Homeland Security and the Davis-Bacon Act

Homeland Security and the Davis-Bacon Act

Order Code RS21295
August 27, 2002
CRS Report for Congress
Received through the CRS Web
Homeland Security and the Davis-Bacon Act
name redacted
Legislative Attorney
American Law Division
Summary
This report discusses section 194 of the Lieberman substitute amendment to S.
2452, the National Homeland Security and Combating Terrorism Act of 2002. Section
194 would require all laborers and mechanics employed by contractors or subcontractors
on construction projects “financed in whole or in part with assistance received under this
Act” to be paid locally prevailing wages in accordance with the Davis-Bacon Act. In
addition to providing background information on the Davis-Bacon Act, this report
considers the effect section 194 could have on construction projects undertaken by
agencies or related to programs transferred to the proposed Department of Homeland
Security. This report will be updated in response to relevant legislative activity.
Section 194 of the Lieberman substitute amendment to S. 2452, the National
Homeland Security and Combating Terrorism Act of 2002, would require all laborers and
mechanics employed by contractors or subcontractors on construction projects “financed
in whole or in part with assistance received under this Act” to be paid locally prevailing
wages in accordance with the Davis-Bacon Act.1 This section has generated concern
among those who believe that the payment of locally prevailing wages would dramatically
increase the cost of federally-funded homeland security construction projects. In
particular, the Bush Administration contends that section 194 would undermine disaster
relief efforts by increasing the cost of federal disaster relief construction by “hundreds of
1 S.2452, 107th Cong. § 194 (2002) (Lieberman substitute). Section 194 provides, in its entirety:
(a) IN GENERAL.–All laborers and mechanics employed by contractors or
subcontractors in the performance of construction work financed in whole or in part
with assistance received under this Act shall be paid wages at rates not less than those
prevailing on similar construction in the locality as determined by the Secretary of
Labor in accordance with the Davis-Bacon Act (40 U.S.C. 276a et seq.).
(b) SECRETARY OF LABOR.–The Secretary of Labor shall have, with respect
to the enforcement of labor standards under subsection (a), the authority and functions
set forth in Reorganization Plan Number 14 of 1950 (5 U.S.C. App.) and section 2 of
the Act of June 13, 1934 (48 Stat. 948, chapter 482; 40 U.S.C. 276c).
H.R. 5005, the House-passed homeland security measure, does not have a Davis-Bacon provision.
Congressional Research Service ˜ The Library of Congress

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millions of dollars each year.”2 Those who generally support the application of the Davis-
Bacon Act maintain that it helps stabilize the local construction industry, and tends to
assure higher quality work as more competent and productive workers will be hired if the
payment of locally prevailing wages is required.3
This report provides background information on the Davis-Bacon Act, and discusses
the possible effect of section 194 on construction projects undertaken by agencies or
related to programs transferred to the proposed Department of Homeland Security.
Background
Passed in 1931, the Davis-Bacon Act requires the payment of not less than locally
prevailing wages and fringe benefits to mechanics and/or laborers on a federally-financed
project when the following conditions are met: (1) there is a contract in excess of $2,000;
(2) the United States or the District of Columbia is a party to the contract; and (3) the
contract is for construction, alteration, and/or repair, including painting and decorating,
of public buildings or public works of the United States or the District of Columbia within
the geographical limits of the United States or the District of Columbia.4 The Davis-
Bacon Act reflects Congress’ interest in giving the government “the power to require its
contractors to pay their employees the prevailing wage scales in the vicinity of the
building projects.”5
Locally prevailing wage rates are determined by the Secretary of Labor in light of
wages paid to corresponding classes of laborers and mechanics employed on projects of
a similar character to the contract work in the city, town, village, or civil subdivision of
the state in which the work is performed.6 The government may terminate a contract with
a contractor if it is discovered that locally prevailing wages have not been paid to any
laborer or mechanic employed on the project.7 Following termination, the government
may contract for the completion of the work and hold the original contractor liable for any
excess costs incurred.8
The Comptroller General of the United States is authorized to distribute a list of
individuals or firms found to have disregarded their obligations to laborers and mechanics
2 Letter from Gov. Tom Ridge, Homeland Security Advisor, to Sen. Thomas Daschle (Aug. 1,
2002) (on file with author).
3 See CRS Report 94-908, Davis-Bacon: The Act and the Literature.
4 See 40 U.S.C. § 276a.
5 S.Rept. No. 71-1445, at 1-2 (1931). For a more detailed history of the Davis-Bacon Act, see
CRS Report 94-408, The Davis-Bacon Act: Institutional Evolution and Public Policy. The Davis-
Bacon Act establishes a wage floor for covered construction. In practice, conditions may require
contractors to pay a higher rate of wages.
6 Id.
7 40 U.S.C. § 276a-1.
8 Id.

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to all departments of the government.9 No contract shall be awarded to the persons or
firms appearing on the list or to any firm, corporation, partnership, or association in which
such persons or firms have an interest until three years after the date of publication of the
list.10
In addition to the Davis-Bacon Act itself, Congress has added prevailing wage
provisions to approximately fifty-seven statutes that provide financial assistance for
construction projects through grants, loans, and other funding mechanisms.11 These so-
called “related acts” involve construction in areas such as transportation, housing, air and
water pollution reduction, and health. The Robert T. Stafford Disaster Relief and
Emergency Assistance Act, the federal statute that authorizes the Federal Emergency
Management Agency (“FEMA”) to provide funds for the repair and reconstruction of
facilities following a major disaster and for construction related to emergency
preparedness, also includes a prevailing wage provision.12 Section 611(j)(8) of the
Stafford Act requires the payment of locally prevailing wages to laborers and mechanics
employed on construction projects related to emergency preparedness.13 However, section
611(j)(8) does not apply to repair or reconstruction projects involving state or local public
facilities, private nonprofit facilities, and owner-occupied private residences following a
major disaster.14 Opponents of section 194 maintain that if the Senate homeland security
proposal was enacted, locally prevailing wages would be required for laborers and
mechanics that work on these kinds of projects.15
9 40 U.S.C. § 276a-2.
10 Id.
11 See 29 C.F.R. pt. 1, app. A.
12 42 U.S.C. § 5121 et seq..
13 42 U.S.C. § 5196(j)(8). See 42 U.S.C. § 5195a(3) (The term “emergency preparedness” means
“all those activities and measures designed or undertaken to prepare for or minimize the effects
of a hazard upon the civilian population, to deal with the immediate emergency conditions which
would be created by the hazard, and to effectuate emergency repairs to, or the emergency
restoration of, vital utilities and facilities destroyed or damaged by the hazard.” Measures to be
undertaken in preparation for anticipated hazards include the construction of shelters, shelter
areas, and control centers.).
14 See 42 U.S.C. §§ 5172(a) (“The President may make contributions – (1) to a State or local
government for the repair, restoration, reconstruction, or replacement of a public facility which
is damaged or destroyed by a major disaster and for associated expense incurred by such
government; and (2) to a person who owns or operates a private nonprofit facility damaged or
destroyed by a major disaster for the repair, restoration, reconstruction, or replacement of such
facility and for associated expenses incurred by such person.”), 5174(c)(2)(A) (“The President
may provide financial or other assistance under this section to individuals and households to
respond to the disaster-related housing needs of individuals and households who are displaced
from their predisaster primary residences or whose predisaster primary residences are rendered
uninhabitable as a result of damage caused by a major disaster.”). Section 4-203 of Executive
Order No. 12148 provides for the delegation of functions vested in the President to the Director
of the Federal Emergency Management Agency.
15 See Associated Builders and Contractors, Senate Committee Ties Davis-Bacon to Homeland
Security, at http://www.abc.org/newsline/august022002/davisbaconn102.html (last visited Aug.
(continued...)

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While construction that satisfies the three Davis-Bacon conditions would be covered
by the Davis-Bacon Act itself, other construction would not require the payment of locally
prevailing wages unless a related act imposes coverage. For example, construction on an
owner-occupied private residence occurring after a major disaster and funded with
assistance provided under the Stafford Act would not require the payment of locally
prevailing wages. Such construction would not involve the United States or the District
of Columbia as a party to the contract for construction. In addition, section 611(j)(8) of
the Stafford Act applies only to construction projects related to emergency preparedness
and not disaster relief projects. Thus, section 194 or a similar provision would be needed
if Congress wanted to require the payment of locally prevailing wages on disaster relief
projects. The Stafford Act appears to be the only related act to involve either an agency
or program that would be transferred to the proposed Department of Homeland Security.
Homeland Security
The Senate homeland security proposal provides for the transfer of twenty-two
agencies and programs to a new Department of Homeland Security.16 FEMA, the U.S.
Coast Guard, and the Animal and Plant Health Inspection Service are among the entities
that would be transferred. Section 186 of the Senate proposal provides for the transfer of
assets, unexpended balances of appropriations, authorizations, and allocations to the
Secretary of Homeland Security for appropriate allocation.17 Funding for fiscal year 2004
would be provided pursuant to a budget request submitted by the President for the
department.18 Opponents of section 194 seem to believe that by providing for the transfer
of unexpended balances of appropriations and authorizations, and because future funding
for the transferred agencies and programs would appear to flow from budget requests for
the department, disaster relief construction would be “financed in whole or in part with
assistance received under this Act,” subject to the prevailing wage requirement.19
15 (...continued)
22, 2002) (“The legislation . . . would require Davis-Bacon to cover everything from disaster
relief funds to preparedness grants.”).
16 For additional discussion on the organization of the proposed new department, see CRS Report
RL31493, Homeland Security: Department Organization and Management.
17 S.2452, 107th Cong. § 186 (2002) (Lieberman substitute) (“Except as otherwise provided in this
title, the personnel employed in connection with, and the assets, liabilities, contracts, property,
records, and unexpended balance of appropriations, authorizations, allocations, and other funds
employed, held, used, arising from, available to, or to be made available in connection with the
agencies transferred under this title, shall be transferred to the Secretary for appropriate
allocation, subject to the approval of the Director of the Office of Management and Budget and
to section 1531 of title 31, United States Code. Unexpended funds transferred under this
subsection shall be used only for the purposes for which the funds were originally authorized and
appropriated.”). For additional discussion on the transfer of appropriations, see CRS Report
RL31514, Department of Homeland Security: Appropriations Transfer Authority.
18 S. 2452, 107th Cong. § 189(g) (2002) (Lieberman substitute) (“Under section 105 of title 31,
United States Code, the President shall submit to Congress a detailed budget request for the
Department for fiscal year 2004.”). Reference to the department’s fiscal year 1995 budget
request is made in section 197(c) of the Senate proposal.
19 The basis for finding disaster relief construction to require the payment of locally prevailing
(continued...)

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The operative language of section 194 would seem to be “assistance received under
this Act.” The U.S. Supreme Court has observed that “[s]tatutory construction must begin
with the language employed by Congress and the assumption that the ordinary meaning
of that language accurately expresses the legislative purpose.”20 The ordinary meaning
of the verb “receive” is “to come into possession of” or to “acquire.”21 Here, it could be
argued that funding for disaster relief projects would be acquired following the transfers
prescribed by the Senate proposal and as a result of future budget requests. However, an
alternate argument may be available.
The Senate proposal authorizes appropriations for at least two new programs.
Section 135(d) provides for the creation of an Acceleration Fund to support research and
the development of technologies relevant to homeland security.22 The proposal authorizes
to be appropriated $200,000,000 for the fund for fiscal year 2003, and such sums as are
necessary in subsequent fiscal years. Section 153 establishes the Emergency Preparedness
Enhancement Pilot Program.23 Under the program, the department shall award grants to
private entities to “pay for the Federal share of the cost of improving emergency
preparedness, and educating employees and other individuals using the entities’ facilities
about emergency preparedness.”24 The proposal authorizes to be appropriated $5,000,000
for each of fiscal years 2003 through 2005. It may be argued that section 194 applies only
to construction undertaken in relation to these new programs. Such construction would
be financed with assistance acquired under the proposal. In this case, with funds
specifically authorized by the Act. Section 194 would seem to ensure that locally
prevailing wages are paid to laborers and mechanics that work on these projects.
Whether section 194 is meant to apply to all construction receiving funds under the
proposal, including construction funded through transfers of authorizations and
unexpended appropriations, or simply to construction related to programs specifically
authorized by the proposal is not clear. The ordinary meaning of the verb “receive” would
suggest the payment of not less than locally prevailing wages on all construction projects
so long as assistance was somehow acquired under the proposal. Senator Joseph I.
Lieberman, sponsor of the Senate proposal, is reported to have said that the proposal
requires prevailing wages for construction workers so long as federal money is spent on
“substantial renovation projects.”25 It is not clear how much construction would be
19 (...continued)
wages pursuant to section 194 does not appear to have been articulated by the Administration,
the Associated Builders and Contractors, or any other organization. However, the most likely
argument for finding a requirement to pay locally prevailing wages would seem to be the one
provided here.
20 Park ‘n Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985). See also American
Tobacco Co. v. Patterson, 456 U.S. 63 (1982).
21 Miriam-Webster’s Collegiate Dictionary 975 (10th ed. 1997).
22 S. 2452, 107th Cong. § 135(d) (2002) (Lieberman substitute).
23 S. 2452, 107th Cong. § 153 (2002) (Lieberman substitute).
24 S.2452, 107th Cong. § 153(a) (2002) (Lieberman substitute).
25 Senate Gears Up For Union Rights Debate Regarding New Homeland Security Employees,
(continued...)

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undertaken to further the objectives of the Acceleration Fund or the Emergency
Preparedness Enhancement Pilot Program. Further, if locally prevailing wages were to
be paid only on construction projects related to the new programs, alternate language
could have been used. Section 194 could have specified construction work financed in
whole or in part with assistance authorized under the Act rather than assistance received
under the Act.
Because the Senate proposal was amended at business meetings of the Senate
Committee on Governmental Affairs, and not during a proceeding where a formal report
would be prepared, there is no explanatory language to assist with interpreting section
194. If section 194 is meant to apply only to construction related to the new programs
authorized by the proposal, language that specifies the use of assistance authorized by the
proposal may be appropriate.
25 (...continued)
Daily Lab. Rep. (BNA), July 30, 2002, at A-7.

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