Published date: 01/21/2025
Under the Davis-Bacon and Related Acts (DBRA), All-Agency Memorandums (AAMs) serve as critical tools for ensuring consistent application of prevailing wage laws. Issued by the U.S. Department of Labor, these memorandums provide essential guidance on interpreting and applying regulations across federal and federally assisted construction projects. Their purpose is to clarify ambiguities, address emerging challenges, and standardize enforcement across agencies and contractors.
It’s important to note that AAMs are not static documents. As regulations evolve or new challenges emerge in federally funded construction projects, the Department of Labor may issue new AAMs that refine, expand upon, or even replace earlier guidance. This process makes it so that that policies remain relevant and aligned with legislative updates or changing industry practices.
Below is an in-depth look at some of the most impactful AAMs and their ongoing influence in shaping compliance practices.
AAM 130 (1978): Wage Determination Guidance on Construction types
Context: Before AAM 130, there was significant ambiguity regarding the application of prevailing wages for different categories of construction (Building, Highway, Heavy or Residential) under the Davis-Bacon Act. The guidelines in this memorandum are to be used by contracting agencies in selecting the proper wage determinations and instructing contractors regarding the application of multiple wage determinations.
Key Provisions:
- Introduction of Construction Types Descriptions: Recognized that there was confusion around which type of wage determination is required to be used for types of construction projects.
- Definition of Construction Types: Identified building, highway, heavy and residential construction examples to help contracting agencies and contractors to identify the correct wage determination types.
- Focus on Local Wage Practices: Emphasized aligning prevailing wage rates with local residential wage practices to better reflect industry norms.
Impact:
- Helped contracting agencies standardize wage decision selections for construction, reducing contractor uncertainty and fostering compliance under the Davis-Bacon Act.
- Set the stage for future clarifications on project scope and application of multiple wage determinations for construction projects.
To know more about AAM 130, read here.
AAM 131 (1978): Clarification of AAM 130
Context: Before AAM 131, the application of prevailing wages to building, highway, heavy and residential construction types was unclear, particularly for federal or federally assisted projects involving multiple types of construction.
Key Provisions:
- Scope of multiple Wage Decisions: Guidance on circumstances in which multiple schedules of wage rates are issued for a project. Multiple wage schedules are issued if the construction items exceed more than 20% of the total project cost or $1 million threshold.
- Rationale: Aimed to ensure employees are paid appropriately based on the type of construction that is being completed.
Impact:
Influenced how contractors bid on projects that have multiple different construction types. This AAM was updated in 2020 to increase the threshold to $2.5 million as stated later in this document.
To know more about AAM 131, read here.
AAM 176 (1994): Application of the Davis-Bacon Act to Buildings and Works Constructed and/or Altered for Lease by the Federal Government
Context: The Davis-Bacon Act (DBA) applies to federal contracts exceeding $2,000 for the construction, alteration, or repair of public buildings or works. For years, there was legal uncertainty regarding whether lease-construction contracts were covered under DBA.
Key Provisions:
- Revised OLC Interpretation: In May 1994, OLC retracted its 1988 opinion, stating the plain language of the DBA does not exclude lease contracts that involve construction. Instead, the applicability depends on the specifics of the contract.
- Factors for Determination: Criteria include the lease term, government involvement in construction intended use of the construction, financial arrangements, and whether the lease structure attempts to bypass DBA requirements.
- Agency Responsibilities: Contracts for lease-construction projects solicited after the memorandum’s issuance must incorporate DBA provisions if applicable.
Impact:
- Strengthened clarity on applying DBA to lease-construction contracts.
- Reaffirmed prevailing wage protections for workers on public building projects indirectly financed by federal agencies.
To know more about AAM 176, read here.
AAM 213 (2013): Application of the Davis-Bacon and Related Acts Requirement for “Reasonable Relationship” in Conformed Wage Rates
Context: This memorandum clarifies the process by which contracting officers apply the Davis-Bacon and Related Acts to additional classifications in wage determinations. The DBRA mandates that additional classifications, when conformed to an existing wage determination, must have a wage rate that bears a “reasonable relationship” to the rates already included in the determination.
Key Provisions:
- Conformance Criteria: contracting officers must ensure that an additional classification is:
- Not already covered by an existing classification.
- Used within the local construction industry.
- Assigned a wage rate that bears a reasonable relationship to the wages in the existing wage determination.
- “Reasonable Relationship” in Wage Rates: The memorandum highlights the shift away from automatically using the lowest rate as a benchmark for conformed classifications. Instead, the Wage and Hour Division now evaluates the entire range of wages within the relevant category (e.g., skilled crafts, laborers, power equipment operators, truck drivers) to ensure that the proposed wage rate is appropriate.
- Union vs. Non-Union Rates: Considerations must include whether the wage rates in the determination are predominantly union or weighted average rates. For instance, if union rates predominate, the conformed rate should be based on the union sector’s wage structure.
Impact:
Increased Efficiency and Compliance: Agencies and contractors are provided with clearer guidelines to ensure conformed wage rates align with industry standards, helping to streamline the approval process and avoid disputes.
Clarity in Conformance Process: This memorandum ensures that conformance requests are evaluated based on a comprehensive review of all wage rates within the category, promoting fair and consistent determinations.
Wage Determination Approvals: By revising the approach to evaluating proposed wage rates, the WHD aims to create more accurate and reasonable wage determinations that better reflect actual industry practices.
To know more about AAM 213, read here.
AAM 233 (2020): Clarification of Conformance Process When Few Classifications Exist in Wage Determinations
Context: This memorandum clarifies AAM 213, specifically in how to apply the “reasonable relationship” principle in wage determinations when there are fewer than three classifications within a relevant category. It allows for comparisons between skilled crafts and Professional Employer Organizations (PEOs) when classifications are limited.
Key Provisions:
- Combine skilled crafts and PEO categories for the “reasonable relationship” analysis when fewer than three classifications are present.
- Use the relevant category for comparisons when three or more classifications are available.
To know more about AAM 233, read here.
AAM 235 (2020): Rescission of AAM 212 on Survey Crews and Davis-Bacon Applicability
Context: This memorandum rescinds AAM 212, which addressed the applicability of Davis-Bacon labor standards to survey crews. Concerns raised indicated that AAM 212 did not sufficiently address the roles and training of survey crew members supporting construction, leading to confusion and incomplete implementation.
Key Provisions:
- AAM 212 rescinded due to confusion over coverage and the failure to revise the Field Operations Handbook (FOH).
- The rescission is consistent with Executive Order 13891, promoting clearer guidance documents.
Impact:
- Eliminates confusion regarding the applicability of Davis-Bacon standards for survey crews.
- Aligns with executive directives for improved agency guidance.
To know more about AAM 235, read here.
AAM 236 (2020): Update on $1 Million Threshold for Multiple Wage Determinations
Context: This memorandum updates the threshold used by contracting agencies and the Wage and Hour Division to determine when multiple wage determinations apply to a project. It revises the previous $1 million threshold used to decide if substantial construction in a different category requires multiple wage determinations.
Key Provisions:
- Contracting agencies should apply multiple wage determinations when construction in a different category exceeds $2.5 million or 20% of total project costs.
- This is an update from previous guidance that applied the $1 million threshold for substantial construction items.
Impact: Provides updated guidelines for determining when multiple wage determinations are necessary for complex construction projects.
To know more about AAM 236, read here.
AAM 244 (2023): Final Rule – Updating the Davis-Bacon and Related Acts Regulations
Context: This memorandum summarizes the final rule issued by the Department of Labor to update the regulations under the Davis-Bacon Act (DBA) and the Davis-Bacon Related Acts (DBRA). The updated regulations provide clarity and address issues in the administration and enforcement of DBRA.
Key Provisions:
- Revised wage determination procedures, including the use of county or state-specific wages and adding frequently requested classifications from conformants.
- Clarified methods for determining prevailing wage rates, including functional equivalence for varying rates.
- Expanded scope of the incorporation and applicability of wage determinations.
Impact: Improved clarity and consistency for contracting agencies, while also facilitating better enforcement and compliance with prevailing wage requirements.
To know more about AAM 244, read here.
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