The Davis-Bacon Act (40 U.S.C. 276a) requires workers on federal construction projects valued in excess of $2,000 to be paid, at a minimum, wages and fringe benefits that the Secretary of Labor determines to be prevailing for corresponding classes of workers in the locality where the contract is to be performed. The act covers every contract to which the United States or the District of Columbia is a party, for construction, alteration, or repair of public buildings or public works. The $2,000 threshold for projects covered by the Davis-Bacon Act has not changed since 1935. WHD, within Labor’s Employment Standards Administration (ESA), has responsibility for administering the Davis-Bacon Act through approximately 50 staff in the Washington, D.C., headquarters and in its six regional offices. Its duties include the collection of wage and fringe benefits data on construction projects for the calculation of local prevailing wage rates. For fiscal year 1996, the Congressional Budget Office estimates that $42 billion will be spent on the construction of federal projects. Labor’s Administrative Review Board hears appeals of prevailing wage determinations issued under the Davis-Bacon Act and upheld by the WHD Administrator. The Office of the Solicitor provides legal advice and assistance to Labor personnel relative to the administration and enforcement of the Davis-Bacon Act and represents WHD in Davis-Bacon wage determination cases before the Administrative Review Board. Labor collects wage and fringe benefit data through voluntary participation in a wage survey. Although the survey form does not explicitly so inform participants, failure to supply truthful answers can have serious consequences. It is a crime under federal law (18 U.S.C. 1001) to knowingly submit false data to the government, and it is a crime under federal law (18 U.S.C. 1341) to use the U.S. mail for fraudulent purposes. In previous reviews of the Davis-Bacon Act, we raised concerns about the accuracy of Labor’s wage determinations. In 1979, we pointed out that the act appeared to be impractical to administer due to the magnitude of the task of producing an estimated 12,400 accurate and timely prevailing wage determinations. Since then, Labor has implemented regulatory changes that have addressed some of our specific concerns about the process used to determine prevailing wages. For example, rules were changed to generally prohibit (1) including federal contracts in the area wage surveys and (2) mixing prevailing wage data from surveys of urban and rural areas. An additional change has likely resulted in more wage determinations being based on the average wage of an area rather than on the wage specified in area collective bargaining agreements. Technological improvements have also improved Labor’s ability to administer the Davis-Bacon wage determination process. Despite these changes, in 1994, we found continuing verification problems with the data that Labor uses to make prevailing wage determinations. The Congress is currently considering separate bills that would either repeal or reform the Davis-Bacon Act. Two bills (S. 141 and H.R. 500) would repeal the Davis-Bacon Act. Two other bills (H.R. 2472 and S. 1183) would reform the act. The two latter bills would change the way that Labor determines and enforces wage decisions in the construction industry. These reform bills include provisions that would (l) increase the $2,000 threshold for construction projects covered by Labor’s wage surveys and (2) expand Labor’s enforcement authority. Thirty-two states have “little Davis-Bacon” laws requiring the payment of prevailing wages on certain state-funded construction projects. Of these, 15 states conduct their own wage surveys as part of their prevailing wage rate determination process. Three of the remaining 17 states— Connecticut, Kentucky, and Oklahoma—have recently used the federal wage determinations as the basis for the prevailing rates on state construction projects, while the others generally base their wage rates on the union rate. In January 1995, federal Labor and Oklahoma state labor officials received reports about possible inaccuracies in the results of a recent survey conducted by Labor that set prevailing wages for work on certain types of construction projects in the Oklahoma City and Tulsa areas. Based on this information, Labor directed an audit of the wage data used in the Oklahoma City survey. Labor’s review found that inaccuracies did exist in the wage determinations issued for some heavy construction and building construction job classifications in the Oklahoma City area. In March 1995, Labor issued a revised determination for certain heavy construction job classifications for the Oklahoma City area. Labor also reviewed the wage survey data of the remaining heavy construction job classifications for the Oklahoma City and Tulsa areas and issued revised wage rates in May 1995. During this period, believing the initial survey rates to be incorrect, Oklahoma state labor officials independently directed a review of the third-party data used in the contested survey. This investigation detected several occurrences of potentially inaccurate and fraudulent wage and fringe benefit information reported by third parties, which served to increase the federal prevailing wage rate for certain construction job classifications. In July 1995, Labor received the Oklahoma state Labor Commissioner’s report alleging that fraudulent data were submitted and used in the original wage determinations. This report however, did not challenge the revised wage determinations for heavy construction that Labor had issued in March and May 1995. In July 1995, Labor then initiated a review of the building construction wage surveys for Oklahoma that had been collected at the same time as the initial heavy construction wage survey data. Based on a determination that potential data verification problems existed in the building construction survey, Labor withdrew its wage determinations for all Oklahoma City building construction job classifications in August 1995. In April 1996, Labor issued new wage determinations for heavy construction based on completely new survey data and for building construction based on complete verification and analysis of previously conducted building construction survey data. The new determinations established prevailing rates that were higher in some instances and lower in others than the wage determinations in place in January 1995. As of mid-May 1996, these new determinations had not been contested. Labor’s Office of the Inspector General is currently surveying the extent to which fraudulent or inaccurate wage data were used by Labor in 1995 to determine prevailing wages under the Davis-Bacon Act in several of Labor’s regions. The study is expected to be completed in the fall of 1996. Labor’s procedures for determining prevailing wages for individual counties or groups of counties are based on a survey of the wages and fringe benefits paid to workers in similar job classifications on comparable construction projects in the particular area. This information is collected through the voluntary submission of data from employers and third parties on construction projects surveyed for each wage determination. Labor’s wage determination process consists of four basic stages: planning and scheduling surveys, conducting the surveys, clarifying and analyzing respondents’ wage data, and issuing the wage determinations. In addition, any employer or interested party who wishes to contest or appeal Labor’s final wage determination can do so. Labor encourages the submission of wage information from all employers and third parties, including employee unions and industry associations that are not directly involved with the surveyed projects. In fiscal year 1995, Labor completed about 100 prevailing wage surveys, gathering wage and fringe benefit data from over 37,000 employers and third parties. Labor surveys wages and fringe benefits paid to workers in different job classifications for four basic types of construction (building, residential, heavy, and highway) covering more than 3,000 counties or groups of counties within the United States. Given the large number of prevailing wage determinations and Labor’s limited resources, Labor develops an annual plan to identify those geographic areas or counties for which wage determinations are most in need of revision. (See app. II for a detailed description of Labor’s prevailing wage determination and appeal procedures.) For each area designated for survey, Labor identifies the counties for which the wage determination should be conducted and determines what construction projects will be surveyed. Labor places primary responsibility for the collection and compilation of the relevant wage data on about 30 staff distributed among six Labor regional offices. The survey is distributed to the participant population, which includes the general contractor for each construction project identified as comparable and within the survey’s geographic area. In surveying the general contractors, Labor requests information on subcontractors to solicit their participation. Labor also surveys interested third parties, such as local unions and construction industry associations that are located or active in the survey area. Once the data submissions are returned, the analysts review and analyze the returned wage survey forms—WD-10 wage reporting forms. They follow up with the employer or third parties to clarify any information that seems discrepant, inaccurate, or confusing. The analysts then use this information to create computer-generated recommended prevailing wages for key construction job classifications. These recommended prevailing wages are reviewed and approved by Labor’s National Office in Washington, D.C. Labor publishes the Davis-Bacon final wage determinations in printed reports and on its electronic bulletin board, allowing updates to be rapidly communicated to contracting and assisting agencies. Modifications to wage determinations are published in the Federal Register. Any interested party has the opportunity to review or contest, through a written or telephone request, a final wage determination issued by Labor in Washington, D.C. (See app. II for details on Labor’s appeals process.) Labor’s wage determination procedures contain weaknesses that could permit the use of fraudulent or inaccurate data for setting prevailing wage rates. These weaknesses include limitations in the degree to which Labor verifies the accuracy of the survey wage and fringe benefit data it receives, limited computer capabilities and safeguards to review wage data before calculating prevailing wage rates, and an appeals process that may not be well publicized. Labor’s failure to prevent the use of fraudulent or inaccurate data may result in wages and fringe benefits being paid to construction workers that are lower than those prevailing. Erroneous prevailing wage rates could also lead to excessive government construction costs and undermine confidence in the system among survey respondents, reducing their future participation. Labor’s regional staff rely primarily on telephone responses from employers or third parties to verify the information received on the WD-10 wage reporting forms.