Davis-Bacon Act:

Process Changes Could Raise Confidence That Wage Rates Are Based on Accurate Data

HEHS-96-130: Published: May 31, 1996. Publicly Released: May 31, 1996.

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Pursuant to a congressional request, GAO reviewed the Department of Labor's efforts to prevent the use of inaccurate wage data for Davis-Bacon Act wage rate determinations, focusing on: (1) the steps Labor follows in collecting and reporting wage data; and (2) weaknesses in Labor's wage determination process.

GAO found that: (1) Labor's wage determinations are based on voluntary submissions of wage and benefit data from employers and third parties; (2) such internal control weaknesses as inaccurate wage and fringe benefit data, limited computer capability, and an inaccessible appeals process often lead to increased government construction costs or lower wages and fringe benefits for construction workers; (3) Labor began requiring its regional staff to verify third-party wage survey data in August 1995, but the verification does not address erroneous employer-reported data; (4) Labor does not have sufficient computer resources to automate data collection and verification; and (5) Labor requested $4 million in its fiscal year 1997 budget to develop, evaluate, and implement alternative reliable methodologies that will provide accurate and timely wage determinations at a reasonable cost.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Beginning in June 1996, the Department of Labor's Wage and Hour Division implemented a process to verify wage data submitted by employers in the wage survey process through telephone and onsite verification. WHD selects a sample of wage survey forms submitted by employers to verify data reported on the survey form, such as the number of workers on a project, wages paid, and whether workers are covered by a collective bargaining agreement. For telephone verification, employers who have not submitted payroll records are asked to provide supporting documentation. For onsite verification, auditors review the employer's payroll records at the worksite.

    Recommendation: While Labor continues in the long term to evaluate the Davis-Bacon wage determination process, the Secretary of Labor should require the Assistant Secretary for Employment Standards to request a sample of participating employers to submit appropriate documentation on their data submissions or to conduct a limited number of on-site inspection reviews of employer wage data.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: Labor/Wage and Hour Division officials placed an explanation on every published Davis-Bacon wage decision issued since August 1996 notifying the public and interested parties of their rights and agency procedures required to appeal a final wage determination.

    Recommendation: Because Labor's appeals process can serve as an additional internal control to guard against the use of fraudulent or inaccurate data in the wage determination process, the Secretary of Labor should require the Assistant Secretary for Employment Standards to inform employers, unions, and other interested parties of their rights to request summary information on a wage determination and of the agency's procedures for initiating an appeal of a wage determination.

    Agency Affected: Department of Labor

 

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