Although all of the requirements will be briefly discussed, this article will focus mainly on the last two requirements: the requirement that the government must be a party to the contract and the requirement that the construction contract must be for a public building or work.This is because those two requirements have been the most confusing and hotly debated in recent history. A recent controversy arising out of the meaning of those two requirements will be discussed with heavy reference to the District of Columbia v. Department of Labor case, given that it addresses those two requirements specifically.
A single, reliable definition for the term “public building or work” must be established in order to avoid future confusion and debate over whether or not a privately funded work that greatly benefits the public as a whole meets the requirement of being a “public building or work” for the purposes of paying construction workers the prevailing wage rate. There has not been a single, consistent definition for the phrase thus far. Further, a clear and comprehensive route for determining whether or not the government was actually a party to the contract at issue, regardless of whether or not the government is a signed party to the contract, must be established to prevent situations where the government is able to avoid triggering the Davis-Bacon Act by directing and requiring the formation of construction contracts but remaining an unsigned party to the contract itself.
This Note offers a short, but potentially effective, two-part solution that could put an end to further disputes over when the government should be considered a party to a contract as well as how to determine whether or not a contract is actually for the construction of a “public work.” Both parts of this solution aim to accomplish the goals that the original drafters of the Davis-Bacon Act had in mind and provide more uniformity and predictability to the application of the Act going forward. This solution will be implemented by amending the Act to include precise definitions and guidance.
This solution will suggest that a fair analysis of the government’s role in the existence and formation of a contract is more important that whether or not the government is literally a signed party to the contract. It will also suggest that one concise and consistent definition, from Black’s Law Dictionary, should be used to define the meaning of a public building or work.
II. Why Congress Enacted the Davis-Bacon Act
The Davis-Bacon Act was signed in 1931 by President Herbert C. Hoover, in response to the country’s ongoing difficulties during the time of the Great Depression. Attempting to save money, government agencies were contracting construction workers and paying them less than fair wages.The agencies did this by basing the wage rate on lower-income areas instead of the average pay in the area in which they were actually located.
In a targeted effort to combat the financial state of the country, the Davis-Bacon Act took on the “evil” of hiring construction workers and basing their wage rates on those of other areas that had lower rates.This was meant to protect the construction contractors working in the public sector from being paid less than they deserved.It also prevented contractors from winning a bid, and then importing cheap labor as opposed to hiring local workers.The legislature found the purpose of the Act so important that it was actually passed as an “emergency measure,” and made it through the House and Senate without any changes. The Act provided that all construction contractors contracting with the government be paid the prevailing rate, or the typical amount of money that other workers in that geographical area earn. Further, the Act directed that the Secretary of Labor would be responsible for providing reasonable regulations related to the Act.
III. What the Davis-Bacon Act Does & Whom It Serves
The overall purpose of the Davis-Bacon Act is to ensure that construction contractors who contract with the government are paid the prevailing wage rate in the private sector for any work that they do.
In short, the Act protects those who choose to contract with the government from being strong-armed into unfairly low wages by their employers. The Act does this by federally mandating that employers pay the prevailing rate in the private sector. The Davis-Bacon Act not only protects construction workers, but general contractors of all types who work on contracts that involve the construction of, renovation of, addition to, or remodeling of any public building or work, so long as they are laboring on site. Further, the prevailing wage rate is to be determined by the Secretary of Labor. The prevailing wage rate that the Secretary of Labor chooses is based on the same wage rate that a laborer working on a comparable project in the private sector in the same geographical region as the laborers who are contracting with the government or the District of Columbia would make. More simply put, someone with the same job, working on a similar project, should be paid the same, regardless of whether they work for the government or for a private company.
The Davis-Bacon Act only applies to contracts that contain four distinct elements. First, the contract must be for an amount that exceeds $2,000. Second, the federal government or the District of Columbia must be a party to the contract for the Act to apply. Third, the contract must be for the construction, alteration, renovation, or repair of something. Lastly, that “something” must be a public building or work.
IV. How Each of the Davis-Bacon Act's Requirements Are Met
Each of the four requirements in the Davis-Bacon Act calls for different conditions to be met to trigger the Act’s coverage. The first requirement sets a necessary dollar amount that the value of the contract must equal or exceed. Given that the dollar amount is specified, this requirement is rather clear.
The third requirement is also relatively clear. There is not much ambiguity in determining whether a contract is a construction contract when the statute provides a short list of work that would constitute a construction contract. As for the second and fourth requirements, many efforts were made over time to determine when the government should be deemed a party to a contract and to define what a “public building or work” is. The outcome of those efforts has been far less helpful than one would hope. There is still no agreement on what involvement the government must have to be considered a party to a contract. Additionally, there is still no single, consistent definition of “public building or work.”
A. Two of the Four Requirements Are Straightforward and Cause No Confusion
In addition to the first requirement, the second of the Davis-Bacon Act requirements, whether or not the contract is for construction, is now generally well-understood and causes less confusion. A contract for “construction” means multiple things under the Davis-Bacon Act. It can literally mean the building of a new structure or building, but it could also mean the renovation, upkeep, repair, painting, alteration, or decoration of a public building or work. Further, this requirement was clarified by Building and Construction Trades Department v. Turnage. The court in that case found that a contract for the construction and leasing of a public work was still considered a construction contract for the purposes of triggering application of the Davis-Bacon Act. Additionally, the Office of Legal Counsel at the Department of Justice (DoJ) clarified that a contract for the leasing of a property cannot be considered to be per se not a contract for construction.
The United States District Court for the District of Columbia again acknowledged that particular types of lease agreements between the government and general contractors can be considered contracts for construction for the purposes of the Davis-Bacon Act in another case involving the Building and Construction Trades Department. Further, the Act does not require that the contract be predominantly for the purpose of construction; rather, so long as construction is a part of the contract, the Act will apply.
B. Early Efforts in Determining Whether or Not the Government Is a Party to the Contract and Whether or Not the Contract Is for a Public Work
The other two requirements, whether the government is a party to the contract and whether or not the contract is for a “public building or work,” are not defined within the Davis-Bacon Act. This was bound to lead to confusion given the lack of hard definitions to go on when determining whether or not contracts are indeed for the construction, alteration, or repair of a public work or building. Further, the lack of explanation in the Act about when the government should be considered a party to a contract left open the possibility that the government could simply form agreements with private developers and instruct these developers to enter into construction contracts. In doing so, construction contracts that meet the other Davis-Bacon Act requirements, but failed to meet the government party requirement, would effectively be removed from the realm of the Act’s coverage. This would leave those carrying out the contract without the wage protection that the Davis-Bacon Act provides to contractors. Further, the DoJ has mentioned this explicit concern. In that opinion, the Office of Legal Counsel partially solved the issue by stomping the notion that leasing contracts are per se not construction contracts.
With regard to determining whether or not the government is a party to the contract, there seem to be no issues in determining that the government is, in fact, a party to a construction contract when it is literally a signed party. Further, the same 1994 opinion from the DoJ mentioned earlier stated that the government would not be able to evade coverage of the Davis-Bacon Act by “clever drafting” or by simply forming lease agreements and having private developers form construction contracts with contractors. Further, the opinion explicitly said that “neither can the ‘plain language’ of the Act be read as declaring that a 99-year lease of a brand new building that would never otherwise have been built is not the construction of a public work,” in what now appears to be an uncanny forecast to the recent CityCenterDC case that will be discussed later in this Note. Regarding contracts for leases, the opinion made clear that if a lease agreement calls for the construction of a building as part of the contract, then it would be improper to consider the contract to not be for construction. This declaration seemed to suggest that the government could and should be found to be a party to a contract if the circumstances indicate that the public work would have not been built but for the government and its involvement, regardless of whether or not it is a signed party on the actual contract.
C. Early Efforts in Determining Whether or Not the Contract Is for a Public Work
There is no singular definition for the phrase “public building or work,” meaning there is no set way of determining whether something qualifies as one, but it is clear that the public benefit of the structure should be taken into account. An early definition was given in 1942 as: “projects of the character previously carried on by public authority or with public aid to serve interests of the general public.” This made clear that the benefit that a structure will pose to the public both at the present time and in the future should be considered when determining whether or not something is a public work. Further, it distinguished projects that are carried on directly “by public authority” from those that are carried on “with public aid.” Thus a project may qualify as a “public buildings or work” even without public funding.
Later on, the Code of Federal Regulations was modified to clarify the terms by explaining that the Davis-Bacon Act covers construction contracts for any “public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency. . . . ” Although that revision was first made in 2009, the language explaining what public buildings and works are has remained unchanged. The language is clear that the Davis-Bacon Act will cover buildings and works that are federally funded, but some confusion remains around public buildings and works that are not federally funded.
It should be noted, however, that the Department of Labor (DoL) has in fact defined the term “building or work.”
Unfortunately, the general definition of “building or work” given in the Code of Federal Regulations does not provide any distinction between what buildings and works should be considered “public” and which should be considered “private.”
The Board of Service Contract Appeals (BSCA) within the DoL acknowledged this ambiguity over twenty-five years ago. The BSCA pointed out that, although the term “public building or work” was not defined in the Davis-Bacon Act, the term actually predated the Act in the government procurement field. In noting this, the BSCA implied that the term has been construed broadly throughout the history of government contracts by referencing an opinion of the Attorney General where irrigation for land reclamations were considered public works of the United States. The BSCA used that reference as a justification for expanding the term “public building or work” to include cementing services for the plugging of drilled holes and tunnels.
Unfortunately, this reference is seemingly unhelpful in the general application of the Davis-Bacon Act because those determinations were based on situationally specific services. The BSCA did provide some clarity by pointing out that the term “public building or work” in the Davis-Bacon Act includes temporary structures, as opposed to just permanent structures. This provided some general guidance to government contractors by making it clear that the permanence of a structure is not a factor to consider when making the determination of whether or not something is a “public building or work.”
D. Recent Efforts Determining Whether or Not the Government Is a Party to the Contract and Whether or Not the Contract Is for a Public Work
More recently, in 2016, the United States Court of Appeals for the D.C. Circuit addressed the two ambiguous requirements in CCDC Office LLC v. Department of Labor (also known as the CityCenterDC case). Unfortunately, the opinion fell short of giving an explanation of how to correctly apply the Act’s terms and requirements that is clear enough to provide general contractors and government agencies with easy-to-follow guidelines. In that case, the court held that the contracts at issue did not constitute contracts to which the government was a party because the government merely directed the formation of the contracts. Additionally, the court also held that the development at issue did not qualify as a public building or work because private developers built it without the use of government funds.
In that case, the contract to which the government was a party was a leasing contract, not technically a contract for construction. The District owned a large amount of land that it decided to lease to multiple private developers. However, in agreeing to lease the land to the developers, the District instructed the developers that they were to form construction contracts with private contractors in order to build certain structures that constituted a “mixed use urban neighborhood” on the land that would be called CityCenterDC. Further, they required the private developers to pay the District a certain amount of money on an annual basis.To accomplish this, the District followed typical competitive bidding procedures by issuing a “Request for Proposals for a Development Partner.” After receiving numerous proposals, the District chose multiple private developers and then formed development agreements with each of them to ensure the construction of CityCenterDC. These agreements required the developers to contract with general construction contractors.
However, the District did not provide any funding nor did it own or operate any of the structures or businesses that were built, which, as pointed out, are the typical requirements for a structure or project to be considered a public building or work. Today, CityCenterDC is home to a luxury hotel, upscale restaurants and housing facilities, expensive shops, and a prominent law firm.
E. Holding of the CityCenterDC Case and Its Lack of Clarification for Contractors Going Forward
CityCenterDC caused an ongoing dispute between different governmental agencies as to when the Davis-Bacon Act coverage is triggered. In response to this dispute over the applicability of the Davis-Bacon Act to the contracts for building CityCenterDC, the workers sent a letter to the DoL asking for a determination. Initially, the Chief of the Branch of Government Contracts at the DoL found that the Act did not apply to CityCenterDC because it was not found to be a “public building or work.”
However, on administrative appeal within the DoL, the Administrator of the Wage and Hour Division found that the Act did in fact apply to CityCenter- DC. The DoL has authority over claims arising out of the Davis-Bacon Act, and it typically allocates decision-making power for disputes like this to the Acting Administrator of the Wage and Hour Division. In its determination, the DoL reasoned that the development agreements constituted contracts for construction and, given the benefits and services that CityCenterDC would provide to the community, qualified it as a “public work.” When there is a disagreement over the Wage and Hour Administrator’s decision, the only remedy is an internal administrative review process. This review process is the responsibility of the Administrative Review Board.
Having an issue with the Wage and Hour Administrator’s finding and following this protocol, the District then appealed to the Administrative Review Board. That review board affirmed the previous holding, finding that the Davis-Bacon Act did apply to the construction of CityCenterDC. In response, the District filed for review in federal court. The District Court found in favor of the District of Columbia, concluding that the Davis-Bacon Act did not apply to the project because it was privately funded and is privately owned and operated.
Next, the United States Court of Appeals for the D.C. Circuit reviewed the case de novo. In its analysis, the Court of Appeals determined, first, that the contracts with the private developers did not constitute contracts for construction and, second, that the project did not constitute a public work. In the opinion, the court explained that even if a contract between the government and private developers includes an instruction that the developers must later enter into construction contracts with general contractors for the developers to be in compliance with the contract, it will not be sufficient to say that the government was a party to the construction contract. Further, the court opined that, although CityCenterDC is a complex consisting of multiple buildings that would be available for public use, none of those buildings is actually public. Instead, the structures and businesses within are all privately owned and operated. Therefore, since the District was not responsible for the construction, ownership, or operation of any of the structures, it could not be considered to be a public work.
1. The U.S. Court of Appeals Found That the Government Cannot Be a Party to a Contract When It Is Not a Literal, Signed Party, Contrary to Prior Precedent.
The Court of Appeals found that if the government is not a signed party to a contract, then it will not be found to be a party to the contract for the purposes of the Davis-Bacon Act. Contrary to prior opinions, the court opined that because the government was not literally a signed party to the contracts at issue in the CityCenterDC case, the government could not possibly be considered a party to those contracts. This decision was made despite the DoL’s argument that the Act should cover certain three-party contracts where the government is not actually a party to the construction contract. However, the court insisted that finding the government to be a party to a construction contract without being an actual signatory would be an unprecedented expansion of the Davis-Bacon Act.
This ruling set a standard that will only hold the government accountable for paying construction workers the prevailing wage rate of the private sector when the government is literally a signed party to the construction contract itself, regardless of how involved the government was in the existence and formation of the construction contracts. Additionally, the court stated that it is not the place of the courts to rewrite statutes, but, instead, that power and responsibility lies with Congress. The court went on to say that if the DoL truly believes that coverage of the Davis-Bacon Act should be triggered by contracts where the government is considered a third party, then it should recommend an amendment to the Davis-Bacon Act, as provided by the Recommendations Clause of the U.S. Constitution.
2. The U.S. Court of Appeals Did Not Define the Term “Public Building or Work.”
While the Court of Appeals did not give a singular definition of “pubic building or work,” it did rely on two widely used definitions of the phrase when giving its opinion. First, the court pointed to the Black’s Law Dictionary definition. Secondly, it turned to the congressional definition adopted in the National Industrial Recovery Act (NIRA). The NIRA defines “public works” as action taken to construct, repair, and/ or improve any “public highways and park ways, public buildings, and any publicly owned instrumentalities and facilities.”
The DoL, on the other hand, argued that CityCenterDC should nonetheless be included within the definition of “public building or works” because the District not only instructed and helped plan the construction of the project, but the development would also produce numerous public benefits. Namely, the lease agreements for the “enclave of private developments” will provide the District with around $2 million per year.
However, in acknowledging and agreeing with the DoL that the development will offer benefits such as providing housing, entertainment, and jobs to the public, the court pointed out that many private developments can also provide those public benefits. Further, the Davis-Bacon Act covers all repairs and alterations to public works. Therefore, the court explained that if CityCenterDC were to be considered a public work, the District would then be responsible for upkeep of the facilities within it, including repairing damaged or outdated amenities within a high-end apartment complex.
V. To Provide Clarification and Avoid Future Confusion in Regard to the Requirements in The Davis-Bacon Act, a Broad Definition of “Party to the Contract” Should Be Adopted, and the Black’s Law Dictionary Definition of “Public Work” Should Be Adopted
The DoL, via the Recommendations Clause of the U.S. Constitution, should urge the legislature to amend the Davis-Bacon Act. In doing this, the DoL should recommend an expansion of the meaning of “party” within the Act. Consequently, when looking at contracts for construction and determining whether or not the government was a party to the contract, the government will be considered to be a party to a contract if they essentially controlled, created, or instructed the formation of the contract. This would apply even if the government was a third party that did not sign the contract at issue.
Namely, Congress should amend the Act to qualify a lease agreement that directs the formation of contracts for construction as a requirement for the other party to be in compliance with the agreement as a “contract for construction” for the purposes of the Davis-Bacon Act. This would ensure that the Act covers contracts that the government was responsible for forming while also avoiding the confusing process of parties arguing over the issue of who was really a party to a contract.
With regard to the debate over what the most useful meaning of the term “public building or work” is, Congress should adopt the plain meaning definition of “public building or work” given in Black’s Law Dictionary to avoid confusion. This will also prevent unreasonable applications of the Davis-Bacon Act. The D.C. Circuit Court of Appeals expressed concern over the possibility of the overapplication of the Act to renovations and upgrades to amenities that do not actually serve a public purpose. Using the plain meaning definition would effectively ensure that the Act would only apply to public buildings and works that actually serve the public, as opposed to serving private gain.
The Black’s Law Dictionary definition has been consistent over time. Not only does it outdate many of the other definitions referenced above, but it is also very similar to the definition provided by the NIRA.
The Black’s Law Dictionary definition would achieve the original goals of the Davis-Bacon Act. It would include all works and buildings that benefit the public, as well as those paid for by the government with public funds. Therefore, Congress should amend the Act to include the Black’s Law Dictionary definition of “public building or work” to clarify the terms and prevent future confusion for the sake of uniformity, efficiency, and predictability.
VI. Conclusion
The Davis-Bacon Act’s original goals and purposes were admirable during a time of confusion, let-down, and financial hardship for most people in the United States. The Act afforded protection to blue-collar workers, including multiple types of laborers and mechanics who were contracting with powerful government agencies. This posed a clear disparity in power that the Davis-Bacon Act sought to eradicate in order to even the playing field and ensure that those contracted to provide construction services for the government would be paid the prevailing wage rate that they would have been paid had they chosen to contract in the private sector. The Davis-Bacon Act did this by attempting to ensure that all laborers and mechanics working on contracts for any kind of construction of a public building or work, including renovations, painting, updates, and decorating, were paid a rate that was to be determined by the Secretary of Labor.
Unfortunately, by not defining key terms within the Davis-Bacon Act itself, the drafters set up multiple areas in which confusion and disputes could arise. In fact, confusion and disputes have already arisen over time. The two most ambiguous terms in the Davis-Bacon Act are found within the requirements that the government must be a party to the construction contract and that the construction contract must be a contract for a “public building or work.”
Until recently, decades of opinions from various institutions insisted that the government could not avoid triggering the Davis-Bacon Act by signing long-term lease agreements that required private parties to then enter into contracts for construction in order to uphold their end of the agreement. However, with the opinion in the CityCenterDC case came a decision that undermined previous opinions and insisted that the government must be a signed party to be considered a party to that particular contract for the purposes of the Davis-Bacon Act. It is clear that the holding in the CityCenterDC case is neither in line with previous interpretations, nor does it provide a definition that is fully in line with the what the original drafters intended to accomplish, as the DoJ pointed out in its 1994 memorandum opinion. Therefore, Congress should adopt a broader definition in order to ensure that the Davis-Bacon Act is triggered anytime the government is the reason for the construction of a public building or work, regardless of whether or not the government a signed party to the contract at issue.
A reliable, singular definition is vital to the uniform application of the Davis-Bacon Act, as well as for the purpose of predictability for those who take part in the drafting and enforcement of construction contracts. The CityCenterDC case considered the Black’s Law Dictionary definition when it gave an overview of what definitions are traditionally associated with the public buildings or works. This is a well-established and widely used publication for definitions of legal terms. Therefore, for the sake of clarity and consistency, that definition should be used when defining the term “public building or work” within the context of the Davis-Bacon Act. It would provide a cut-and-dry meaning for the term that accurately encompasses what a public building or work truly is and what the drafters of the Act intended it to cover.
If the solutions stated above are implemented, the Davis-Bacon Act has the potential to be far less ambiguous and far more uniform in its applicability than it currently is. Further, having bright-line definitions and clear-cut rules for the application of the Davis-Bacon Act will restore faith in the field of public procurement, allowing general contractors to enter into construction contracts with the government without being wary of loopholes or unfair compensation for their work.
