• What is prevailing wage?
  
  The minimum rate that is equal to the rate customary or prevailing for the same work in the same trade or occupation in the town in which such public works project is being constructed.
   

• How is prevailing wage determined?
  
  Since 1977, the Labor Commissioner has adopted and used the  prevailing wage rate determinations as have been made by the United States Secretary of Labor, under the provisions of the Davis-Bacon Act, as amended.
   

• What is the obligation of the contracting agency in obtaining prevailing wage rate schedules?
  
  The contracting agency or agent empowered to let a public works contract shall contact the Labor Commissioner at least ten (10) days, but not more than twenty (20) days prior to the date such contracts will be advertised for bid.  These initial Rate Schedules are “Project Specific” and cannot be downloaded from the DOL Web page.
  
  The Date on the initial rate schedule cannot be more than 20 days prior to the Advertise For Bid Date --- If the project is NOT advertised within 20 days of the Date appearing on the rate schedule, the Contracting Agency must contact the DOL by telephone or by Fax to obtain an updated Initial rate schedule. Rate schedules MUST be included in the Bid Documents / Bid Specifications at the time of Bid, and not provided later through an addendum.
   

• Contracting agency shall request the initial prevailing wage rate schedules when:
   

  • Entire Projects advertised and competitively bid – awarded to GC or CM

  • Solicitation of Bids for Design/Build project

  • Request for Proposals, individual Purchase Orders

  • Each Phase of a project or each Prime Contract that is advertised separately by the CA or CM

  • Lease arrangements where construction or renovation is required or authorized by State or Political Subdivision

  • Contract Administrator or Construction manager negotiates a contract to administer a project for the Contracting Agency – Initial Rates required for each package when advertised

For example:

If a contract is advertised to bid on January 30, then the initial request for a prevailing wage rate schedule should be made no later than January 20 and no earlier than January 10 to comply with the law.

Any initial prevailing wage rate schedule dated more than twenty (20) days prior to the advertise for bid date is no longer valid and must be updated.  The contracting agency can obtain updated rates by calling (860) 263-6549.

Also, be aware that contracting agencies cannot use the Annual Rates downloaded from the DOL website in the initial bid package.  Annual Rates ONLY apply to ongoing projects and go into effect each July 1^st.  If the Annual Rates are improperly used in the initial bid package, the contracting agency may be subject to a financial liability if the correct rates are higher.

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What is a Public Works Project?

Connecticut General Statutes Section 31-53 Public Works Projects

This summary is intended to provide the basis for the Division's determinations as to whether projects by the State or its agents (and political subdivisions or their agents) are covered for prevailing wage purposes.

The prevailing wage law was enacted to provide for competitive bidding on a level playing field and at the same time provide an appropriate standard of living for Connecticut's workers. Over the years, the law has withstood many repeal attempts. In the 1993 and 1997 legislative sessions, the law was actually strengthened to ensure increased compliance.  

However, the legislature has recognized that not all projects should be covered by the prevailing wage law. Instead of exempting specific construction projects the legislature has applied a monetary threshold test. There are essentially two categories of construction outlined in the statute (1) new construction and (2) any remodeling, refinishing, refurbishing, rehabilitation, alteration or repair of any public works projects. The threshold for new construction has increased over the years from $50,000 of total cost of all work to be performed to the current $400,000 which was mandated in 1991. The other category has increased from $10,000 to the current $100,000 of total cost. Again, the legislative response to exempting projects was to raise the monetary thresholds.  

The Labor Department's role is to interpret the law consistently with legislative intent. Toward that end, the Division has had to commit extensive resources in enforcement of the law.  

The Division issues prevailing wage schedules upon the request of the contracting agency or their agents. Agents can be purchasing officers, boards of education, architects and other individuals. This means that the initial assessment as to whether a project is covered is made by the contacting agency, not the Department of Labor. Section 31-53(e) states in part:  

However, when a contracting agency is unsure of the applicability of the law, it should contact the Division. The Division also determines coverage if a complaint is received where no rates have been issued.

The following guidelines are used by the Division to determine the applicability of the law.

• At the outset, a question arises as to what is a public works project. Although, section 31-53 does not specifically define public works project, the Division has historically relied upon the accepted dictionary definition of public works as "Construction projects, such as highways or dams financed by public funds and constructed by a government for the general public". Webster 's II New Riverside University Dictionary.

• The Division also looks to the Federal Davis-Bacon Act for guidance especially since Federal Davis-Bacon rates were adopted in 1977. The definition of a public works project under Title 29, Part 5 of the Code of Federal Regulations covers contracts federally financed or assisted construction. Section 5.2k provides:

the term "Public building" or “public work" includes building or work, the construction, prosecution, completion, or repair of which as defined above is carried on directly by authority of or with funds of a Federal Agency to serve the interest of the general public regardless of whether title thereof is in a federal agency.

These two definitions are consistent with each other and essentially require that the State's (or agent or political subdivision) funds are utilized for the construction, rehabilitation or repair of a project which serves the interest of the general public.

One common question relating to this definition is whether grant-in-aid agreements where the State or political subdivision is not the contracting agency for the construction, are considered projects subject to the prevailing wage law. The Department has historically concluded that when a grantee receives funds for a primarily private benefit, the subsequent construction would not be covered under Section 31-53. The state or political subdivision must be a party to the funding agreement and the entity for which the work is to be done. The basic rule has been utilized by the Division in finding that grant-in-aid agreements where (1) the State or political subdivision does not let out the contract, and (2) the general public does not receive a benefit - are not covered under Section 31-53.

Once it is determined that the project is a public works project several scenarios may develop where the coverage of the law is not evident or confusing to the contracting agencies. The following is a list of such scenarios with responses based on past enforcement practices of the Division:

Scenario #1: There is no classification of the work that will be performed.

Under Section 31-53(d) the Labor Commissioner may either (a) predetermine the prevailing rate of wages by holding hearings in the locality where the work is to be performed or (b) adopt and use the Federal Davis-Bacon rates which are published approximately every three months and are based upon surveys of prevailing practices in Connecticut. Since 1977, the practice of the Labor Commissioner has been to adopt and use the Federal Davis-Bacon rates. If a specific classification is not listed, the contracting agency can request the Department of Labor to issue a conformance rate specific to said project. This Division will look for conformity with existing classifications and again look at prevailing practice.

Scenario #2: The total cost of one part of the project does not exceed the threshold or the cost borders on the thresholds.

A question often asked is whether each aspect of a contract can be looked at separately. For example, can we look at just the electrical work, mechanical, or carpentry etc and if each segment does not reach the $100,000 threshold separately is the project covered? Section 31-53(g) states that "the provisions of this section shall not apply where the total cost of all work to be performed by all contractors and subcontractors in connection with any remodeling, refinishing, refurbishing, rehabilitation, alteration or repair of any public works project is less than $100,000 dollars". This section has been interpreted to mean that the entire cost of the project must be included to determine whether the threshold should be met. The interpretation was conveyed to DAS in 1986 when it asked whether a task labor contract for work performed at UConn and UConn Health Center was covered. This contract asked for bids by the hour for electrical, painting, carpentry, and plumbing and although each aspect might be under $100,000, the total cost of the contract was close to $1 million. The Division responded that these contracts would be covered.

Another situation arises when the project is estimated at over the threshold, but the bids come in under the threshold. If the project bids are close to the threshold then in all likelihood one change order will push the project over the top. It has been the policy of the Division to apply the threshold requirements of Section 31-53(g) retroactively in the situation where a contractor bids a project and then subsequent change orders bring the total cost of all work to be performed on the project over the threshold amount. In this type of situation, the Division will look to the contractor or subcontractor for reimbursement of wages at the prevailing rate from the first day work was performed on the project. However, if the contractor can demonstrate that he/she bid in good faith, but there was a major factor - unknown at the time of the bid - which resulted in the change order, the prevailing rate will not be applied retroactively, but from the date of the discovered change in the project.

Scenario #3: The contract requires purchase of equipment and installation.

An issue may arise as to the coverage of a project when it requires purchases of supplies and installation, as well as construction components. For example, a contract which meets the threshold otherwise may involve an alteration to update a computer system and the substantial portion of the funds is for supplies and installation.  Again, the Division looks to the Federal Davis-Bacon Act for guidance. Specifically, in the Field Operation Handbook for the U.S. Department of Labor, Section 15 d 10 discusses the criteria for determinations:

1. Installation work performed in conjunction with supply or service (e.g., base support) contracts is covered by the DBRA where it involves more than an incidental amount of construction activity (i.e., the contract contains specific requirements for substantial amounts of construction, reconstruction, alteration, or repair work, and such work is physically or functionally separate from the contract (see Reg. 4.116(c)(2)). For example, D-B coverage has been extended to installing a security system or an intrusion detection system, installing permanent shelving which is attached to a structure, installing air-conditioning ducts, excavating outside cable trenches and laying cable, installing heavy generators, grounding systems, where a substantial amount of construction work is involved.

2. Whether installation work involves more than an incidental amount of construction activity depends upon the special circumstances of each particular case and no fixed rules can be established which would accommodate the facts of every situation. Factors requiring consideration include the nature of the prime contract work, the type of work performed by the employees installing the equipment on the project site (i.e., the techniques, materials, and equipment used and the skills called for in its performance), the extent to which structural modifications to buildings are needed and the cost of the installation work -- either in terms of absolute amount or in relation to the cost of the equipment and the total project cost.

The above handbook sections are consistent with federal case law and administrative Wage Appeal Board cases. Obviously, these are fact specific cases and each situation has to be judged based on the particulars of each project. This issue has only recently been raised with respect to a large project involving the installation of a telecommunications system for an office building leased by the State. This project must be evaluated based upon the above criteria.

Scenario #4: The State or political subdivision has entered into a lease agreement.

Questions may also arise as to coverage when the State or political subdivision leases property where construction or renovation is involved. The Division has recently concluded that there is no requirement that the State or political subdivision be the holder of title to the property subject to construction, renovation, addition or alteration as a prerequisite to coverage under Section 31-53. Like the Davis-Bacon Act, Connecticut's law does not specifically address such situations; however, the Courts have upheld the U.S. Department of Labor's practice of applying Davis-Bacon rates to projects where the property is leased not owned by the federal Government.  

"The Court finds that it is reasonable to conclude, as the Wage Appeals Board has done, that the nature of the contract is not controlling so long as construction work is part of it." Building and Construction Trades Department, AFL-CIO, et al., v. Turnge Civ. A. No. 87-2827. U.S. Dist. Court, District of Columbia.

The Field Operations Handbook Sec. 15b06 also addresses lease situations:

Where the Government enters into a lease/purchase agreement D-B applies, because the cost of the construction is eventually paid for by the Government. D-B also applies to a lease option or to a term lease agreement where there is substantial and segregable construction activity, and where the structure is a public building or public work. This may be true, for example, where the building is built at the request of the Government pursuant to Government specifications for Government use or purpose for the period of the lease.

Recently, we have seen quite a few lease projects where title is not held with the State, but the construction is clearly authorized and paid for by the State. In this type of situation, there should be a contract which describes the construction work or renovations to be performed. Even if the contract is called a "lease agreement" and even if it is between the State and the owner of the property who eventually subcontracts the actual construction, it is work carried on by the authority of the State or with funds of the State and is thus subject to the mandates of Section 31-53.

In lease arrangements, it is necessary to confirm that the contract (or lease agreement) contains provisions regarding the construction or renovation, alteration or repair required or authorized by the State or political subdivision. If it can be shown that the construction is not required by the State or political subdivision before it will enter into or continue in a lease agreement, the mere increase in lease payments which reflects the owner passing along a portion of his cost in the improvements would not render the agreement subject to Section 31-53.

Our experience has shown that during economic times where private construction is minimal there is tremendous competition to win government contracts. It is also during this time that there is increased pressure on contracting agencies to lower the cost of projects. However, without regard to the various arguments surrounding the impact of prevailing wage on the cost of construction, it is important for the Labor Department to stay the course despite market fluctuation. Over the years, this has been done to the benefit of contractors, workers, and agencies who need to know there is consistency in maintaining a "level playing field".

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Coverage When Bid Under $100,000 Threshold

In response to the question regarding this agency's interpretation of the applicability of Connecticut General Statutes Section 31-53 to projects which are bid under $100,000, but through change orders subsequently meet the threshold requirement of Connecticut General Statutes Section 31-53(g).