It turns out, what you don’t know CAN hurt you. Recent changes to the Davis-Bacon and Related Acts Regulations (DBRA) significantly affect the way prevailing wages are determined, mandated and, perhaps most importantly, enforced. Contractors who either don’t know the new regulations or don’t comply with them, risk serious consequences ranging from withholding to losing their eligibility for public works projects. And given the fact there’s $1.3 trillion of federally funded work on the table stemming from the Infrastructure Investment and Jobs Act (IIJA), the stakes are high.

What Does DBRA Do?

Originally enacted in 1931, DBRA regulations provide local laborers and contractors a fair opportunity to participate in building programs when federal funding is involved and protect local wage standards by preventing bids based on wages lower than those prevailing in that area. An estimated 1.2 million construction workers in the U.S. are affected by DBRA prevailing wage regulations.

The Consequences of Non-compliance

More than 50 significant changes to the DBRA regulations regarding prevailing wages took effect in October 2023. One of the biggest shifts is the ability of contracting officers to enforce the prevailing wage standards. The original act had no enforcement provisions in place but now allows for withholding, termination or debarment as consequences for non-compliance.

Other important changes to note:

• A new requirement for contractors to provide weekly certified payroll records and maintain them for a three-year period
• A broader definition of “prime contractor” that now reads “any person that enters into a contract with an agency”
• More activities defined as construction - including transportation
• New classes of workers added e.g.
  • Surveyors
  • Truckers
  • Prefabrication
  • Material suppliers
• Standards for determining wage rates are variable vs. fixed

Could You Be Connected to a False Claim?

Beyond the new enforcement capabilities, there’s an additional motivation for contractors to be vigilant about understanding and adhering to the new DBRA regulations - potential False Claims Act (FCA) liabilities. FCA was established to prevent or penalize government fraud. A false claims act violation is defined as directly, or indirectly, knowingly presenting or causing a false or fraudulent claim to the federal government for payment. The act allows private individuals, known as relators, to report fraud against the government. Relators are able to file confidentially and are incentivized to report with potential financial reward, which could explain the recent rise in claims reported by the Justice Department.

Non-compliance with the DBRA regulations could qualify as a false claim, so anyone who had knowledge of a violation (whether the violation was intentional or not) could report a contractor. And just the allegation of a false claim can trigger an extremely costly and lengthy civil investigation, something contractors should avoid at all costs.

For Example:

Contractor Smith obtains work on a federally funded project. He submits an invoice to the controlling agency for payment on the project. But Contractor Smith didn’t adhere to the prevailing wage standard and wound up collecting and keeping money that should actually have gone to workers on his payroll. That equates to making a false claim to the government. A subcontractor reports the incident to the government agency, which launches an investigation into the contractor’s practices, tying up the contractor’s valuable time and resources, and putting his business at risk.

Any contractor working on public projects would be wise to review and understand the changes to the DBRA regulations and implement procedures to adhere to them to minimize risk and protect their operation.

Have questions about the DBRA? Learn more here.