification. For an example of how  Labor collects peak week data on a WD-10, see appendix II.
The Census Bureau conducts four mailings throughout a survey. The first  mailing includes letters and WD-10 wage survey forms to general  contractors and interested parties. (For examples of survey announcement  letters sent to contractors and interested parties, see app. IV.) General  contractors listed on the Dodge Reports receive WD-10 forms with project  names identified through the Dodge Reports, as well as additional blank  forms for other projects. General contractors not listed on the Dodge  Reports and interested parties receive a limited number of blank WD-10  forms, but additional forms are available upon request. In addition, all  general contractors receive forms to provide information on  subcontractors who worked on projects being surveyed. Members of  Congress receive one blank WD-10 form and are not contacted again  unless a survey is extended. The second mailing is only to general  contractors who do not respond to the first mailing and includes the WD- 10 forms with project names from the Dodge Report and subcontractor list  forms provided in the first mailing. The third mailing is to all reported  subcontractors and newly reported general contractors and includes WD- 10 forms with project names and blank WD-10 forms. The fourth and final  mailing is to all subcontractors who do not respond and newly reported  subcontractors and only includes WD-10 forms.
Survey respondents may submit paper WD-10 forms or complete forms  electronically on Labor’s Web site. Census scans returned paper WD-10  forms into Labor’s ASDS. WD-10 forms submitted electronically are loaded  directly into ASDS. Any additional information submitted must be entered  into ASDS manually. CIRPC reviews the completed WD-10s, matches  submitted information with the associated project, and forwards the WD- 10s to Labor regional offices.
section_title: Stage 3: Clarifying and Analyzing Respondents’ Data
paragraphs: Labor’s wage analysts begin to review and analyze the data as they receive  the completed WD-10s.
subsections: section_title: Data Review and Clarification
paragraphs: Wage analysts’ first step in the review process is to determine whether the  project reported on the WD-10 form is within the scope of the survey, or  “usable.” Since the WD-10 forms may provide more information about a  project than the Dodge Report, wage analysts review the data to determine  whether the project meets the four basic survey criteria (correct  construction type, geographic area, time frame, and project value). If a  project does not meet the four criteria, it is determined unusable and any  associated WD-10 forms are excluded from the survey.
Once Labor has determined a project and WD-10 form are usable, wage  analysts call contractors to clarify any information that is unclear or  incomplete. Wage analysts record information about the clarification call  in ASDS, including the date and name of the person contacted and any  information that resulted in changes to the WD-10 form. Wage analysts  review each section of the WD-10 forms and clarify the information, as  necessary. Specifically, the analysts verify contractor and subcontractor  information; project name, description, and location; whether the project  received federal or state funding; start and end dates and value of the  project; type of construction (i.e., building, residential, highway, or heavy);  employee job classifications; the peak week ending date; the number of  employees reported; the basic hourly rate; fringe benefits rates; and  whether the wages were paid under a CBA, among other data. In addition  to contractors, interested parties may also submit WD-10 forms for a  project. However, Labor clarifies submitted data with the relevant  contractor, regardless of the source, and excludes information provided by  an interested party if it duplicates data provided by the contractor unless  data are submitted on specific job classifications that were not included by  the contractor. Labor also verifies rates paid under a CBA, or union rates,  to ensure they are accurately reported.
Similarly, because of variations in industry practices across the country,  known as “area practice,” wage analysts may call contractors to clarify the  type of work employees in certain job classifications are actually  performing. This is necessary because, for a given prevailing wage, the  scope of work covered by the job classification must reflect the actual  prevailing area practice. An area practice issue exists when the same work  is performed by employees in more than one classification in a given  location. For example, a worker under the general electrician classification  may perform tasks in addition to general electrical work, such as alarm  installation and low voltage wiring. If there is another specialty  classification installing alarms in the same location, it may indicate an area  practice issue. In some geographic areas, particular work may be performed  frequently and widely enough by a specialty classification such that the  traditional practice by the general classification may be replaced by the  practice of the specialty classification.
section_title: Data Verification
paragraphs: Labor conducts several processes to verify data submitted in a survey. For  data submitted by interested parties and contractors, Labor’s regional  offices verify a random sample of data. To verify reported data, regional  offices contact selected contractors and third parties to request payroll  documentation, though data provided without documentation may still be  used. In addition to remote verification of randomly selected contractors,  on-site verification of a weighted sample of contractors is conducted. The  on-site verification selection is designed to include those contractors with  the biggest impact on the prevailing wage rate for each job classification.  Once the weighted sample of contractors has been selected, an independent  auditing firm contracted by Labor arranges an appointment with each  contractor to meet and review supporting records. The auditing firm  prepares and submits a report documenting the differences between the  submitted and verified information, including differences in project and  wage data. Wage analysts in Labor’s regional offices update information in  ASDS that may have changed as a result of these verification processes.
section_title: Additional Data Sources
paragraphs: In addition to wage data collected on WD-10 forms, Labor uses certified  payroll data from projects that receive federal funding and meet survey  criteria. For surveys of highway and heavy construction projects, Labor  always uses certified payroll data, while it is only included in building and  residential surveys if the submitted WD-10 forms do not provide enough  information to make a wage determination. In addition, for highway  surveys only, Labor sometimes adopts rates published by state  departments of transportation if a state has conducted its own prevailing  wage survey and data collected separately by Labor support the prevailing  wage rates established by the state.
Labor also updates union-prevailing wage rates when unions submit  updated CBAs to Labor headquarters.
section_title: Prevailing Wage Rate Calculation
paragraphs: Once all verified and corrected data have been entered into ASDS, Labor  calculates the prevailing wage rate for each job classification in a survey.  If a majority of workers (more than 50 percent) in a job classification are  paid the same rate, that rate is determined the prevailing wage. If the  same rate is not paid to a majority (over 50 percent) of workers in a job  classification, the prevailing wage is the average wage rate weighted by the  number of employees for which that rate was reported. Prevailing fringe  benefits are determined only if a majority of the workers in a job  classification receive fringe benefits. Once that condition is met, the  prevailing fringe benefit is calculated for each job classification similarly  to the way the prevailing wage rate is calculated. The prevailing rates  resulting from the calculations will be either “union-prevailing”—if a  majority of workers is paid under a CBA—or “nonunion-prevailing” rates.
A prevailing wage rate for a job classification is only issued if there are  sufficient data to make a determination. For data to be sufficient, Labor  must receive wage information on at least three employees from at least  two contractors for that job classification. If Labor receives sufficient data  based on information collected at the county level for a job classification,  a prevailing wage rate is determined using data from a single county. If  data are insufficient at the county level, Labor includes data from federal  projects in that county. If data are still insufficient, Labor includes data  from contiguous counties, combined in “groups” or “supergroups” of  counties, until data are sufficient to make a prevailing wage determination.  Expansion to include other counties, if necessary, may continue until data  from all counties in the state are combined. However, Labor’s regulations  require wage data from projects in metropolitan and rural counties be  separated when determining prevailing wages. For metropolitan  counties, data are combined with data from one or more counties within  the metropolitan statistical area, while data from rural counties are  combined with data from other rural  counties.
Once the prevailing wage rates have been calculated, the regional offices  transmit survey results to headquarters for final review.
section_title: Stage 4: Issuing the Wage Determinations
paragraphs: Labor headquarters issues wage determinations after reviewing  recommended wage rates submitted by the regional offices. The prevailing  wage rates are transmitted electronically to the WDGS for publication  online at www.wdol.gov, where they are publicly available. Labor  sometimes modifies wage determinations to keep them current or correct  errors. Generally, modifications affect a limited number of job  classifications within a wage determination.
If a prevailing wage rate is not provided for a specific job classification in a  wage determination, a contractor may request a rate for that classification,  known as a conformance, through the contracting agency overseeing the  specific project. The rate determined in the conformance process only  applies to workers in that classification for the contract in question.
section_title: Stage 5: Appeals Process
paragraphs: Any interested party may request reconsideration and review of Labor’s  wage determinations. The regional offices accept initial inquiries after a  wage determination has been issued. Any interested party may request  reconsideration from headquarters in writing and include any relevant  information, such as wage payment data or project descriptions, to assist  with the review. Labor’s regulations state that the Wage and Hour Division  Administrator will generally respond within 30 days of receipt of the  request. If the interested party’s request for reconsideration is denied, the  interested party may file an appeal with Labor’s Administrative Review  Board, which consists of three members appointed by the Secretary of  Labor. All decisions by the Administrative Review Board are final. Any  new wage determination resulting from such an appeal must be issued  prior to the award of the contract in question, or before the start of  construction if there is no award.
section_title: Appendix IV: Survey Announcement Letters Sent to Contractors and Interested Parties by the Department of Labor
section_title: Appendix V: Example of a Florida Wage Determination Published by the Department of Labor
section_title: Appendix VI: Comments from the Department of Labor
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, the following staff made key  contributions to this report: Gretta L. Goodwin, Assistant Director and  Amy Anderson, analyst-in-charge, managed all aspects of this assignment;  and Brenna Guarneros, analyst, made significant contributions to all  phases of the work. In addition, John J. Barrett, analyst, made significant  contributions to design and data collection; Christopher Zbrozek, intern,  assisted in data collection and analysis; Walter Vance, Melinda Cordero,  and Carl Barden provided assistance in designing the study and  conducting data analysis; Susan Aschoff assisted in message and report  development; Mimi Nguyen created the report’s graphics; Alexander  Galuten provided legal advice; Erin Godtland, Barbara Steel-Lowney, and  Yunsian Tai referenced the report; and Roshni Dave, Ronald Fecso, Kim  Frankena, Mark Gaffigan, Charles A. Jeszeck, David Marroni, Mary  Mohiyuddin, Stuart Ryba, David Wise, and William Woods provided  guidance.