6.1. Application of DBA.

6.1.1. Should DBA be included in my contract? All contracts in excess of $2,000 issued for construction, alteration, or repair work (including painting and decorating) performed in the 50 United States and District of Columbia on public buildings or public works as defined in FAR 22.401 must include the DBA clauses FAR 52.222-5 through FAR 52.222-15 (as prescribed by FAR 22.407). These contracts must also include appropriate wage determination(s) for the proper type and location of the project. The DBA must also be included in "non-construction" contracts, such as contracts for services or supplies if the contract is a hybrid contract that also includes substantial and specific requirements for construction, alteration, or repair work and that work is capable of being segregated from the services or supply work (FAR 22.402(b) and DFARS 222.402-70). Several other clauses must be considered for inclusion in the contract as well, depending on the nature and value of the contract as follows:

6.1.2.1. Contract Work Hours and Safety Standards Act (FAR 52.222-4) as prescribed by FAR 22.305 must be included in DBA-covered contracts that exceed $100,000.

6.1.2.2 "Approval of Wage Rates" (FAR 52.222-16) as prescribed by FAR 22.407(b) must be included in cost-reimbursement contracts subject to the DBA. This provision requires approval of wage/benefit rates that exceed DBA prevailing minimum rates. If such rates are not approved by the head of the contracting activity or an expressly designated representative, "Any amount paid by the Contractor to any laborer or mechanic in excess of the agency approved wage rate shall be at the expense of the Contractor and shall not be reimbursed by the Government."

6.1.2.3 "Labor Standards for Construction Work - Facilities Contracts" (FAR 52.222-17) as prescribed by FAR 22.407(c) & (d) must be included in contracts that are primarily for services or supplies, but may also require DBA-covered construction. This clause is required when a "facilities contract", as defined in FAR 45.301, (generally a services or supply type contract) contains specific, substantial and segregable construction requirements as more fully described in FAR 22.402(b). This may be required, for example, in service contracts such as a BOS contract, a military family housing maintenance contract, or a supply type contract such as an expendable launch vehicle supply contract, which may also require construction and/or maintenance of government launch facilities.

6.1.2.4. If the contract is for completion of a specific construction project ("build the building", "build the road", etc.) regardless of the amount of time the project will take to complete (i.e. 3 months or 3 years); then a clause to update wage determination(s) and to allow for the adjustment of the contract price are not appropriate or required. However, a Davis-Bacon Act Price Adjustment Clause (either FAR 52.222-30, 52.222-31, or 52.222-32) as prescribed by FAR 22.407(e), (f) or (g) must be included in DBA-covered contracts that include provisions to extend the term (length) of the contract by option, extension or otherwise. Contracts that typically require one of these clauses include indefinite delivery indefinite quantity (IDIQ), Simplified Acquisition of Base Engineering Requirements (SABER), and service or supply contracts that require some construction work such as military family housing maintenance (MFH) and base operating services (BOS). See also FAR 22.404-12 for further detail. Additional Considerations and Recommendations:

6.1.2.4.1. FAR 52.222-30 "No Adjustment or Separately Specified". Include in: (a) All cost-reimbursement contracts; (b) all fixed-price contracts with a separate pricing mechanism specified (such as a SABER contract using the R.S. Means pricing method); (c) some fixed-price contracts with no other pricing mechanism specified if total contract duration will be 3 years or less (especially if WD rates are not union rates and the WD survey date is less than five years old)*. Consideration should also be given to whether the contractor will be put at substantial economic risk by not allowing for an adjustment to contract price, if DBA wages increase dramatically, or to whether competition is sufficient to moderate out-year pricing escalation by the contractor (e.g. a sole source contract may permit windfall escalation in the out-years).

6.1.2.4.2 FAR 52.222-31 "Percentage Method". Include in: Most fixed-price contracts of any duration, especially contracts involving multiple classifications, where the type of work or total hours are likely to vary significantly from year-to-year, or one or more applicable wage determination rates are union rates (which usually increase every year)*. Using this methodology requires the contracting officer to consider two equally important factors, as follows: (1) what portion of the total contact price should be adjusted? and (2) by what percentage should it be adjusted? The FAR 22.404-12 (c) default is that 50% be used as the estimated portion of the contract price that is labor (and thus subject to adjustment) unless the contracting officer determines, prior to the solicitation, that a different percentage is more appropriate for a particular contract. The contracting officer must also select a specific index by which the labor portion of the contract price will be adjusted. The index may be the U.S. Department of Labor Employment Cost Index, the Consumer Price Index or a similar index that the contracting officer determines is appropriate. The percentage may also be a fixed percentage that the contracting officer has determined is appropriate.

6.1.2.4.3 FAR 52.222.32 "Actual Increase Method". Include in: Some fixed-price contracts of any duration involving few classifications, that will be relatively consistent in type of work and total labor hours each year, and wage determination rates for the classifications involved are not union rates (so are likely to change only about once in several years)*. This method may also be appropriate where a sole-source environment may make the "no adjustment" methodology unattractive (since that method may allow the contractor to excessively escalate in the out-years), or where the no adjustment methodology may place a contractor at severe financial risk in the out-years in a highly competitive environment (the contractor may not have escalated at all for the out-year in such circumstances). This method is nearly identical to the Service Contract Act Price Adjustment method required by FAR 52.222-43.

* See the "Davis-Bacon Act Desktop Guide" to learn how to detect wage determination "union dominance" and the survey date (if any or all rates are not union rates).