In November 2021, President Biden signed the $1.2 trillion Infrastructure and Investment Jobs Act (IIJA) into law. The passage of this massive, bipartisan infrastructure deal creates a path to invest billions of dollars in roads, bridges, water systems, transit, broadband and more. In addition to the more traditional infrastructure elements, the Infrastructure and Investment Jobs Act forays into more progressive definitions of infrastructure. For the Davis-Bacon and construction contractor, there are many new opportunities on the horizon for those willing to seize them!
Expanding How We Think of the DBA
The Davis-Bacon Act is traditionally associated with construction projects, requiring the employer or construction contractor performing contracts for the federal government to pay their laborers a prevailing wage and fringe benefits. Historically, the primary objective of the Davis-Bacon Act is to protect local communities from the economic upheaval caused by federal contracts. The wage requirements associated with the Davis-Bacon Act apply to contractors valued in excess of $2000 and levels the playing field for union contractors.
Typical Davis-Bacon construction projects include building, alterations, and repairs on public buildings or in public works. The IIJA expands this definition, providing that energy related contracts will be subject to Davis-Bacon wage requirements and, in addition to traditional Davis-Bacon projects like roadways and bridges. Additionally, some contracts that are performed at the state level may be required to follow “little Davis-Bacon” state prevailing wage laws.
With this expansion of the DBA comes many private companies will be competing for a new generation of federal contracts. These entities will also be new to federal funded projects and will be introduced to bidding competitively with prevailing wage and Davis-Bacon Act provisions for the first time. Companies should begin to familiarize themselves with the Davis-Bacon Act and its requirements in order to ensure compliance and to provide an advantage in bidding for these contracts.
A Progressive Approach for the Construction Contractor
A key component of the current administration’s agenda, and the infrastructure package, is an emphasis on a more equitable future and the promise of clean energy for the American people. The IIJA includes more than $62 billion for the Department of Energy to put towards expanding access to clean energy and energy efficient solutions for families, communities, and businesses. This includes delivering reliable and affordable power, supporting clean energy technologies, and investment in American manufacturing.
The Infrastructure Investment and Jobs Act is estimated to add an average of 1.5 million jobs per year, over the course of a decade. Many of these jobs will fall under an expanded definition of what is considered to be covered by the Davis-Bacon Act, requiring that all workers on such projects be paid prevailing wages. This will be new territory for the construction contractor, as well as an unprecedented opportunity.
Much of the legislation’s infrastructure efforts bring the necessity of updates and maintenance into alignment with clean energy ambitions. A prime example of this is the plan’s focus on updating the electrical grid. Efforts to modernize and expand the electrical grid have the goals of making the American energy sector more resilient, while enabling a pivot to affordable, reliable, clean energy.
Construction Contractors Plan to Seize the Opportunity
The Infrastructure and Investment Jobs Act represents a massive opportunity for jobs and growth for the construction contractor. With a host of federal procurements on the horizon and new companies entering into unfamiliar territory, when it comes to bidding competitively while utilizing the prevailing wage, the key to successful bids is develop a strategy. Wages make up a large and essential financial component of any construction project. As such, balancing the prevailing wages with a comprehensive benefits strategy will provide a competitive advantage for some contractors and cause a compliance headache for others. That’s where we come in.
The future of the construction contractor has arrived. As contractors prepare to seize the infrastructure opportunities on the horizon, Boon offers its clients an expert in their corner. In addition to our fringe benefit solutions, Boon provides a deeper understanding of the government contracting space and the ability to help contractors plan ahead and craft the best benefit option.
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