Debarment for Violations of Davis-Bacon Act

B-200451: Mar 18, 1981

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Contracts for construction work subject to the Davis-Bacon Act were awarded to a firm. As the result of investigations by the contracting agency, it was determined that the firm's employees working on the contracts were not paid the full amounts specified in the wage determination for fringe benifits, nor were the full amounts paid into approved fringe benefit plans or funds, even though these amounts were deducted from the employee's wages. The certified payrolls indicated that the amounts withheld for fringe benefits were being paid into approved fringe benefit funds or plans when, in at least one instance, the plan or fund did not exist at the time of contract performance, and no escrow fund was established for the amounts withheld from the employees' wages. The firm did not have all of its employees covered by its medical plan, nor were they covered during all periods of the contract. The firm was repeatedly requested to furnish documentation to support the fringe benefit payments but it submitted incomplete documentation and made no effort to make total restitution. It declared all contributions to its pension plan to be employer contributions which would not vest until after the employee had worked for 4 years. Since the contributions were deducted from the employees' wages, they should have been designated as participant contributions which would have vested immediately. This indicated that the firm diverted fringe benefits to the use of the contractor. The firm was also continually late in transmitting its weekly certified payroll to the agency. The firm did not submit any facts in rebuttal or arguments against debarment action as recommended by both the contracting agency and the Department of Labor. GAO found that the firm and its officers disregarded obligations to its employees within the meaning of the Davis-Bacon Act, and their names were placed on the debarred bidders list for 3 years.