If you spend too much time thinking about a thing, you’ll never get it done” – Bruce Lee 

The Department of Labor, Office of the Inspector General (OIG), conducted an audit into the practice of wage determinations made by the DOL Wage and Hour Division (WHD). They released a report 04-19-001-15-001 on March 29, 2019 reporting the findings of their audit and determined that while the WHD had improved the timeliness of their practices, they had a long way to go in publishing truly effective wage rates. https://www.oig.dol.gov/public/reports/oa/2019/04-19-001-15-001.pdf.

The Davis Bacon Act requires that the DOL publish wage rates determined after evaluating data from union and non-union employees in the same employment position, in a geographic area. The WHD is responsible, in part for collecting and publishing those rates. In the time period between 2002 and 2015, it seems that the WHD halved the amount of time it took to complete a wage survey from 5-7 years to 2.6 in 2015. However, the OIG found that the WHD needed improvement in other categories that would allow them to operate more efficiently, publish more accurate wage rates, and update the wage rates that need updating.

One of the deficiencies noted by the OIG in their report were the decades old wage rates being used in present contracts. They referenced a 140 million dollar contract that was using wage rates for employees from 1988. Another issue they cite is the possible inaccuracy of the wage rates because of the lack of input sources. Some of these rates are taken by voluntary survey of contractors in a geographic area, others are taken by onsite visits by the WHD. These methods are imperfect. Voluntary surveys could lead to survey bias that inflates or deflates the wage rate, and while onsite visits that confirm local wages are useful, they are impractical to use more often than they are.

As a solution to these problems the OIG suggested procedures that would allow the WHD to make more determinations in a smaller period of time, and to do so accurately. First and foremost, the OIG suggested that WHD collaborate with the DOL Bureau of Labor Statistics (BLS) to streamline their sampling process of wage rates. The OIG also suggest that the WHD scale their wage rates with the Consumer Price Index to keep their wage rates current. However, these processes are imperfect as well. The WHD is concerned that the Consumer Price Index would not account for different locales making their wage determinations inaccurate. Furthermore, there is concern that alternative processes for wage determinations are illegal under the current regulatory scheme.

The WHD agreed with the finding of the OIG and took many of their findings to heart. In their response they explained themselves in some situations and wrote about their possible next steps in collecting data for future wage determinations including collaboration with other DOL branches and collecting more sampling data. In the future, if the WHD follows the advice from the OIG, they may employ new sampling strategies to make wage determinations and publish wage rates more efficiently.

Meanwhile, due to the lagging nature of DOL’s wage determinations, and rising state law mandated minimum wage increases in places like Washington, DC and California, some Service Contract Act (“SCA”) wage determinations are extant which have wages less than the local minimum wage. This is particularly a problem since the FAR SCA Price Adjustment clauses, FAR 52.222-43 and -44, don’t purport to give a price adjustment for higher state or local mandated minimum wages.