The Davis-Bacon Act requires contractors and subcontractors working on federally funded contracts in excess of $2,000 to pay at least locally prevailing wages to laborers and mechanics. The act covers both new construction and the alteration or repair of existing public buildings and works. The Department of Labor sets prevailing wage rates for various job categories in a local area on the basis of periodic surveys it conducts of contractors, unions, public officials, and other interested parties. The Davis-Bacon Act stems from a Depression-era practice of transporting workers from lower-paying areas to bypass local workers who would demand a higher wage. The prevailing wage requirement was meant to prevent this practice by ensuring that workers on federal projects were paid at least the locally prevailing wage. Congress has extended this requirement beyond projects funded directly by the federal government by including Davis-Bacon Act prevailing wage provisions in numerous related laws under which federal agencies assist construction projects through grants, loans, guarantees, insurance, and other methods. Examples of related laws include the Federal-Aid Highway Acts, the Housing and Community Development Act of 1974, and the Federal Water Pollution Control Act. Contractors on projects subject to Davis-Bacon requirements may also be subject to additional prevailing wage requirements under state and local laws. In addition to paying no less than locally prevailing wages, contractors for construction projects that are subject to the Davis-Bacon Act must pay their workers on a weekly basis and submit weekly certified payroll records. The federal contracting or administering agency has primary responsibility for enforcing these requirements, while the Department of Labor has coordination and oversight responsibilities, including the authority to establish regulations and investigate compliance with labor standards as warranted. The prevailing wage provision in section 1606 of the Recovery Act broadly applies Davis-Bacon requirements to all construction projects funded directly or assisted by the federal government under Division A of the act. It reinforces Davis-Bacon Act coverage of construction projects where the federal government is a party to the contract, extends it to projects assisted in whole or in part by Division A of the act, and overri any limitation to Davis-Bacon coverage in related laws under which federal agencies provide financial assistance, such as grants and loan guarantees, to recipients to use for construction projects. It also extends the prevailing wage requirement to some federally assisted projects th would not otherwise be subject to that req uirement. According to federal agency officials, 40 programs are newly subject to Davis-Bacon requirements as a result of the Recovery Act’s prevailing wage provision, as shown in table 1. These programs are spread across 12 of 27 federal agencies that received funding under Division A of the ac Most of the programs existed prior to the Recovery Act and are subject to Davis-Bacon requirements for the first time under the act, while some are newly created programs. t. Federal, state, and local officials involved with the 40 Recovery Act programs that are newly subject to Davis-Bacon requirements differed on whether those requirements would increase program costs. However, these officials generally did not expect Davis-Bacon requirements to inhibit their ability to achieve Recovery Act and program goals. Federal officials responsible for most of the programs did not expect Davis-Bacon requirements to affect the timing of their program’s Recovery Act efforts, though officials for some programs expected an impact. Federal officials responsible for programs that are newly subject to Davis- Bacon requirements—the prevailing wage rate requirement and the administrative requirements associated with weekly payroll processes— had mixed views on the extent to which they expected these requirements to affect program costs, as table 2 shows. Officials for the 40 programs provided a range of explanations for the extent to which the prevailing wage rate requirement might impact program costs. Specifically: Little to no impact. Department of Energy officials responsible for two programs said construction firms generally pay prevailing wage rates as a standard practice and therefore the prevailing wage rate requirement would have no impact on program costs. According to other program officials, the impact would be small because a relatively small amount of program funds are to be spent on construction activities that are subject to Davis-Bacon requirements. For example, Department of Justice officials responsible for the Transitional Housing Assistance Grants for Victims of Domestic Violence, Dating Violence, Stalking, or Sexual Assault Program said only a small number of grantees requested funds for construction and that less than 5 percent would be allocated for this purpose. Department of Energy officials responsible for the Geothermal Technologies program noted that the prevailing wage rates were in line with what they expected, and Electricity Delivery and Energy Reliability program officials said existing wage rates paid by utility companies were generally high already so any increase in wage expenses due to prevailing wage rates would probably be minimal. Moderate impact. Officials from the Department of Energy’s Weatherization Assistance Program explained that the prevailing wage rate requirement will have at least a moderate impact on program costs. They explained that weatherization projects in buildings taller than four stories will require that workers be paid commercial prevailing wage rates that are higher than the wage rates that would otherwise be used for weatherization projects. Department of Energy officials responsible for the Wind and Hydropower Technologies program explained that the prevailing wage rates for construction workers are sometimes 20 percent higher than what would have been paid for similar work and could increase labor costs by 20 percent. Conversely, these officials said the payment of higher wages could attract a more highly trained laborer and thus possibly result in savings in rework or in adherence to safety guidelines. Large impact. Department of Energy officials from the State Energy Program explained that in some of the areas hardest hit economically, construction workers are paid less than the prevailing wage rate for the county. Therefore, paying the Davis-Bacon prevailing wage rate will increase costs. Likewise, Department of Justice officials responsible for the Correctional Facilities on Tribal Lands Program explained that in some cases the prevailing wage rate may be significantly higher than what the tribe would normally pay for construction. Department of Energy officials responsible for the Energy Efficiency and Conservation Block Grants program anticipated a potentially large impact as a result of the large number of grantees and significant proportion of funds that would be spent on construction labor wages. State and local officials we interviewed also had mixed views about the expected impact of the prevailing wage rate requirement on program costs. District of Columbia weatherization officials explained that the prevailing wage rates were generally in line with what they would expect to pay and some state weatherization officials in California said the prevailing wage rates may be less than what some service providers are currently paying. Data provided by State Energy Program officials in Georgia indicated that contractor wage rates are higher than Davis-Bacon prevailing wage rates in a subset of counties. Conversely, Iowa state weatherization officials explained that the average cost increase would be about 9 percent per home, and one local Lead Hazard Reduction Program official reported that, based on historical experience, the prevailing wage rate requirement could increase program costs by 10 to 13 percent per home. One Mississippi contractor we interviewed said the wage rates would not have an impact on costs because the hourly rates that the company pays its employees are and always have been higher than the Davis-Bacon rates. As table 2 also shows, federal officials reported mixed views on the extent to which they expected Davis-Bacon administrative requirements, such as paying workers weekly, to affect program administrative costs. For example: Little to no impact. Department of Health and Human Services officials responsible for the Capital Improvement Program and Facility Investment Program for Health Centers said the requirements should have no impact on program costs since grantees were asked to include Davis-Bacon compliance in their proposals. Department of Energy officials responsible for the Solar Energy Technologies program expected the administrative requirements to have a small impact because less than 5 percent of funds will be used for construction-related activities subject to Davis-Bacon requirements. Department of Housing and Urban Development officials responsible for the Green Retrofit Program for Multifamily Housing said the administrative requirements would have a small impact because the grant recipients had previous experience with the Davis-Bacon requirements through other federal housing programs and were accustomed to requirements such as paying workers on a weekly basis. Environmental Protection Agency officials responsible for the Diesel Emission Reduction Act Grants program said the impact would be small because the majority of the grant funds are used to purchase equipment and are therefore not subject to the administrative requirements. These program officials added that while the requirements are new to most grantees, the grantees will become familiar with them over time. Moderate impact. State Energy Program officials noted that many construction companies involved with their projects do not maintain payroll records sufficient to meet Davis-Bacon requirements, and as a result, the administrative requirement to pay workers weekly may add to their administrative costs. Large impact. Federal officials responsible for the Weatherization Assistance Program and the Lead Hazard Reduction Program said Davis- Bacon administrative requirements would require a more detailed payroll tracking system, which would be particularly burdensome for small companies. According to Weatherization Assistance Program officials, smaller companies are the ones, generally speaking, that do not usually have experience with the Davis-Bacon requirement for certified weekly payrolls. For these employers, who often employ fewer than five people, it is particularly burdensome to certify payrolls weekly. Lead Hazard Reduction Program officials explained that additional administrative duties necessary for weekly payroll processing will increase administrative costs. To accommodate this increase, the agency is in the process of increasing the cap on how much recipients can spend on administrative costs from 10 to 15 percent of their award. State and local officials we interviewed had mixed views on the impact of Davis-Bacon administrative requirements on program costs. Clean Water State Revolving Fund officials in Georgia and the District of Columbia said they do not anticipate any additional costs as a result of the administrative requirements, whereas program officials in Mississippi and New Jersey noted the requirements would likely increase project costs.