Davis-Bacon Act:

Methodological Changes Needed to Improve Wage Survey

GAO-11-152: Published: Mar 22, 2011. Publicly Released: Apr 6, 2011.

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Procedures for determining Davis-Bacon prevailing wage rates, which must be paid to workers on certain federally funded construction projects, and their vulnerability to the use of inaccurate data have long been an issue for Congress, employers, and workers. In this report, GAO examined (1) the extent to which the Department of Labor (Labor) has addressed concerns regarding the quality of the Davis-Bacon wage determination process, and (2) additional issues identified by stakeholders regarding the wage determination process. GAO interviewed Labor officials, representatives from contractor associations and unions, contractors, and researchers; conducted site visits to three Labor regional offices; and analyzed data from Labor's wage survey database.

Recent efforts to improve the Davis-Bacon wage survey have not addressed key issues with timeliness, representativeness, and the utility of using the county as the basis for the wage calculation. Labor has made some data collection and processing changes; however, we found some surveys initiated under the new processes were behind Labor's processing schedule. Labor did not consult survey design experts, and some criticisms of the survey and wage determination process have not been addressed, including the representativeness and sufficiency of the data collected. For example, Labor cannot determine whether its wage determinations accurately reflect prevailing wages because it does not currently calculate response rates or analyze survey nonrespondents. And, while Labor is required by law to issue wage rates by the "civil subdivision of the state," the goal to issue them at the county level is often not met because of insufficient survey response. In the published results for the four surveys in our review, Labor issued about 11 percent of wage rates for key job classifications (types of workers needed for one or more of Labor's construction types) using data from a single county. The rest were issued at the multi-county or state level. Over one-quarter of the wage rates were based on six or fewer workers. Little incentive to participate in Labor's Davis-Bacon wage surveys and a lack of transparency in the survey process remain key issues for stakeholders. Stakeholders said contractors may not participate because they lack resources, may not understand the purpose of the survey, or may not see the point in responding because they believe the prevailing wages issued by Labor are inaccurate. While most stakeholders said the survey form was generally easy to understand, some identified challenges with completing specific sections. Our review of reports by Labor's contracted auditor for four published surveys found most survey forms verified against payroll data had errors in areas such as number of employees and hourly and fringe benefit rates. Both contractor association and union officials said addressing a lack of transparency in how the published wage rates are set could result in a better understanding of the process and greater participation in the survey. GAO suggests Congress consider amending its requirement that Labor issue wage rates by civil subdivision to allow more flexibility. To improve the quality and timeliness of the Davis-Bacon wage surveys, GAO recommends Labor obtain objective expert advice on its survey design and methodology. GAO also recommends Labor take steps to improve the transparency of its wage determinations. Labor agreed with the second recommendation, but said obtaining expert survey advice may be premature given ongoing changes. We believe obtaining expert advice is critical for improving the quality of wage determinations.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: H.R. 924 (Responsibility in Federal Contracting Act) was introduced on February 12, 2015 and would require prevailing wage determinations to be set based on surveys carried out by the Department of Labor's Bureau of Labor Statistics (BLS). BLS wage surveys generally use Metropolitan Statistical Areas rather than civil subdivisions of states.

    Matter: To improve the quality of Labor's Davis-Bacon wage survey data, Congress may wish to consider amending the language of the Davis-Bacon Act to allow Labor to use wage data from geographic groupings other than civil subdivisions of states, such as metropolitan statistical areas or Bureau of Economic Analysis' economic areas.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: In 2014, the Department reported that its Division of Wage Determinations was merged with the Branch of Government Contracts Enforcement into the Office of Government Contracts, headed by a newly-created SES position, as part of its commitment to the government contracts program. According to officials, this merger centralized all aspects of the government contracts program and streamlined changes to the wage determination methodology. Officials noted that this restructuring was part of a larger effort by the Wage and Hour Division (WHD) to reevaluate its survey processes. As part of that effort, officials said they also met with statistical agencies, including the Bureau of Labor Statistics (BLS) and the U.S. Census Bureau (Census), to determine methods WHD can use to increase survey participation. Specifically, they said since GAO's report, numerous meetings and discussions have been held with BLS to explore use of the Occupational Employment Survey (OES) or alternative survey methodology. WHD officials indicated that BLS and WHD have discussed barriers to using the OES, including: the Davis Bacon Act and implementing regulations that require WHD to use the smallest civil subdivision, whereas OES data are primarily derived using statewide data; regulations requiring the use of a prevailing rate requirement at more than 50 percent as opposed to the OES' automatic calculation of an average rate; and the inclusion of data collected by BLS in its surveys that are not permitted to be included in prevailing wage calculations (for example, the OES includes data on "helpers"). As of May 2017, however, WHD officials were not able to provide documentation of their meetings with BLS or Census or cite specific actions taken as a result of the meetings. In FY 2015, WHD conducted a top to bottom review of the construction survey process. WHD officials said as part of this review they also actively engaged with various construction stakeholders to identify ways to improve contractor participation in the survey. In addition, WHD indicated that in January of 2015, it began conducting post-survey briefings to explain how participation affected survey results. Based on positive stakeholder response, officials reported in 2016 that they had institutionalized the use of post-survey briefings and had begun conducting mid-survey briefings as well to increase survey participation. Also in 2016 (April), WHD published its first stakeholder fact sheet to clarify that survey data are not used to target contractors for investigation. In September 2016, WHD officials contracted with Eastern Research Group (ERG) to provide objective feedback on the Davis-Bacon survey process. As part of this contract, ERG is expected to provide WHD with an analysis of the construction industry including data to help understand, predict, inform, and enhance the survey process and aid in targeting construction activity. ERG is also being contracted to conduct, develop, and test different survey strategies to maximize participation as well as conduct stratified sample surveys in counties designated by WHD to estimate the ratio of collective bargaining agreement construction activity to total construction. WHD officials said that WHD and ERG have been working closely on evaluating the survey process since January 2017 since ERG was fully transitioned. These efforts all represent positive steps in improving the quality and timeliness of Davis-Bacon wage surveys, but documentation of these specific actions is still needed. WHD officials said they have had multiple meetings with BLS and Census on the survey process, but have not yet provided documentation of those discussions or specific steps taken in response. In addition, WHD has not yet provided documentation of ERG's evaluation of the survey process and its recommended strategies for improvement.

    Recommendation: To improve the quality and timeliness of Labor's Davis-Bacon wage surveys, the Secretary of Labor should direct the Wage and Hour Division to enlist the National Academies, or another independent statistical organization, to evaluate and provide objective advice on the survey, including its methods and design; the potential for conducting a sample survey instead of a census survey; the collection, processing, tracking, and analysis of data; and promotion of survey awareness.

    Agency Affected: Department of Labor

  2. Status: Open

    Comments: According to the department's 2015 update, the General Services Administration (GSA) is responsible for managing the wage determination website, WDOL.gov, and is coordinating its update. DOL has been working closely with GSA to ensure that stakeholder input has been considered in updating the website. Specifically, GSA has been conducting user acceptance testing with stakeholders from contracting agencies, external contractor associations and unions, as well as staff at DOL. In May 2017, DOL officials said the new system was in beta testing. They said the first iteration of the website will focus on making it easier for users to navigate wage determination information, such as reviewing historical wage data and finding and downloading wage determinations. Once that phase is complete, officials said they will begin work on publishing more information to increase transparency, such as summary survey data used to set the prevailing wage. Officials said they do not have an estimated date of completion. Because the updated website is not yet online, we cannot determine if it includes the information we recommended be added to improve the transparency of the wage determinations. Therefore, we are keeping this recommendation open and will reevaluate once the new wage determination website is active.

    Recommendation: To improve the transparency of wage determinations while maintaining the confidentiality of specific survey respondents, the Secretary of Labor should direct the Wage and Hour Division to publicly provide additional information on the data used to calculate its Davis-Bacon wage rates, such as the number and wages of workers included in each wage rate calculation, and to clearly communicate the meaning of various dates and codes used in wage determinations in the same place the prevailing wage rates are posted.

    Agency Affected: Department of Labor

 

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