The Davis-Bacon wage act is also known as “prevailing wage” which stipulates that certain projects must prove that the tradesman employed by the contracted firms are being paid according to locally defined wage rates. The defined wage rates are generally in line with Union wage rates which means that a Union shop paying higher wages would be more competitive against a non-union shop since the non-union shop would be obligated to match the pay scale for that project.
Davis-Bacon wage rates are generally required on Federally funded projects but any client may decide to require them. Clients that require Davis Bacon wage rates will typically include provisions within the specifications – be very careful – Architects virtually never include the Davis Bacon Wage information in an easy to find space.
“The project will require Davis-Bacon wages if subsection D exhibit C lists the location of the Minotaur. Contractors must defeat the Minotaur in order to obtain wage rates for the City and State of the project…”
Often the sample contract will include subsection references as conditions of a requirement. For example, if a Davis-Bacon wage scale is provided as a subsection reference – then the wages are required. If the pay scale isn’t there the job doesn’t require them. In some cases, the Architect will include a requirement to adhere to the Davis-Bacon wage scale for a specific county. This means you must contact the appropriate offices and obtain the most current data. Wherever possible, attempt to get the design team to verify the wage rates via Request For Information (RFI). There is a lot at stake if there’s an error in wage calculations.
Including this information with the plans and specifications reduces the chances of errors on subcontractor bids. Check and double-check that ALL affected trades are listed.
Flight of the MeeBee Weebee
Minority Owned Business (MBE), and Women Owned Business (WBE) are MeeBee Weebee’s which is a catch-all term for businesses that have completed a certification process at the Federal, State, County, or City level. Certain projects will define a percentage of the project value which must be awarded to firms that are certified as Small, Disadvantaged, Minority owned, Women owned, etc. The intention is to “set aside” a certain amount of local work to help bootstrap firms get work they would otherwise struggle to compete.
Luck favors the prepared – make sure to investigate the local market. Many projects with MBE/WBE requirements will also require Davis Bacon wages. Small firms that routinely do these projects are often well-versed in Davis-Bacon wage requirements. A well-developed subcontractor list should include information about certification status. Wherever possible, attempt to obtain a copy of their certification for the file. Digital copies are especially helpful when the file name is meaningful enough to enable a search.
Prepare for overflow
Preparation is critical for MBE/WBE bids. Bid day requirements often include a list of selected subcontractors, their addresses, the contract values, their MBE/WBE status, % of total contract value, and certificate numbers. On larger projects with diverse scope, this adds literally hundreds of data points to be filled out at high-speed just before the deadline.
Some clients will allow a preliminary list to be submitted with a more detailed packet to follow within a pre-set amount of time. Be very careful to review what is required on bid-day as bids are frequently rejected for being incomplete, or out-of-order.
Building a good framework for the entire bid is crucial to making things fall into place. All bids coming in should have “Davis-Bacon wages” listed as an inclusion for consideration. All MBE/WBE’s should notate their certification boldly on their proposal to include any certification numbers. Any requirement for incoming bids should be boldly noted on the original invitation to bid.
The estimate itself should include a MBE/WBE counter at the top of the estimate. Locking the top rows allows this to be a “scoreboard” feature to allow the estimating team to know when the estimate has met the requirements. Creating a check box next to the subcontractor name that signals the sheet to tally as a MBE/WBE simplifies the operations. Be sure to test the estimate spreadsheet thoroughly. The check box allows for on the fly “what if” tallies to determine which subcontractor to use. Depending on the participation requirements and the project scope, the what-if scenario’s can present numerous potential configurations.
And now a word from our sponsors
Companies that are certified as MBE/WBE are not necessarily proven performers, nor are they an assured low-risk prospect.
Even if they are team players.
There are no guarantees that these firms can complete the project. To the GC, the risk of hiring a MBE/WBE can be considerable. The better informed before bid – day the better the decisions can be. Certification processes can be very arduous – it is not uncommon for a qualified firm to be awaiting certification for long periods of time. Estimators are well advised to be cautious about MBE/WBE firms – it’s better to spread the risk via several smaller contracts than to chance the job on a couple of unknowns. Some firms specialize in projects with MBE/WBE requirements – some are very sophisticated and offer work on par with the market. Estimators should strive to develop relationships with these firms if they intend to compete in this market.
It’s not just the subs…
Thus far, these requirements have been about the subcontractors pricing which may have created the impression these programs are simply pass-though items that don’t cost anything. Davis-Bacon wage’s must be proven via payroll for every person on the site. Subcontractors will need to generate wage tracking data in compliance with the required forms. Often outside agencies will conduct job site visits where agents will speak directly to tradesman inquiring about their pay. Apprentice to Journeyman ratios are strictly enforced – as are over-time and holiday pay requirements. Progress payments to the GC and/or the subcontractors are routinely withheld whenever discrepancies are found.
The additional work to track this data can be considerable – be sure to include adequate management and support staff wages in the General Conditions to cover it. Larger jobs will require funds for printing, couriers, and storage of all the paperwork these projects require.
How to make it work for you
Davis Bacon and MBE/WBE requirements add cost to projects both directly and indirectly. This creates a situation where low bid is no longer the sole deciding factor. An organized estimator with a well-developed subcontractor roster can approach the bid with less fear that a competitor who threw their bid together will come in low by accident. The more arduous the bid packet requirements the more likely the client will be to disqualify bidders who fail to comply. Take this as an opportunity to generate a comprehensive and less harried bid. Create a time-table that counts down to the deadline. Assign an estimating team member to maintain the timeline. Allow sufficient time to complete the bid packet in the timeline – then stop reviewing incoming bids according to that schedule. Approach the bid with compliance being a higher priority than lowest price.
A well done estimate should present pricing with which to compare to subcontractor bids. The earlier this is done, the sooner potential MBE/WBE contractors can be considered. If these requirements can be met with a couple of highly qualified subcontractors, the estimators time can be freed up to scope high value subcontractor bids.
A bid-day estimating team needs a consistent methodology for scoping and entering scoped bids into the estimate. Colored highlighters indicating MBE /WBE status are helpful to make quick sorting. The follow-up required for full compliance can be extensive. If the packet must contain copies of MBE/WBE certifications, assign a helper to follow-up on MBE/WBE bids to get them sent over. Make sure the helper knows how to search the stored certificate database. Instruct them to make a photocopy or scan of any new certificates that come in for the file.
Should you lose the bid, follow-up to determine which firms were selected for contract award. Most public work that requires Davis Bacon, and MBE/WBE standards will provide some means for public review of the awarded contractors. This feedback can be invaluable to find MBE/WBE subcontractors who aren’t “on your radar”. Be advised that finding where this information is publicly available may require some discrete investigation.
The nuances and difficulties of preparing a bid with MBE/WBE and Davis Bacon wage requirements can be daunting. Start with research to find out which subs are performing this work, and how much the work is going for. These programs can dramatically affect the final price in areas where the Davis Bacon wages are substantially higher than market average. Don’t be misled into thinking it’s a simple “wage offset”. The accounting and clerical efforts necessary for these programs can consume a profound amount of resources. Project managers with previous experience on public work can substantially reduce the risk.
With solid research, planning, preparation and execution, these projects can be profitable even in a competitive market.
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© Anton Takken 2014 all rights reserved