Federal Contract Labor Standards Statutes: An Overview

Federal Contract Labor
Standards Statutes: An Overview
Updated December 4, 2007
William G. Whittaker
Specialist in Labor Economics
Domestic Social Policy Division

Federal Contract Labor
Standards Statutes: An Overview
Summary
In the late 1920s, following action taken in a number of states in dealing with
state contracts, the federal government began development of a body of labor
standards protections for workers employed by private contractors in federal contract
work. The first of these statutes, the Davis-Bacon Act (1931), set basic labor
standards (primarily, prevailing wage rates) for workers engaged in construction
work, under contract, for the federal government. Two other major contract labor
standards statutes followed: the Walsh-Healey Public Contracts Act (1936) and the
McNamara-O’Hara Service Contract Act (1965) — respectively dealing with labor
standards for workers engaged in contracts for production of goods and the provision
of services.
These statutes, amended from time to time and supplemented by other
enactments, deal only with federal contract work. They do not directly impact work
performed for private sector entities. Clearly, however, there are economic
implications from these primary federally contracting statutes for private sector work.
In part, the thrust of the statutes was to establish the federal government as a model
employer to be emulated by the private sector. More directly, they were intended to
provide economic protections to the targeted groups of workers and to assist, in some
measure, in stabilizing the industries directly involved.
Both Davis-Bacon and Walsh-Healey were enacted prior to the more general
Fair Labor Standards Act (FLSA, 1938) which has come to provide a structure of
minimum wages, overtime pay requirements, restraints upon child labor and
industrial homework, among other things, both for public and private workers.
Indeed, the McNamara-O’Hara Act was shaped and, finally, adopted while FLSA
amendments (those of 1961 and 1966) were being developed to bring wage/hour
protections to service workers.
Through the years, these statutes have been the focus of numerous hearings and
an extensive literature. Their provisions have been added to various federal program
statutes, usually by reference. And, they have sparked substantial debate, pro and
con.
This report presents a brief historical introduction to the three federal contract
labor standards statutes — Davis-Bacon, Walsh-Healey, and McNamara-O’Hara —
and suggests how the several enactments (with the FLSA) are similar and different.
It will be updated from time to time as conditions warrant.

Contents
In troduction ......................................................1
Evolving Federal Contract Labor Standards Policies......................3
The Davis-Bacon Act (1931).....................................3
Davis-Bacon Enacted.......................................4
Evolution of the Statute.....................................5
Areas of Controversy.......................................6
The Walsh-Healey Public Contracts Act (1936)......................8
Walsh-Healey Enacted......................................9
Determining a Wage Standard...............................11
The Issue of Overtime Pay..................................12
Manufacturer or Regular Dealer.............................14
Naval Vessels............................................14
The McNamara-O’Hara Service Contract Act (1965).................15
McNamara-O’Hara Enacted................................15
Evolution of the Service Contract Act.........................17
Controversy and Amendment...............................17
Comparison of Existing Standards....................................21
Diverse Provisions but Similarity of Purpose.......................22
Establishing Standards.........................................27
Setting a Reasonable Wage Rate.............................27
The Locality Issue........................................28
Competing or Complementary Structures......................29
Concluding Comment.............................................30
List of Tables
Table 1. Compilation of Select Federal Labor Standards Requirements......24

Federal Contract Labor
Standards Statutes: An Overview
During the past century, Congress adopted a series of labor standards statutes
applicable to contract work for the federal government: construction, production of
goods, or provision of services. These statutes do not apply to the private sector
except when it is engaged in contract work for the federal government. In some
instances, coverage is triggered by a contract to which the federal government is a
signatory. On other occasions, the laws may apply to various forms of federally
assisted work through grants, loan guarantees, revolving funds, and the like.
The first of these statutes, the Davis-Bacon Act (1931), set certain wage and
related standards for federal contract construction work. In 1936, Congress added
the Walsh-Healey Public Contracts Act, setting basic labor standards in the
production of goods under contract for the federal government. The third of these
statutes, the McNamara-O’Hara Service Contract Act (1965), mandates minimum
labor standards where services are provided, under contract, to the federal
government.¹ These statutes are supplemented by other federal enactments and,
often, by laws at the state and local level.
This report sketches the history of these statutes: what they provide, how they
are similar, and how they differ. It suggests how they fit into the broader framework
of general wage/hour and related legislation. And, it notes certain areas of
controversy that have developed with respect to the several enactments.
Introduction
Early in the 19^th century, the federal government began development of a special
body of labor standards protections applicable to its own direct workforce. However,
much of the work of the federal government was not undertaken by its direct
employees, but rather through contracts with the private sector: by employers who
operated beyond the reach of federal regulation and to whom standards applicable to
federal employees did not apply.
Through the early 20^th century, public work was awarded to the lowest
responsible bidder. Responsible was defined as the ability to fulfil the terms of the

¹ These statutes are supplemented by other federal enactments, inter alia: the Copeland
“anti-kickback” Act (1934), the Fair Labor Standards Act (1938), and the Occupational
Safety and Health Act (1970). The Davis-Bacon Act has been supplemented by the Contract
Work Hours Standards Act (1962) and the Contract Work Hours and Safety Standards Act
(1969).

contract: that is, to provide the goods, services, or construction work the government
sought. No consideration was given to the conditions under which such work was
performed.² Regulation of wages, hours, and child labor was regarded as beyond the
reach of government. Attempts to legislate in those areas were generally found to be
unconstitutional and were vigorously opposed as an illegal and unjustified intrusion
upon private sector prerogatives. Industrial health, safety and sanitation were left,
largely, to local jurisdictions. Where states and local governments were able to enact
measures that would withstand the test of constitutionality, they appear to have been
of little impact: either lacking substance or unenforced.
Most contractors appear to have been reputable; some were not. Often, bid
brokers sought contracts and then, with the award in hand, would sub-contract to
firms willing to work at the lowest cost.³ Since government would normally specify
the quality of the fabric or materials, the style and construction standards, the prime
area in which to cut costs was on labor: engaging the cheapest viable workers and
pressing them to work as long as endurance would permit. These were often not
permanent employees of the contractor but, rather, casual workers whose welfare was
of little continuing concern — neither to the bid broker nor to the sub-contractor.
Where government protected its own direct workforce through wage/hour and
related standards, contracting out for public work placed a premium on low wages
and sometimes led to adverse working conditions. By paying less, private contractors
could enhance their competitive position. Thus, an informal alliance might be struck
between the procurement officer and the low-wage employer, each, for their own
reasons, conspiring to cut costs by keeping wages low. At the same time, by
indirectly tolerating abusive conditions, government sacrificed its role as a model
employer (an oft-expressed desire) and as an example for the private sector.⁴

² See O. R. McGuire, “Advertisements for Proposals on Public Contracts,” The Constructor,
August 1930, pp. 24-26, for a discussion of contractor responsibility.
³ See “Solutions to the Bid Peddling Problem,” The Constructor, April 1932, pp. 20-21 and
39, and “Bid Peddling vs. Price Padding,” The Constructor, June 1932, pp. 12-13, both by
W. F. Creighton.
⁴ An account of the reform movement of the late 19^th and early 20^th centuries is presented
in Landon R. Y. Storrs, Civilizing Capitalism: The National Consumers’ League, Women’s
Activism, and Labor Standards in the New Deal Era (Chapel Hill: University of North
Carolina Press, 2000). See also David A. Moss, Socializing Security: Progressive-Era
Economists and the Origins of American Social Policy (Cambridge: Harvard University
Press, 1996), and Irwin Wellowitz, Labor and the Progressive Movement in New York State,
l897-1916 (Ithaca: Cornell University Press, 1965).

Evolving Federal Contract Labor Standards Policies
First the states and then the federal government embarked upon a program of⁵
reform: often encountering constitutional challenges. But, in at least two areas,
government was free to act. As an employer, it could set standards that applied to its
own direct employees — just as any private sector employer could then do. More
significant here, as a consumer, it could set standards for the goods, services and
construction that it was willing to purchase in the public marketplace. It could, for
example, write into bid specifications requirements that certain unfair labor practices
would not be tolerated in the context of public procurement. And, in that way, it
reserved to itself the right to define the concept of fairness.
The Davis-Bacon Act (1931)
During the years following World War I, various efforts were made to bring a
greater level of professionalism to the construction industry. However, certain
practices continued that embarrassed the better contractors and complicated the
process of doing business with government. Assessing contractor and worker
credentials posed a problem. For example, was a particular firm equipped to fulfill
the terms of a specific contract, and were the workers employed by the firm
competent workmen? Some contractors would bid above their level of expertise and,
having won a contract on the basis of the lowest projected costs, would then attempt
to draw together a workforce. Sometimes they were successful, but at other times
they may not have been.⁶
It was also alleged that itinerant contractors would enter a local market, bid on
public construction work, bring onto the worksite a crew from outside the area,
complete the work, and move on. Some of these contractors did excellent work:
perhaps better than local firms could have done or were equipped to do. But, it
appears, there were also firms that were less-than-competent and to whom the
opprobrious title, fly-by-night operators, was given. In either case, outside firms
came under attack during the 1920s — increasingly so as the Great Depression
dawned and as local companies and their employees became desperate for work.⁷
As the federal government commenced major expenditures for public buildings
and public works, the broader, more abstract, issue of fairness (in terms of wages,

⁵ Concerning early state initiatives, see David B. Johnson, “Prevailing Wage Legislation in
the States,” Monthly Labor Review, August 1, 1961, pp. 839-845.
⁶ Lloyd Smith, “To Eliminate Irresponsible Bidders,” The Constructor, January 1925, pp.
23, 64; “When Low Bids Are Too Expensive,” The Constructor, February 1930, pp. 40-41
and 58; C. W. Butts, “The Necessity for Prequalification: Over Optimism on the Part of
Contractors Requires a Check,” The Constructor, March 1930, pp. 40-41; E. A. St. John,
“Cooperation Eliminating Irresponsibility,” The Constructor, April 1930, pp. 35-36; and
“Hard Facts About Contractors,” The Constructor, September 1930, pp. 28-30.
⁷ U.S. Congress, House Committee on Labor, Hours of Labor and Wages on Public Works,
hearings on H.R. 17069, 69^th Cong., 2^nd Sess., February 18, 1927 (Washington, GPO, 1927),
p. 2.

hours and conditions of work) combined with wage-based economic competition as
an issue of public policy. In part, the federal construction program was intended to
spur the economy of depressed areas by providing jobs for local workers and
contracts for their employers. But, it appears, outside contractors, working with
imported low-wage crews, would often underbid local firms and, once having
finished the immediate project, would move on.⁸ The economic impact sought from
the work was, thus, defused: the effort to provide work (and contracts) for distressed
communities, frustrated.
But, public contracting activity of the 1920s and 1930s needs further
exploration. How frequently, for example, did outside contractors compete with
local firms on an unfair basis, however defined? What were their labor practices?
The quality of work of the respective firms and the economic/cost implications of
dealing with local or outside contractors needs assessment. Much of what is asserted
with respect to this period appears to be anecdotal.
Davis-Bacon Enacted. In 1931, as an emergency measure urged by
President Herbert Hoover, Congress adopted the Davis-Bacon Act (P.L. 71-798).⁹
It mandated that not less than the locally “prevailing rate of wages for work of a
similar nature” had to be paid on construction work to which the federal government¹⁰
(or the District of Columbia) was a party. No specific rate was set; but the act
provided:
... in case any dispute arises as to ... the prevailing rates of wages for work of a
similar nature applicable to the contract which can not be adjusted by the
contracting officer, the matter shall be referred to the Secretary of Labor for
determination and his decision thereon shall be conclusive on all the parties to
the contract.
In effect, the initial determination was left to the parties (to the contractor and the
workers) and only secondarily to the Secretary of Labor. In that manner, Congress
sought to end the wage-based competition from the fly-by-night operators, to
stabilize the local contracting community, and to protect workers from unfair
exploitation. Employers could compete on the basis of efficiency, skill, or any other

⁸ See testimony of Labor Secretary William N. Doak in U.S. Congress, Senate Committee
on Manufactures, Wages of Laborers and Mechanics on Public Buildings, hearings on S.^st^rd

5904, 71 Cong., 3 Sess., February 3, 1931, pp. 2-3.

⁹ See 40 U.S.C. §§ 276a-276a-5. (See also 40 U.S.C. §§ 3141-3148.) Various versions of
the final legislation had been considered through several Congresses prior to its enactment.
The final legislation was introduced by Senator James Davis (R-Pa.), who had served as
Secretary of Labor under Presidents Harding, Coolidge and Hoover, and by Representative
Robert Bacon (R-N.Y.).
¹⁰ The Davis-Bacon Act provides a wage floor. Contractors may need to pay in excess of
the Davis-Bacon rate in order to secure qualified workers.

factor except wages.¹¹ Substantively, the act was contained in one relatively brief
paragraph.
Evolution of the Statute. Problems, largely unaddressed in the original
statute, quickly arose. Oversight hearings commenced almost immediately; but, in
January 1932, before Congress could act, President Hoover issued Executive Order
No. 5778 in an attempt to improve the administration of the statute. While the Order
was not successful as administrative reform, it did defer formal amendment of the act¹²
for several years.
As enacted in 1931, the Davis-Bacon Act attracted many critics.¹³ Some
contractors, it was alleged, paid the locally prevailing wage — but then demanded
rebates from their employees. In 1934, Congress adopted the Copeland “anti-
kickback” Act (P.L. 73-324). The act, specified a fine of up to $5,000 or
imprisonment of up to five years, or both, for anyone who induces any person
engaged in covered federal construction work “to give up any part of the
compensation to which he is entitled under his contract of employment, by force,
intimidation, threat of procuring dismissal from such employment, or by any other¹⁴
manner whatsoever.”
Other complications arose as well with respect to the Davis-Bacon Act, most of
which were addressed in amendments adopted in 1935 (P.L. 74-403). Among the
changes made in the statute were the following. First. In 1931, the dollar volume
coverage threshold had been set at $5,000. However, it was charged that contractors
fragmented their work to make it come in under the threshold — a matter of
particular concern with respect to painting and decorating. Thus, the threshold was
lowered to $2,000 and coverage for painting and decorating work was specified in
the statute. Second. Where the 1931 statute had concerned only public buildings, the
1935 amendments extended coverage to include public works. Third. The
Comptroller General would be directed to prepare a list of contractors who have
“disregarded their obligations to employees and subcontractors.” Listed violators
would be barred from federal contracts for a period of three years. Fourth. Davis-

¹¹ In the Senate report on the Davis-Bacon legislation, it was affirmed that the “measure does
not require the Government to establish any new wage scales in any portion of the country.”
Instead, “[i]t merely gives the Government the power to require its contractors to pay their
employees the prevailing wage scales in the vicinity of the building projects. This is only
fair and just to the employees, the contractors, and the Government alike.” See U.S.
Congress, Senate, Regulation of Wages Paid to Employees by Contractors Awarded^st^rd
Government Building Contracts, report to Accompany S. 5904, 71 Cong., 3 sess., S.Rept.

1445 (Washington, GPO, 1931), pp. 1-2.

¹² Proclamations and Executive Orders: Herbert Hoover, March 4, 1929 to March 4, 1933.
Washington, Govt. Print. Off., 1974, vol. 2, pp. 1066-1067.
¹³ See the editorial, “Defects Seen In Davis-Bacon Law,” The Constructor, July 1931, p. 17.
¹⁴ See U.S. Congress, Senate Subcommittee of the Committee on Education and Labor,
Investigation of the Relationship Existing Between Certain Contractors and Their^rd^nd
Employees in the United States, hearings on S.Res. 228, 73 Cong., 2 sess., Part 1, May

4 and 7, and June 21-23, 1934 (Washington, GPO, 1934), p. 3; and, Congressional Record,

April 26, 1934, p. 7401; June 7, 1934, p. 10759; and June 15, 1934, p. 11624.

Bacon contracts were to state “the minimum wages to be paid various classes of
laborers and mechanics.” Thus, there would be a pre-determination of the Davis-
Bacon wage rate: that is, prior to the submission of bids by the contractor. Fifth. The

1935 amendments added various enforcement and related administrative provisions.¹⁵

After 1935, though some found aspects of the statute and its administration with
which to disagree, the Davis-Bacon Act emerged as a regular component of federal
procurement policy. Gradually, Congress wrote Davis-Bacon requirements into a
number of program statutes involving federally assisted construction.
In the early 1960s, Congress undertook a review of the statute: the first major
oversight of the act since the 1935 amendments were adopted. The investigation and
hearings led to two changes. First. Although there was often disagreement about
specific coverage and/or wage rate determinations, there was no independent review
provided for decisions of the Secretary. Some, primarily from industry, urged that
a formal judicial review option was needed. Others suggested an internal review
structure within the Department of Labor (DOL). On January 3, 1964, Secretary of
Labor Willard Wirtz moved unilaterally to establish a Wage Appeals Board within
DOL — short-circuiting a legislative initiative then before Congress.¹⁶ Second. As
compensation increasingly came to include fringe benefits, some felt that the Davis-
Bacon rates (cash wages per hour) were outdated. In the spring of 1964, Congress
amended Davis-Bacon to expand the definition of wage to include certain fringe
benefits or, as an alternative, a fringe benefit component (P.L. 88-349).¹⁷
Areas of Controversy. In almost every session of the Congress since the
1960s, the Davis-Bacon Act has emerged in some context. Often, debate has focused
upon inclusion of Davis-Bacon provisions in various program statutes. But, the act
has also been directly an object of dispute.
In 1971, President Richard Nixon briefly suspended the act as part of his¹⁸
program to control inflation. The suspension lasted just over one month, after
which the act was fully restored.¹⁹ In October 1992, during the presidential

¹⁵ U.S. Congress, House Committee on Labor, Amend the Act Approved March 3, 1931,
Relating to Rate of Wages for Laborers and Mechanics Employed on Public Buildings,
report to accompany S. 3303, August 9, 1935 (Washington, GPO, 1935), p. 1. See also
editorial, “Reinterpreting the Davis-Bacon Law,” The Constructor, January 1932, pp. 15-16.
¹⁶ Federal Register, January 4, 1964, pp. 118-119. With some modifications of structure and
procedures, the Board remains in place. Broader issues — applicability of the statute, for
example — are appealed to the courts.
¹⁷ Congressional Quarterly Almanac, 1964, Congressional Quarterly, Inc., Washington,

1965, pp. 576-577.

¹⁸ On June 5, 1934, the Davis-Bacon Act was suspended by President Franklin Roosevelt,
apparently in order to avoid confusion with other New Deal statutes. On June 30, 1934, the
act was quietly restored. See John Herling’s Labor Letter, March 13, 1971, p. 3; and
Statutes at Large, vol. 48, part 2, pp. 1745-1746, and vol. 49, part 2, p. 3400.
¹⁹ Section 276a-5 provides that the President “is authorized to suspend” the act “[i]n the
(continued...)

campaign, President George H. W. Bush suspended the statute as it might have been
applied to federal construction associated with hurricanes Andrew and Iniki. It was
restored shortly after the election of 1992 by President William Clinton.²⁰ Again, on
September 8, 2005, President George W. Bush suspended the Davis-Bacon Act as
part of a program to clear up the destruction associated with Hurricane Katrina. As
in 1992, the suspension was for a limited area (parts of Florida, Alabama,
Mississippi, and Louisiana) and for a limited, if unspecified, duration.²¹ Within two
months, the President announced that Davis-Bacon would be reinstated on November

8, 2005.²²

The Comptroller General, during consideration of the original Davis-Bacon
legislation, had pointed to what he perceived to be flaws in the proposal. Through
the years, the General Accounting Office (GAO, now the General Accountability
Office) had continued to critique both the statute and its administration by the DOL.
Finally, in 1979, GAO issued an extended report titled: The Davis-Bacon Act Should
Be Repealed.²³ The report touched off heated debate in labor policy circles and
sparked several congressional hearings on the Davis-Bacon Act. While Congress
took no direct legislative action, administrative restructuring was proposed — first
by the Carter Administration and, subsequently (and in different form), by the
Reagan Administration. Extended litigation followed — the controversy continuing
beyond the end of the 20^th century.²⁴
At least since the 1979 GAO report, debate has been ongoing over the economic
impact of the Davis-Bacon Act: an issue that remains unresolved. Other aspects of
the administration of the statute that have been of continuing dispute include the
DOL’s ability, appropriately, to render prevailing wage rate determinations; the
definition of basic concepts associated with the statute such as the site of the work

¹⁹ (...continued)
event of national emergency ....” The statute does not define national emergency. In June
1934, President Roosevelt suspended the act, briefly, while shaping the various New Deal
programs, but this appears to have been without controversy. See archived CRS Report 79-

249, The Davis-Bacon Act Suspension of 1971, by William G. Whittaker.

²⁰ See Proclamation 6491, reproduced in Weekly Compilation of President Documents, vol.
28, no. 42, October 19, 1992, pp. 1936-1937; The White House, Office of the Press
Secretary, “Emergency Suspension of the Davis-Bacon Act,” press release, October 14,

1992, 2 p.; and Federal Register, March 10, 1993, p. 13189.

²¹ See White House press release, September 8, 2005.
²² See Griff Witte, “Prevailing Wages To Be Paid Again on Gulf Coast,” Washington Post,
October 27, 2005, pp. A1-A10; and CRS Report RL33100, The Davis-Bacon Act:
Suspension, by William G. Whittaker.
²³ U.S. General Accounting Office, The Davis-Bacon Act Should Be Repealed: Report to
the Congress by the Comptroller General of the United States, GAO/HRD-79-18, April 27,

1979.

²⁴ For an overview of the history of the Davis-Bacon Act, see CRS Report 94-408, The
Davis-Bacon Act: Institutional Evolution and Public Policy, by William G. Whittaker.

and helper; and the application of the act to the various program statutes involving
federal funding and certain funding mechanisms where there is a federal presence.²⁵
The Walsh-Healey Public Contracts Act (1936)
“The Government,” stated Secretary of War Newton Baker in August 1917,
while considering the production of military uniforms, “cannot permit its work to be
done under sweatshop conditions, and it cannot allow the evils widely [associated
with such production] ... to go uncorrected.”²⁶ Government contracts for goods had
long sparked complaints of abuse. Profiteering on sales to the federal government
had been a continuing focus of public policy debate. During World War I, reformers
battled to protect workers on the home front from exploitation.²⁷ After the war,
wartime cooperation with labor faded before a reluctance, in peacetime, to interfere
with labor practices of the private sector.
Compelled “to accept the lowest responsible bid regardless of the conditions of
work under which the contract was performed,”government often found itself “an
unwilling collaborator with ... firms that sought to get government business by
cutting wages.”²⁸ In the early 1930s, the Roosevelt Administration, staffed heavily
by social activists from the World War I era and faced with the economic realities of
the Great Depression, began to press for reforms. In June 1933, Congress passed the
National Industrial Recovery Act (NIRA) under which industries, given limited anti-
trust immunity, developed codes of fair competitive practices which, normally,
included minimum wage and overtime pay requirements, restriction of industrial
homework, and prohibition of child labor.²⁹ The result was a flurry of quasi-

²⁵ Inter alia, see Herbert R. Northrup, “The ‘Helper’ Controversy in the Construction
Industry,” Journal of Labor Research, fall 1992, pp. 1-15; William A. Isokait, “Reason
Restored: Courts Rule Davis-Bacon Act Language Means What It Says,” The Constructor,
August 1994, pp. 20-22; U.S. General Accounting Office, Davis-Bacon Act: Process
Changes Could Raise Confidence That Wage Rates Are Based on Accurate Data,
GAO/HEHS-96-130, May 1996; and U.S. General Accounting Office, The Davis-Bacon
Act: Labor Now Verifies Wage Data, but Verification Process Needs Improvement,
GAO/HEHS-99-21, January 1999.
²⁶ Quoted in Eileen Boris, Home To Work: Motherhood and the Politics of Industrial
Homework in the United States (Cambridge: Cambridge University Press, 1994), p. 135.
²⁷ See Steven Fraser, Labor Will Rule: Sidney Hillman and the Rise of American Labor
(New York: The Free Press, 1991), p. 166 ff.
²⁸ Herbert C. Morton, Public Contracts and Private Wages: Experience under the Walsh-
Healey Act (Washington: The Brookings Institution, 1965), p. 8. (Hereafter cited as
Morton, Public Contracts and Private Wages.)
²⁹ Margaret H. Schoenfeld, “Analysis of the Labor Provisions of the N.R.A. Codes,”
Monthly Labor Review, March 1935, pp. 574-603. See also Irving Bernstein, A Caring
Society: The New Deal, the Worker, and the Great Depression (Boston: Houghton Mifflin
Company, 1985).

regulatory activity — with high visibility and extreme contentiousness.³⁰ In May

1935, the NIRA was declared unconstitutional.³¹

Walsh-Healey Enacted. The Roosevelt Administration set out to salvage
what it could of the labor standards provisions of the NIRA. The approach taken
under Davis-Bacon (i.e., regulation through procurement policy, rather than direct
restraint upon the private sector) seemed a likely option. Anticipating a Court threat
to the NIRA, Labor Secretary Frances Perkins had drafted (but temporarily set aside)
two separate bills. One proposed establishment of labor standards under federal
contracts for manufactured goods. The second would emerge in mid-1938, after³²
considerable modification, as the Fair Labor Standards Act.
The thrust of the public contracts legislation, reverting to the spirit of World
War I reforms, was the eradication of sweatshop production: ending child labor and
industrial homework, while establishing a minimum wage floor and overtime pay
standards. Legislation mandating labor standards in contract production of goods for
the federal government was introduced by Senator David Walsh (D-Mass.) in June

1935. A slightly different proposal was offered by Representative Arthur Healey (D-

Mass.). A year later (June 1936), after extended hearings, the Walsh-Healey
legislation was enacted (P.L. 74-846).³³
In some ways, Walsh-Healey resembled Davis-Bacon.³⁴ It mandated that any
contract “made and entered into by any executive department, independent
establishment, or other agency or instrumentality of the United States, or by the
District of Columbia ... for the manufacture or furnishing of materials, supplies,
articles, and equipment in any amount exceeding $10,000,” shall include a stipulation
for payment to:
... all persons employed by the contractor in the manufacture or furnishing or the
materials, supplies, articles, or equipment used in the performance of the contract
... without subsequent deduction or rebate on any account, not less than the
minimum wages as determined by the Secretary of Labor to be the prevailing

³⁰ On this period, see Hugh S. Johnson, The Blue Eagle from Egg to Earth (New York:
Greenwood Press, 1968), and Donald R. Richberg, The Rainbow (New York: Doubleday,
Doran & Company, Inc., 1936).
³¹ Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).
³² Frances Perkins, The Roosevelt I Knew (New York: Viking Press, 1946), pp. 246-267;
and George Martin, Madam Secretary, Frances Perkins (Boston: Houghton Mifflin
Company, 1976), pp. 103-121. Where ideas are flowing as freely as they were during the
New Deal, it can be difficult firmly to assign credit or responsibility.
³³ Concerning the early Walsh-Healey Act, see Elizabeth Brandeis, “Organized Labor and
Protective Labor Legislation,” in Milton Derber and Edwin Young, eds., Labor and the New
Deal (Madison: University of Wisconsin Press, 1961), pp. 208-210; and Carroll L.
Christenson and Richard A. Myren, Wage Policy Under the Walsh-Healey Public Contracts
Act: A Critical Review (Bloomington: Indiana University Press, 1966), p. 228.
³⁴ Charles Donahue, “The Davis-Bacon Act and the Walsh-Healey Public Contracts Act:
Comparison of Coverage and Minimum Wage Provisions,” Law and Contemporary
Problems, spring 1964, pp. 488-513.

minimum wages for persons employed on similar work or in the particular or
similar industries or groups of industries currently operating in the locality in
which the materials, supplies, articles, or equipment are to be manufactured or³⁵
furnished under said contract; ...
The act required the contractor to be “the manufacturer of or a regular dealer in the
materials, supplies, articles, or equipment to be manufactured or used in the
performance of the contract.” The intent was to assure that the contractor was an³⁶
actual (“regular”) “dealer” or “manufacturer” and not a bid broker. The provision
would later be altered. (See discussion of this provision below.)
Given its experience with Davis-Bacon and the NIRA, Congress seems to have
been more concerned with detail in drafting Walsh-Healey. It set workhours limits
of 8 hours per day and 40 hours per week — subsequently modified to provide for³⁷
a general 40-hour workweek. Child labor would be precluded: “no male person
under sixteen years of age and no female person under eighteen years of age” could³⁸
be employed on covered work. No convict labor was to be employed in work
covered by Walsh-Healey.³⁹ Congress mandated that covered work was to be
performed in buildings that were safe, sanitary, and without hazard “to the health and
safety of employees engaged in the performance of said contract” in an effort to⁴⁰
thwart sweatshop production and industrial homework.
There were limitations on the act’s coverage. Specifically, it would not apply
with respect to goods that “may usually be bought in the open market” (i.e., that are
not manufactured under contract for the federal government). In keeping with other
legislation of the period, Walsh-Healey did not apply to agriculture: “to perishables,
including dairy, livestock and nursery products, or to agricultural or farm products
processed for the first sale by the original producers ....”⁴¹ Similarly, common⁴²
carriers of freight or personnel were exempt.
Like Davis-Bacon, it provided that the Comptroller General should compile and
circulate “to all agencies of the United States” a list of firms that “have breached any

³⁵ Section 1(b) of P.L. 74-846; currently Title 41 U.S.C. Section 35(b).
³⁶ Section 1(d) of P.L. 74-846.
³⁷ Section 1(c) of P.L. 74-846.
³⁸ See order of Secretary of Labor Louis Schwellenbach, August 24, 1945, in Federal
Register, August 25, 1945, p. 10438.
³⁹ An exception was made with respect to the federal prison industries program. See Section

8 of P.L. 74-846.

⁴⁰ The act also reads, “Compliance with the safety, sanitary, and factory inspection laws of
the State in which the work or part thereof is to be performed shall be prima-facie evidence
of compliance with this subsection.” Section 1(e) of P.L. 74-846; Title 41, Section35(e).
⁴¹ Section 9 of P.L. 74-846.
⁴² Ibid.

of the agreements or representations required by this Act” and permitted debarment
of such firms for three years.⁴³
The act left latitude to the Secretary of Labor. First. Should the Secretary find
that compliance with the labor standards provisions of the act would “seriously
impair the conduct of Government business,” he “shall make exceptions in specific
cases or otherwise when justice or public interest will be served thereby.” Second.
The Secretary is granted the option, through rules and regulations, of “allowing
reasonable variations, tolerances, and exemptions to and from any or all provisions
of this Act ....”⁴⁴
Determining a Wage Standard. Although covered workers were to be paid
“not less than the minimum wages as determined by the Secretary of Labor to be the
prevailing minimum wages,” it was not specified how the Secretary was to make⁴⁵
such a determination. Nor were either “prevailing” or “minimum” defined. As a
result, there appears to have been some variation both of a working definition and of
wage rate determination methodology from one Secretary to the next.
In 1952, the act was amended making it subject to the Administrative Procedure
Act, specifying that rate determinations were to be made “on the record after
opportunity for a hearing.” Further, it provided that “any interested person shall have
the right of judicial review of any legal question which might otherwise be raised,
including, but not limited to, wage determinations and the interpretation of the terms
‘locality,’ ‘regular dealer,’ ‘manufacturer,’ and ‘open market.’”⁴⁶ The result of
instituting judicial review would not be long in coming.
Rendering prevailing wage rate determinations, as suggested above, was not
easy. The act left undefined critical concepts. But practical issues would overwhelm
the theoretical and most would be dealt with by the Department at its own discretion.

⁴³ Section 3 of P.L. 74-846.
⁴⁴ Section 6 of P.L. 74-846. Whatever alteration may be made to the overtime pay
requirements of the act, the principle of time-and-a-half for overtime work had to be
retained.
⁴⁵ Initially, Walsh-Healey wage rate determinations were made for the low-wage industries,
largely textile and garments; but, by the early 1960s, the Secretary had shifted focus to a
new tier of medium to high-wage industries. At least partly as a result of this shift of focus,
industry became increasingly critical of the statute and of its administration by DOL.
Rudolf Modley, James R. Patton, Jr., and Gerald D. Reilly, “Problem Child Among Labor
Laws — The Walsh-Healey Act,” Duke Law Journal, spring 1963, pp. 206-210, state that
“no wage determinations were made between mid-1943 and 1948.” (Hereafter cited as
Modley, et al., Problem Child.)
⁴⁶ See Title III, Section 301, of P.L. 82-429. To meet the locality requirement, state Modley,
et al., in Problem Child, p. 247, the Secretary had divided “the entire United States into six
‘localities,’” on the legality of which the courts were divided. See Lukens Steel Co. v.
Perkins, 107 F.2d 627, 630 (D.C. Cir. 1939) and Perkins v. Lukens Steel Co. 310 U.S. 113
(1940). The U.S. Supreme Court held that Lukens Steel was without standing to sue — one
of the cases leading to the 1952 (Fullbright) amendment to the act. See P.L. 82-429, Title
III, Section 301.

Should all firms be canvassed for prevailing wage purposes? DOL would choose a
cutoff at five, 10, 20 employees — whatever seemed appropriate at the time; but the
size of the firms surveyed could have a significant impact upon the survey findings.
Which firms might be grouped together for survey purposes? What would be an
appropriate payroll period: that is, at what point during the production cycle should
the survey be conducted? Which employees should be taken into account and, in
terms of job description, how should they be differentiated one from the other?
(Unlike Davis-Bacon, workers covered by Walsh-Healey were not distinguishable
along craft lines — for the most part.) Should there be sub-minima for beginners,
learners, apprentices, etc., or should all workers be treated similarly?⁴⁷
The actual wage survey was undertaken by the Bureau of Labor Statistics (BLS).
When conducting surveys of manufacturing establishments to establish a database,
BLS worked under a promise of firm-specific confidentiality. Thus, as a practical
matter, affected firms saw only the general tabulations and not the data upon which
they were based and, therefore, had no way to judge the validity of the Department’s
calculations. As a result, its methodology was subjected to judicial challenge.⁴⁸
In the 1964 case of Wirtz v. Baldor Electric Co., the court reviewed the wage
determination process as utilized by DOL and suggested that the Department could
sustain the confidentiality of the survey data but, at the same time, it risked having
its determinations invalidated.⁴⁹ The court found tabulations of wage rates “compiled
from undisclosed confidential data ... failed to accord to appellees [industry] the
adequate opportunity for rebuttal and cross-examination that the Congress
prescribed” under the Walsh-Healey Act as amended in 1952.⁵⁰ And, the court found
that the Secretary’s wage rate determination methodology “must be set aside for the
further reason that it is not supported by ‘reliable, probative, and substantial
evi d ence.’”⁵¹
In the wake of Wirtz v. Baldor Electric, no further Walsh-Healey wage rate
determinations were made. As a result, the “prevailing minimum” wage for Walsh-
Healey purposes has become the federal minimum wage under the Fair Labor
Standards Act (FLSA).
The Issue of Overtime Pay. Establishment of an 8-hour day had been a
concern of organized labor at least since the late 19^th century — and it had been one
of the labor standards addressed in the industrial codes growing out of the NIRA.
Thus, in 1936, it was consistent both with history and the spirit of the times that the

⁴⁷ Modley, et al., Problem Child, pp. 221-232.
⁴⁸ Ibid., p. 233, states, “The confidentiality clause effectively prevents industry, labor, and
all Labor Department personnel (except BLS employees) from having access to the data
underlying the wage survey.”
⁴⁹ Wirtz v. Baldor Electric Co. 337 F.2d 518 (D.C. Cir. 1964).
⁵⁰ 337 F.2d at 529.
⁵¹ Ibid., p. 530. See unnumbered CRS report, Prevailing Minimum Wages under the Walsh-
Healey Act, by Vincent E. Treacy, no longer in circulation but available from the author of
this report.

authors of the Walsh-Healey Act provided that covered workers should not be
permitted to work “in excess of eight hours in any one day or in excess of forty hours
in any one week.”
However, P.L. 74-846 granted the Secretary discretion in dealing with
workhours and affirmed: “Whenever the Secretary ... shall permit an increase in the
maximum hours of labor stipulated in the contract, he shall set a rate of pay for any
overtime, which rate shall be not less than one and one-half times the basic rate
received by any employee affected.”⁵² Under the original Walsh-Healey language,
the Secretary could set aside the 8-hour and 40-hour standards — but only in so far
as payment of time-and-a-half for hours worked in excess of 8 per day and 40 per
week was granted.
Both Walsh-Healey and the Fair Labor Standards Act (FLSA) were rooted in the
NIRA. Introduced in 1937 before Walsh-Healey was fully implemented, the FLSA
was signed into law in mid-1938 (P.L. 75-718). In the latter enactment, Congress
dropped the daily limit on hours of work (pre-overtime) but ultimately kept a weekly
standard. The FLSA permitted any combination of hours of work to which an
employer would agree so long as the total did not exceed 40 hours in a single
workweek — after which overtime rates would have to be paid.⁵³
At least by the late 1960s, some in industry were pointing to a conflict between
the overtime pay requirements of Walsh-Healey and those of the FLSA. It created
scheduling problems, it was argued, where firms were engaged both in private sector
(FLSA-covered) work and in contract production for the federal government. On the
other hand, certain worker groups, consultants, and women’s groups were urging
greater flexibility in work scheduling. In 1978, Congress adopted the Federal
Employee’s Flexible and Compressed Work Schedules Act (P.L. 95-390). The latter
statute, at first experimental and subsequently established on a permanent basis,
allowed federal agencies to schedule hours of work over a two-week 80-hour period
without payment of overtime rates. This program for federal employees (on which
the trade unions were divided) raised a question of equality of treatment of public and
private sector workers and provoked new demands for amendment of Walsh-Healey.
Finally, as part of the National Defense Authorization Act for FY1986 (P.L. 99-
145), Congress amended both Walsh-Healey and the Contract Work Hours and
Safety Standards Act (which supplements the Davis-Bacon Act) by eliminating the

8-hour daily pre-overtime pay requirements as they applied to federal contract work.

The 8-hour provision was replaced by the 40-hour standard of the FLSA. The
measure was signed by President Ronald Reagan on November 8, 1985.⁵⁴

⁵² Section 6 of P.L. 74-846.
⁵³ Under P.L. 75-718, the workweek was initially set at 44 hours, prior to the overtime pay
requirement, but was to be phased down to a 40-hour standard at the end of a two-year
period. Special requirements and exceptions were also built into the act.
⁵⁴ For further discussion of the demise of the 8-hour standards for federal contract work, see
CRS Report 86-33, The Walsh-Healey Public Contracts Act of 1936 and the Issue of^th
Overtime Pay: Proposals of the 99 Congress with Background Perspectives, by William
(continued...)

Manufacturer or Regular Dealer. As noted above, federal procurement had
witnessed the presence of bid brokers: professional bidders on public contracts who
may, in fact, have possessed no independent ability to produce the deliverables
specified in the contract. Once award had been made, the bid broker would market
the work to a third party — to the contractor who could do the work most cheaply
and perhaps accept a less than average profit.⁵⁵ In order to end such practices,
Section 1(a) of the original Walsh-Healey Act provided that an eligible contractor
had to be “the manufacturer of or a regular dealer in the materials, supplies, articles,
or equipment to be manufactured or used in the performance of the contract ....”
The concepts of “manufacturer” and “regular dealer” (determining eligibility as
a federal contractor under the act) came to be set forth in DOL regulations. A
manufacturer was defined as “a person who owns, operates, or maintains a factory
or establishment that produces on the premises the materials, supplies, articles, or
equipment required under the contract and of the general character described by the
specifications.” Similarly, a regular dealer was identified as one “who owns,
operates, or maintains a store, warehouse, or other establishment in which the
materials ... described by the specifications and required under the contract are
bought, kept in stock, and sold to the public in the usual course of business.” The
rules specified how eligibility determinations were to be made.⁵⁶
During the 103^rd Congress, the law was changed (P.L. 103-355). The mandatory
character of the “manufacturer” and “regular dealer” eligibility test was altered.
Instead, a new section was added which provides that the Secretary of Labor “may
prescribe in regulations the standards for determining whether a contractor is a
manufacturer of or a regular dealer in materials” and other articles to be used in the
performance of a contract covered by Walsh-Healey. (Italics added.) Adherence to
the “manufacturer” and “regular dealer” standards, thus, became a matter of⁵⁷
discretion with DOL.
Naval Vessels. Initially, there seems to have been some dispute as to whether
the “construction, alteration, furnishing, or equipping of a naval vessel” was
construction subject to the Davis-Bacon Act or the purchase of goods covered by the
Walsh-Healey Act. Under naval procurement law (Title 10, Section 7299), naval
vessels fell under Walsh-Healey.

⁵⁴ (...continued)
G. Whittaker, pp. 51-62 (archived: available from the author).
⁵⁵ Herbert Morton, in Public Contracts and Private Wages, pp. 12-13, characterizes the bid
broker as “a fly-by-night operator who had no plant of his own, but who secured government
contracts and then farmed the work out at a profit.” The “bid peddler” or “bid broker,”
Morton noted, might be little more than a one-person operation. It is also possible that
reputable firms might bid at cost or even under cost in order to provide interim work for
their employees — thus holding a crew together pending a more favorable deal. Such work
could also provide entry into the field.
⁵⁶ See 41 C.F.R. § 50-201.101(a)(1) & (2), and 41 C.F.R. § 50-206.50.
⁵⁷ See Federal Register, August 5, 1996, pp. 40714-40716.

However, the Federal Acquisition Streamlining Act of 1994 (P.L. 103-355)
repealed Title 10, Section 7299. While this change in the law “required no changes
in the regulations,” DOL stated:
... the Department advised contracting agencies and contractors that such
contracts would, as a result, be subject to the Davis-Bacon Act, which applies to
contracts in excess of $2,000 for the construction, alteration, and/or repair ... of
a public building or a public work, because marine vessels have historically been
regarded as “public works” for purposes of the Davis-Bacon Act.
In a Federal Register notice, the Department noted objections to its interpretation
(placing vessels under Davis-Bacon).⁵⁸ In rulemaking, both the Department of the
Navy and the Shipbuilders Council of America “questioned the Department’s
interpretation” that, in the absence (here, the repeal) of Section 7299, labor standards
coverage would devolve to Davis-Bacon. DOL conceded that the result (devolution)
“may have been an unintended consequence” of P.L. 103-355 but, nonetheless, found
the issue moot. The Fiscal Year 1996 Department of Defense Authorization Act
(P.L. 104-106), it pointed out, “includes a provision reinstating former 10 U.S.C.

7299.” Therefore, the Department concluded: “... each contract for the construction,

alteration, furnishing or equipping of a naval vessel is once again subject to the PCA
[Walsh-Healey], unless the President determines that this requirement is not in the
interest of national defense.”⁵⁹
The McNamara-O’Hara Service Contract Act (1965)
As the 1960s dawned, the FLSA was still evolving. Wide gaps in coverage
remained — including many service employees. And, although Congress had
mandated minimum wage standards, variously calculated, for construction and
manufacturing workers employed in contract work for the federal government, the
service sector was not covered by these standards. Legislation to fill that void was
offered during several Congresses and, during the 88^th Congress (1963-1964),
hearings were held and a bill reported from the House Committee on Education and
Labor.⁶⁰ The measure died in the Rules Committee.
McNamara-O’Hara Enacted. In 1965, with support from the Johnson
Administration, Representatives Tom Pelly (R-Wash.) and James O’Hara (D-Mich.)
introduced new legislation to protect service workers. “The employees who would
be covered by the proposed legislation are among the most poorly paid and
economically deprived in our society,” explained DOL Solicitor Charles Donahue
during hearings in August 1965. “Often,” he continued, “they are not members of

⁵⁸ Ibid., p. 40714.
⁵⁹ Ibid., p. 40715. In terms of minimum wages (likely moot, itself, for ship construction) and
overtime pay, the impact of restoration of the Walsh-Healey Act might be regarded as
redundant since such work would otherwise be covered by the identical requirements of the
FLSA.
⁶⁰ U.S. Congress, House Committee on Education and Labor, Special Subcommittee on
Labor, Service Contracts Act of 1963, hearings, 88^th Cong., 2d Sess., January 27, 29, 30, and
March 16, 1964.

unions and have little prospect of bettering their condition through collective
bargaining.” He argued that the federal government should provide an example of
fairness and justice. “While I do not wish to imply that low-wage rates are universal
in the service industry,” the Solicitor cautioned, “the fact that they exist at all is
indefensible, particularly where Government contracts are involved.”
The Solicitor pointed both to economic and policy considerations in support of
the Pelly-O’Hara proposals. Contracting agencies, he stated, must “award contracts
to the lowest bidder who can satisfactorily complete the work. Since labor costs are
the predominant factor in most service contracts,” he added, “the odds on making a
successful low bid for a contract are heavily stacked in favor of the contractor paying
the lowest wage.” When the “low bid policy” for service contracts “is coupled with
a policy of no labor standards protection,” Donahue observed, “the trend may well
be in certain areas for wage rates to spiral downward.”
In the view of the Johnson Administration, low wages were not a prudent
economy. “... it is very doubtful whether the Government gains in the long run by
a policy which encourages the payment of wages at or below the subsistence level.
Substandard wages,” Donahue affirmed, “must inevitably lead to substandard
performance. Further, the economy as a whole suffers from the reduced purchasing
power of the workers.” He concluded: “The present policy of low bid contract
awards is one under which everyone loses — the employee, the Government, the
responsible contractor — that is, everyone except the fly-by-night operator who is
eager to profit from the under compensated toil of his workers.”⁶¹
Although differing opinions were expressed concerning coverage and the wage
rate determination process, the legislation appears to have generated little
controversy. The Pelly-O’Hara bill was unanimously reported from the House
Committee on Education and Labor and on September 20, 1965, passed by the House
under suspension with a voice vote.⁶² Three days later, following a brief hearing by
the Senate Subcommittee on Labor, chaired by Senator Patrick McNamara (D-
Mich.), the measure was unanimously reported from the full Committee on Labor
and Public Welfare. On October 1, 1965, the bill (now, McNamara-O’Hara) was
passed by the Senate virtually without debate.⁶³ In signing the legislation on October
22, 1965, President Lyndon Johnson observed that it “closes the last big gap” in labor
standards protection for federal contract workers (P.L. 89-286).⁶⁴

⁶¹ U.S. Congress, House Committee on Education and Labor, Special Subcommittee on
Labor, Service Contract Act of 1965, hearing, 89^th Cong., 1^st Sess., August 5, 1965, pp. 3-13.
⁶² Congressional Record, September 20, 1965, pp. 24386-24388. See U.S. Congress, House
Committee on Education and Labor, Service Contract Act of 1965, report to accompany^th^st
H.R. 10238, 89 Cong., 1 sess., H.Rept. 89-948 (Washington, GPO, 1965), 5 p. (Hereafter
cited as House Report 89-948.)
⁶³ Congressional Record, October 1, 1965, pp. 25857-25858. See U.S. Congress, Senate
Committee on Labor and Public Welfare, Service Contract Act of 1965, report to accompany^th^st
H.R. 10238, 89 Cong., 1 sess., S.Rept. 89-798 (Washington, GPO, 1965), 6 p. (Hereafter
cited as Senate Report 89-798.)
⁶⁴ Public Papers of the Presidents of the United States: Lyndon B. Johnson, Book II,
(continued...)

Evolution of the Service Contract Act. Like Davis-Bacon and Walsh-
Healey, the McNamara-O’Hara Service Contract Act is bid-based. It provides that
every contract (and bid specification therefore) “entered into by the United States or
the District of Columbia in excess of $2,500 ... [with certain exceptions specified in
the act], whether negotiated or advertised, the principal purpose of which is to
furnish services in the United States through the use of service employees,” shall
contain certain labor standards provisions. (Italics added.) Among these were:
^!... that not less than a specified minimum wage, “determined by the
Secretary” to be “in accordance with prevailing rates” for
comparable work “in the locality,” be paid to workers employed
under the said contract — but in no case less than the minimum
wage provided for in the FLSA,
^!that workers under the contract be provided the fringe benefits (or
the cash equivalent thereof) found by the Secretary to be prevailing
for such workers engaged in comparable work in the locality;⁶⁵
^!that the workplace be safe and sanitary; and
^!that the Secretary was permitted to adjust the terms of the statute as
he might deem proper “in the public interest or to avoid serious
impairment of the conduct of Government business.”
It was expected that contract service employees were to be paid overtime rates, where
appropriate, on the basis of the regular rate as determined under the FLSA.
But, what exactly was a service employee? The original McNamara-O’Hara Act
(P.L. 89-286) defined a service employee to include the following:
... guards, watchmen, and any person engaged in a recognized trade or craft, or
other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual
labor occupations; and any other employee including a foreman or supervisor in
a position having trade, craft, or laboring experience as the paramount
requirement ....
It was not clear that every worker engaged in contract work, other than construction
or in manufacturing, would be deemed a service worker; but, there did seem to be a
consensus that the three acts, taken together, would cover the field of contract work.
Controversy and Amendment. Though the concept of the Service Contract
Act (SCA) may have been clear, problems quickly arose as DOL commenced its
implementation. As with Davis-Bacon, many of these complications stemmed from
the absence of a more precise definition of terms used in the new statute. In 1972
and again in 1976, the act was amended, generally: (a) to expand coverage, (b) to
improve administrative efficiency, (c) to help assure that the act would be enforced,

⁶⁴ (...continued)
Washington, U.S. Govt. Print. Off., 1966, pp. 1078-1079.
⁶⁵ In P.L. 88-349, adopted a year earlier, Congress had added a fringe benefit component to
the Davis-Bacon prevailing wage rate calculation.

and (d) to encourage greater stability within the service industry. But a primary focus
of the various amendments was to define the terms of coverage.
The 1972 Amendments. After several years of experience, both employers
and service workers seemed convinced that change in the statute was in order.
Further, some Members of Congress — involved in the original enactment —
expressed concern that implementation of the statute was not proceeding as they had
expected. The legislation (P.L. 92-473), some estimated, would “benefit nearly two⁶⁶
million employees of private service contractors on Federal installations.”
The “Five Man” Provision. Generally following the Walsh-Healey language,
the SCA permitted the Secretary to make “such rules and regulations allowing
reasonable variations, tolerances, and exemptions to and from any or all provisions
of this Act as he may find necessary and proper ....” It also provided, apparently as
a fall-back position, that not less than the minimum wage under the FLSA should be
paid to covered workers. The intent of the provisions seems to have been to provide
flexibility and to allow the Secretary time to develop a suitable wage rate
determination methodology and machinery.
During hearings in 1971 and 1972, it was disclosed that the Secretary, to a
significant degree, had failed to make the requisite determinations and was relying
upon the FLSA minimum wage as the locally prevailing rate for SCA purposes.
Thus, Congress amended the act to require that the Secretary would actually make
wage rate determinations for progressively smaller contracts. After July 1, 1976, they
were to be made for “all contracts under which more than five service employees are
to be employed.”⁶⁷
“Successorship” and Related Requirements (1972). In service contracts,
labor cost is often a primary competitive element, with the workers, over time, likely
to secure some improvement in wage and benefit levels. Thus, with each successive
round of bidding, a competitor contractor, coming fresh to the job, would be almost
certain to present a bid lower than that of a current contract holder based simply on
lower wage and benefit rates. Where a contracting firm operated under a collective
bargaining agreement, its displacement would be almost guaranteed — regardless of
the quality of services provided.
The implications, it was argued, were diverse. First. Wage-based competition
resulted in a downward spiral so long as there were cheaper workers available.
Second. Annual shifts in contractors created a lack of continuity and stability within
the industry. Third. Low wages produced no real economy for government or the
consumer since (a) cheaper workers were often less competent and responsible than

⁶⁶ “Service Contracting Reform Bill Signed,” The Laborer, November 1972, p. 3.
⁶⁷ P.L. 92-473. The result was a dual coverage threshold for wage rate determinations: i.e.,
contracts in excess of $2,500 and with “more than” five service workers employed. See
CRS Report 86-533, The McNamara-O’Hara Service Contract Act: Discretionary
Authority of the Secretary of Labor Under Section 4(b) and the Mandatory Wage Rate
Determination Requirement as Developed in the 1972 Amendments, A Legislative History,
by William G. Whittaker (out of print, but available from the author).

more experienced and more highly paid workers and, (b) the annual rotation of
contractors created an employer incentive to maximize profits for the short-term —
with little thought for quality of performance. Fourth. Since service workers were,
arguably, usually on the lower end of the pay scale even where prevailing scales were
honored, they might pose a welfare burden to the community. And, were they
displaced in a shift of contractors, the workers might be left destitute. Fifth. An
annual change of contractors, if only because of the short duration of service, seemed
to guarantee a non-union work environment.
As modified, the act would require that a successor contractor, for substantially
the same services in a locality, could not pay “any service employee ... less than the
wages and fringe benefits” (including prospective increases resulting from “arm’s
length negotiations”) to which he or she would have been entitled under the
predecessor contract.⁶⁸
The provision was contentious. Although the Secretary was granted authority
to modify a contract if he found, after a hearing, that the wage and benefit rates were
“substantially at variance” with those prevailing locally for similar services, the
provision seemed, some argued, unduly to favor workers. Absent a discretionary
intervention by the Secretary, wages and benefits would be unlikely to fall,
downward economic pressures notwithstanding. Conversely, it could be argued, the
requirement would somewhat remove wages and benefits from the competitive mix,
encouraging employers to compete in other ways.⁶⁹
Other Issues. Concern had been expressed that direct federal employees could
be disadvantaged through contracting out under potentially less costly service
contracts. To insure comparability, Congress added language to the statute to
provide: that each such service contract must contain a “statement of the rates that
would be paid by the federal agency to the various classes of service employees” if
the workers were direct federal employees; and, that the Secretary “shall give due
consideration to such rates” in making wage and fringe benefit determinations.
Finally, subject to any appropriations restraints, service contracts could be negotiated
for up to five years rather than on an annual basis.
The 1976 Amendments. Interpretive questions continued to plague the act
in the wake of the 1972 amendments. Coverage and definitional issues soon
emerged. How far did the Service Contract Act reach? Was coverage confined to
janitors, cleaning staff and immediately related workers; or, did it include white
collar and technical workers as well?

⁶⁸ The predecessor contract, now setting a wage/benefit floor for a successor contractor, had
to result from “arm’s length negotiations.” That is, there could not have been collusion
between a predecessor contractor and his workers (or the union) to raise the wage/benefit
level in order to saddle a successor with uneconomic costs.
⁶⁹ See Armand J. Thieblot, Jr., Prevailing Wage Legislation: the Davis-Bacon Act, State
“Little Davis-Bacon” Acts, the Walsh-Healey Act, and the Service Contract Act
(Philadelphia: The Wharton School, University of Pennsylvania, 1986, pp. 254-257.
(Hereafter cited as Thieblot, Prevailing Wage Legislation.)

The act was not self-enforcing and some agencies, it was charged, let contracts
without requesting wage rate determinations.⁷⁰ Indeed, an informal coalition may
also have developed between procurement officers and contractors, each for their
own purposes, seeking to reduce labor costs and, thus, seeking the narrowest possible
interpretation of coverage. When agencies disagreed, industry and labor were left
without direction — and disputes ultimately ended up in the courts.
When the courts ruled that the act was limited in its scope to blue collar
employees,⁷¹ Congress reviewed the coverage issue in a series of hearings conducted
intermittently through 1974, 1975 and 1976. The House Subcommittee on Labor-
Management Relations reported as its intent that white collar workers (clerical
workers along with “keypunch operators and others”) were to be included under the
terms of the SCA — and, that their inclusion had been the intent of Congress.⁷²
During the fall of 1976, legislation to clarify that point (though intentionally worded
in terms that would not be delimited by collar color) moved through Congress,
becoming law in October 1976 (P.L. 94-489).⁷³
The definition of service employee, as might have been anticipated given the
history of these statutes, was not entirely clarified by the 1976 amendments.
Whatever the intent of Congress may have been, contract workers engaged in “the
maintenance, calibration, and/or repair of ... automatic data processing equipment and
office information/word processing systems,” and related technical workers, would
come to be exempt from Service Contract Act coverage. The exemptions, the
Secretary of Labor found, “are necessary and proper in the public interest or to avoid
serious impairment of the conduct of Government business ....”⁷⁴
Still other definitional issues proved contentious. What was implied by the
concept of principal purpose? What would be the status of service employees,
however numerous, under a contract the principal purpose of which was not to
provide services? How should administrative or professional personnel, who also
provide services, be treated? “This employee mixture,” one observer affirmed,

⁷⁰ See Beverly Hall Burns, “The Service Contract Act of 1965: Time To Revise or Repeal,”
Villanova Law Review, April 1984, p. 443.
⁷¹ See Descomp v. Sampson, 377 F.Supp. 254 (D.Del. 1974) and Federal Electric
Corporation v. Dunlop, 419 F.Supp. 221 (M.D. Fla. 1976).
⁷² U.S. Congress, House Committee on Education and Labor, Service Contract Act
Amendments of 1976, report to accompany H.R. 15246, 94^th Cong., 2^nd sess., H.Rept. 94-

1571 (Washington, GPO, 1976), pp. 2-3.

⁷³ The operative language of P.L. 94-489 read: “The term ‘service employee’ means any
person engaged in the performance of a contract entered into by the United States ... whether
negotiated or advertised, the principal purpose of which is to furnish services in the United
States (other than any person employed in a bona fide executive, administrative, or
professional capacity) ....” Italics added.
⁷⁴ See 29 C.F.R. § 4.123(e). See also Bureau of National Affairs, Daily Labor Report,
February 6, 1984, pp. A11-A13 and D1-D6.

“subjects the contract to the ‘incidental use’ test,” which he suggested was “a
confusing ‘guideline.’”⁷⁵
After the 1976 amendments, further refinement of the act was left, largely, to
administrative rulemaking, to litigation, and to initiatives in the area of procurement
reform. That course, however, would not be smooth.⁷⁶
Comparison of Existing Standards
Through the years, each act — Davis-Bacon, Walsh-Healey, and McNamara-
O’Hara — has been intermittently a focus of attention, most often sparked by critics.
To some extent, the controversy surrounding each of these statutes may be a measure
of its impact.
Judged by the literature it has sparked and the frequency with which it has been
an active part of the legislative agenda, the Davis-Bacon Act (1931) has been the⁷⁷
most controversial of the three. At least two factors may be at work here. First.
There are strong and articulate interest groups both defending and opposing the
Davis-Bacon Act. Second. Aside from the act, per se, Davis-Bacon (prevailing
wage) provisions have been included in numerous program statutes thereby
expanding the impact of the act to groups of people (in government and in the
contracting community) unfamiliar with its operation and requirements. As a result,
when these program statutes have come up for review and/or reauthorization, Davis-
Bacon is frequently called into consideration.
McNamara-O’Hara (1965) was a subject of contention during the 1970s and
1980s. However, it would appear that, following a strong attack by certain segments
of industry and by the General Accounting Office, it has largely disappeared from the
legislative agenda. It does, however, resurface during discussions of general
procurement policy and has been a subject of administrative rulemaking.⁷⁸ While the
Walsh-Healey Act (1936) may have been moderately controversial when it was
adopted (and again in the 1950s and early 1960s), it appears to have been
overshadowed by other more contentious New Deal statutes: for example, the
Wagner-Connery Labor Relations Act (National Labor Relations Act, 1935) and the

⁷⁵ Brian M. Kingston, “The Service Contract Act of 1965: A Review,” in The Air Force
Law Review, vol. 20, no. 3 (1978), p. 288.
⁷⁶ See Thieblot, Prevailing Wage Legislation, pp. 229-270; and Joseph E. Kalet, Primer on
FLSA & Other Wage & Hour Laws (Washington: Bureau of National Affairs, Inc., 1994),
pp. 103-121.
⁷⁷ CRS Report 94-908, Davis-Bacon: The Act and the Literature, by William G. Whittaker.
⁷⁸ With respect to GAO, see U.S. General Accounting Office, Service Contract Act Should
Not Apply to Service Employees of ADP and High-Technology Companies, GAO/HRD-80-
102, September 16, 1980, 113 p.; and U.S. General Accounting Office, The Congress Should
Consider Repeal of the Service Contract Act, GAO/HRD-83-4, January 31, 1983, 179 p.

Fair Labor Standards Act (1938).⁷⁹ Perhaps because its minimum wage and overtime
standards have become co-equal with those of the Fair Labor Standards Act, it seems
to be no longer a focus of attention — neither legislative nor administrative.
Diverse Provisions but Similarity of Purpose
Davis-Bacon was pre-New Deal and conceived prior to the Depression though
enacted in 1931 as an economic stabilization measure. By 1936, when Congress took
up the legislation that would become the Walsh-Healey Act, it had before it the
experience with Davis-Bacon and, subsequently, with the National Industrial
Recovery Act (NIRA). In each case (Davis-Bacon and Walsh-Healey), Congress
acted in its role as consumer and carefully avoided extending labor standards to the
private sector.
In 1937, judicial attitudes toward wage/hour legislation involving the private
sector changed.⁸⁰ After decades of refusing to give constitutional sanction to labor
standards regulation for the private sector, the Supreme Court modified its stance and
seemed willing to allow Congress greater latitude in dealing with such issues. As a
result, the FLSA was adopted in 1938. During consideration of the FLSA legislation,
Congress seemed to focus on the experience with the NIRA. It was acutely aware of
NIRA deficiencies — but that statute, through its demise, provided an indication of
what the courts would accept. Now freer to deal directly with labor standards in the
private sector, Congress was able to move beyond both Davis-Bacon and Walsh-
Healey in crafting wage/hour legislation.⁸¹
The juxtaposition of McNamara-O’Hara (1965) and the expansion of the FLSA
during the 1960s and 1970s is more puzzling. In reporting the initial legislation on
McNamara-O’Hara, both the House and Senate committees noted that service
employees “in many instances are not covered by the Fair Labor Standards Act or
State minimum wage laws.”⁸² The FLSA, beginning with a relatively narrow pattern
of coverage, had gradually been extended to an ever wider segment of the workforce.
However, the 1961 FLSA amendments expanded coverage “to about 3.6 million new
workers ... primarily in the retail trades and the service sector” and, under the 1966
FLSA amendments, to about 9 million additional workers of whom perhaps 3.3
million were employed in education and service fields (for example, public and

⁷⁹ Concerning policy priorities and public reaction during the period when the federal
contracting labor standards statutes (except McNamara O’Hara) were being shaped, see
Jerold S. Auerbach, Labor and Liberty: The La Follette Committee and the New Deal
(Indianapolis: Bobbs-Merrill, 1966); and Irving Bernstein, A Caring Society: The New
Deal, the Workers, and the Great Depression (Boston: Houghton Mifflin, 1985).
⁸⁰ The change in judicial attitude is explained in John W. Chambers, “The Big Switch:
Justice Roberts and the Minimum-Wage Cases,” Labor History, winter 1969, pp. 44-73.
⁸¹ Two more recent studies examine the context of enactment of the FLSA: George E.
Paulsen, A Living Wage for the Forgotten Man: The Quest for Fair Labor Standards, 1933-
1941 (Selinsgrove: Susquehanna University Press, 1996); and Willis J. Nordlund, The
Quest for a Living Wage: The History of the Federal Minimum Wage Program (Westport,
Conn.: Greenwood Press, 1997).
⁸² House Report 89-948, p. 2, and Senate Report 89-798, p. 3.

private hospitals and nursing institutions).⁸³ Congress might have established
wage/hour standards for workers employed under federal service contracts by
amending the FLSA. Instead, after an interval of nearly 30 years, it chose to revisit
the federal contract labor standards field and to adopt a new statute (a supplement to
Davis-Bacon and Walsh-Healey) — while, almost simultaneously, expanding the
FLSA to provide protection for many of the same workers.
Thus, by the closing decades of the 20^th century, two separate, distinct, but often
parallel, federal wage/hour structures had been developed. Minimum wage and
overtime pay protections were provided to most private and public sector workers
through the FLSA. For construction workers, employed on federal contract work,
there was a super-minimum wage (the locally prevailing rate) under the Davis-Bacon
Act.⁸⁴ Service employees would similarly enjoy a super-minimum wage (not less
than the locally prevailing standards) under the McNamara-O’Hara Act. And, in
theory, workers engaged in the contract production of goods for the federal
government would have to be paid not less than the locally prevailing minimum wage
under the Walsh-Healey Act. At the same time, construction and service workers
would have overtime pay protection under the Contract Work Hours and Safety
Standards Act (1969) — initially more protective than the overtime pay requirements
of the FLSA but, ultimately, co-equal with that statute.
The provisions of the various statutes have been modified through the years by
acts of Congress. Table 1 sets forth the contrasting (and, sometimes, overlapping)
provisions of the FLSA and the federal contract labor standards statutes.

⁸³ Nordlund, pp. 108 and 115.
⁸⁴ Construction workers had also been a focus of the 1966 FLSA amendments.

CRS-24
Table 1. Compilation of Select Federal Labor Standards Requirements
Work Hours
ProvisionDavis-BaconWalsh-HealeyMcNamara-O’Haraand SafetyStandardsFair Labor Standards Act
Act
pe of work coveredConstructionGoodsServicesConstructionMost public and private
sector workers
erage threshold$2,000$10,000$2,500 — — ^a
ⁱ^{ki/CRS-RL32086}e standardLocally prevailingMinimum wage under the FLSALocally prevailing — ^bStatutory minimum wage ^c
^g/w
^s^.orrate(since 1964)minimum rate
^le^akmentCash wage with“... the prevailing minimum wagesCash wage with fringe — Cash wage only
^://wikifringe benefitfor persons employed on similarbenefit component
^h^ttpcomponentwork ...” No further definition instatute
ographical coverageLocality (normally aUndefined ^dUndefined ^e — ^fNational
county)
ergency/SuspensionBy the President inBy the Secretary of Labor when aNo authority to suspend,ⁱ — ^fNo authority to suspend

“a national^gprovision “will seriously impair theper se
emergency” conduct of Government business”
or “in the public interest or to
prevent injustice and undue^h
hardship”

CRS-25
Work Hours
ProvisionDavis-BaconWalsh-HealeyMcNamara-O’Haraand SafetyStandardsFair Labor Standards Act
Act
overtime hours of work — ^j40 hours — ^k40 hours40 hours ^l
barmentthree yearsthree yearsthree years — ^fNot applicable
— No male under 16 years of age and — — Regulates child labor by
no female under 18 years of ageage and type of
may be employedemployment
ⁱ^{ki/CRS-RL32086}
^g/wict labor — No convict labor ^m — — —
^s^.orⁿ^o
^le^akework — Prohibited by inference Prohibited by inference — The Secretary is
authorized to regulate
^://wikiand/or to prohibit
^h^ttpindustrial homework ^p
cality“the city, town,“in the particular or similarNot defined in statute; — —
village, or other civilindustries or groups of industriessubject to administrative
subdivision of thecurrently operating in the localityand judicial
State in which thein which the materials, supplies,determination
work is to bearticles, or equipment are to be
performed”manufactured or furnished under
said contract ...”
^h^{ere is}ⁿ^o^com^p^{arable th}^res^h^{old f}^o^{r cov}^e^rag^e^uⁿ^d^{er th}^{e FL}^SA^.
^o^s^e^parat^e^w^a^g^e^s^t^an^{dard prov}ⁱ^d^ed.

CRS-26
^s^t^at^u^t^ory^mⁱⁿⁱ^m^u^m^rat^e^{($5.85 per h}^o^u^r^{, t}^oⁱⁿ^c^r^e^a^s^eⁱⁿ^st^e^p^s^t^o^{$7.25 per h}^o^u^rⁱⁿ^Ju^l^y^{2009), bu}^t^wⁱ^t^h^v^a^ri^atⁱ^oⁿ^s^f^o^{r cert}^ain^y^o^u^t^h^w^o^r^k^er^{s, p}^e^r^s^oⁿ^{s w}^ith^dⁱ^sab^{ilities, an}^d^so^m^e
^sp^ecifⁱ^{c o}^ccu^p^a^tioⁿ^s^{. So}^m^e^ex^em^p^tioⁿ^s^h^a^v^e^b^een^w^r^ittenⁱⁿ^to^th^{e statu}^t^e.
ⁿ^d^e^fi^ne^dⁱⁿ^st^a^t^ut^e^;^no^w^e^q^ua^l^t^o^t^h^e^mⁱⁿⁱ^m^u^m^w^a^ge^und^e^r^t^h^e^FLSA^:^t^hus,^na^tⁱ^o^na^l^.
^e^fine^d^{in sta}^t^ute^,^b^u^{t sub}^j^e^c^t^to^the^lo^c^a^lity^p^r^o^v^isio^{ns o}^f^the^a^c^t^a^s^d^e^fine^d^thr^o^{ugh r}^e^gula^tio^n.
^{t ap}^p^licab^{le: co}^v^e^r^a^g^e^{is a}^s^u^pplem^en^{t to Dav}ⁱ^s^-^B^acon^cov^e^rag^e^.
^h^{e act prov}^ides^(T^{itle 40, Section}^276a-⁵^{): “}^Iⁿ^th^{e ev}^en^{t of}^{a n}^a^tion^a^{l em}^erg^eⁿ^c^y^th^{e P}^r^es^iden^t^is^au^th^{orized to s}^u^s^p^en^{d” t}^he^a^c^t^.^T^h^e^c^o^nc^e^p^t^o^f^“a^na^tⁱ^o^na^l^e^m^e^r^ge^nc^y^”^ha^{s no}^t
^been^defⁱⁿ^e^d.
^h^{e act p}^r^o^v^id^{es (}^T^{itle 4}¹^,^Sectioⁿ⁴⁰⁾^:^“^u^p^oⁿ^a^w^r^itten^fⁱⁿ^dⁱⁿ^g^b^y^th^e^h^ead^o^f^th^{e co}ⁿ^t^r^actin^g^ag^en^cy^o^r^d^e^p^a^r^t^m^eⁿ^t^th^{at t}^h^eⁱⁿ^cl^u^sⁱ^oⁿⁱⁿ^t^h^{e propos}^al^{or con}^t^ract^of^t^h^{e repres}^en^t^a^tⁱ^oⁿ^s
^o^r^stip^u^l^atioⁿ^s^{set f}^o^r^t^hⁱⁿ^sectioⁿ³⁵^o^f^th^{is title w}^{ill ser}ⁱ^o^u^sly^im^p^a^ir^th^{e co}ⁿ^d^u^c^{t o}^f^Go^v^e^rⁿ^m^eⁿ^t^b^u^sin^e^{ss, th}^{e Secr}^etar^y^o^f^L^a^b^o^r^s^h^a^l^l^m^a^k^e^e^x^c^e^p^tⁱ^oⁿ^sⁱⁿ^s^p^ecifⁱ^c^cas^es^or
^o^t^h^e^r^w^{ise w}^h^en^j^u^{stice o}^r^p^u^b^{lic in}^ter^e^{st w}^{ill b}^e^ser^v^ed^th^er^eb^y^.^Up^oⁿ^th^e^J^oⁱⁿ^t^r^eco^m^m^eⁿ^d^atioⁿ^o^f^th^e^coⁿ^t^r^actin^g^ag^en^cy^an^d^th^{e con}^t^{ractor, th}^{e Secretary}^of^L^a^{bor m}^a^y^m^odif^y
^th^{e term}^s^of^an^ex^is^tin^g^con^t^{ract res}^p^ectin^g^mⁱⁿⁱ^m^u^m^rates^of^pay^an^{d m}^a^xⁱ^m^u^m^h^o^u^r^s^of^{labor as}^h^e^m^a^y^fⁱⁿ^dⁿ^eces^s^a^ry^an^{d prope}^rⁱⁿ^th^{e p}^u^b^{lic in}^ter^e^{st o}^r^to^p^r^ev^en^{t in}^j^u^stice
^aⁿ^d^und^ue^ha^r^d^shi^p^.^”
^h^{e Secretary}^(T^{itle 41, Section}^{353(b)) h}^a^s^th^{e au}^th^ority^{to m}^a^k^e^“^s^u^c^h^ru^les^an^d^reg^u^l^ation^s^allowⁱⁿ^g^reas^on^{able v}^a^riation^s,^t^o^l^e^r^a^nc^e^s^,^a^{nd ex}^em^ptⁱ^oⁿ^s^t^o^an^{d f}^r^om^an^y^{or al}^l
ⁱ^{ki/CRS-RL32086}^prov^is^ion^s^”^of^th^e^act^“^{... bu}^{t on}^lyⁱⁿ^s^p^{ecial circu}^m^s^t^an^ces^w^h^er^{e h}^e^determⁱⁿ^es^th^{at s}^u^ch^lim^itation^,^v^a^riation^,^toleran^{ce, o}^r^ex^em^p^tioⁿ^{is n}^ecessar^y^an^d^p^r^o^p^e^rⁱⁿ^th^{e p}^u^b^{lic in}^ter^e^st
^g/w^{or to av}^{oid th}^{e s}^e^riou^s^im^pairm^eⁿ^t^of^g^o^v^e^rn^m^eⁿ^t^bu^sⁱⁿ^e^s^s^....”
^s^.or^h^{e act p}^r^o^v^id^{es th}^{at o}^v^er^tim^{e w}^{ill b}^e^b^a^sed^oⁿ^t^h^e^w^o^r^k^e^r^’^s^“^r^eg^u^l^ar^o^r^b^a^{sic h}^o^u^r^ly^r^a^{te o}^f^p^a^y⁽^o^r^o^t^h^e^r^alterⁿ^ativ^{e r}^a^te^u^p^oⁿ^w^h^ich^p^r^em^iu^m^r^a^{te o}^f^o^v^er^tim^{e co}^m^p^en^satioⁿ^is
^le^ak^co^m^p^u^t^ed⁾^”^b^u^t^is^silen^t^u^p^oⁿ^th^eⁿ^u^m^b^e^r^o^f^h^o^u^r^s^af^ter^w^h^ich^o^v^er^tim^{e r}^a^{tes m}^u^{st b}^e^p^a^id^{. T}^h^{e 4}⁰^-^h^o^u^r^p^r^o^v^isioⁿ^o^f^th^{e FL}^SA^o^{r th}^{e requ}^irem^en^ts^of^th^{e C}^oⁿ^t^{ract W}^o^rk^Hou^r^s
^an^{d Saf}^e^ty^Stan^dards^A^c^{t w}^o^u^l^{d apply}^w^h^{ere oth}^e^rw^is^{e applicable.}
^://wiki^h^{e act is}^s^ilen^t^on^th^{e is}^s^u^{e of}^ov^ertim^{e. T}^h^{e 40-}^h^o^u^r^s^t^an^{dard of}^th^{e FL}^SA^w^o^u^l^{d apply}^w^h^{ere oth}^e^rw^is^{e applicable.}
^h^ttp^r^t^y^h^o^u^r^{s, p}^r^io^r^to^th^{e r}^e^q^u^ir^ed^p^a^y^m^en^{t o}^f^o^v^er^tim^{e, is stan}^d^a^r^d^{. So}^m^e^ex^em^p^tioⁿ^s^h^a^v^e^b^een^b^u^{ilt in}^to^th^{e statu}^t^e.
^cep^tioⁿ^{is m}^a^d^e^w^ith^resp^{ect to}^certain^p^r^isoⁿⁱⁿ^d^u^stry^p^r^o^g^ram^s^w^h^{ere f}^r^{ee lab}^o^r^w^{ill n}^o^{t b}^e^dⁱ^sp^laced^.
^h^{e act (T}^{itle 41,Section}^{35(e)) states:}^“^...ⁿ^o^{part of}^su^ch^con^t^{ract w}^{ill be perf}^orm^e^{d n}^o^{r w}^{ill an}^y^of^th^{e m}^a^{terials, su}^p^p^lies,^ar^ticles,^o^r^eq^uⁱ^p^m^en^{t to}^b^e^m^aⁿ^u^f^actu^r^ed^o^r^f^u^rⁿ^ish^e^d
^uⁿ^d^er^s^a^{id con}^t^{ract be m}^aⁿ^u^f^actu^r^{ed or f}^a^b^rⁱ^c^a^t^e^dⁱⁿ^aⁿ^y^p^l^aⁿ^t^s^,^fa^c^t^o^rⁱ^e^s,^b^uⁱ^l^dⁱ^ngs,^o^r^sur^r^o^undⁱ^{ngs o}^r^und^e^r^w^o^r^kⁱ^{ng c}^o^ndⁱ^tⁱ^on^s^w^h^ich^{are u}ⁿ^s^an^itary^{or h}^azardou^s^{or dan}^g^e^rou^s
^t^o^t^h^e^he^a^l^t^h^aⁿ^d^sa^fe^t^y^o^f^e^m^p^l^o^y^e^e^s^e^nga^ge^dⁱⁿ^t^h^e^p^e^r^f^o^r^m^a^nc^e^o^f^saⁱ^d^c^o^nt^r^a^c^t^.^”^T^h^e^l^a^ngua^geⁱ^sⁱⁿ^t^e^nd^e^d^t^oⁱⁿ^c^l^ud^e^p^r^o^hⁱ^b^itioⁿ^o^f^ten^e^m^eⁿ^t^p^r^o^d^u^ctioⁿ^.
^{itle 41, Section}^{351(a)(3) s}^t^ates^{: “}^{... th}^{at n}^o^{part of}^th^e^s^e^rv^ices^prov^{ided by}^th^is^ch^{apter w}^{ill be}^p^e^r^f^o^r^m^e^dⁱⁿ^b^uⁱ^l^dⁱⁿ^g^s^o^r^su^r^r^o^uⁿ^dⁱⁿ^g^s^o^r^uⁿ^d^er^w^o^r^kⁱⁿ^g^coⁿ^d^itioⁿ^s^{, p}^r^o^v^id^ed
^by^{or u}ⁿ^d^{er th}^{e con}^t^{rol or s}^u^perv^is^ion^of^th^e^con^t^ractor^or^an^y^s^u^bcon^{tractor, w}^h^ich^{are u}ⁿ^s^an^itary^{or h}^azardou^s^{or dan}^g^e^rou^s^t^{o th}^{e h}^ealth^{or s}^a^f^e^ty^of^s^e^rv^{ice em}^ploy^ees^en^g^a^g^e^d
^to^f^u^rⁿ^ish^th^{e ser}^v^ices.”
^{itle 2}⁹^,^Sectioⁿ¹¹⁽^d⁾^o^f^th^{e FL}^SA^{states: “}^T^h^e^A^d^mⁱⁿⁱ^str^a^to^r^{is au}^th^o^r^ized^to^m^a^k^e^su^ch^r^e^g^u^l^atioⁿ^s^an^d^o^r^d^e^r^s^r^e^g^u^l^atin^g^{, r}^e^strⁱ^ctin^g^,^o^r^p^r^o^h^ib^itin^gⁱⁿ^d^u^strⁱ^{al h}^o^m^e^w^o^r^k^as^ar^e
ⁿ^ecessar^y^o^r^ap^p^r^o^p^r^{iate to}^p^r^ev^en^{t th}^{e cir}^c^u^m^v^eⁿ^tioⁿ^o^r^ev^asioⁿ^o^f^an^d^to^saf^e^g^u^a^r^d^th^{e m}ⁱⁿⁱ^m^u^m^w^a^g^e^r^a^{te p}^r^escr^ib^edⁱⁿ^th^{is c}^h^a^{pter ....”}

Establishing Standards
In retrospect, given the history of the federal contract labor standards statutes,
it may appear that Congress was unduly optimistic about the ease with which they
could be administered. When Davis-Bacon was adopted in 1931, there was little
experience upon which to draw. But, as subsequent statutes were adopted, Congress
attempted to resolve administrative issues by writing qualifying language into each
new piece of legislation. Problems, however, continued to arise and to spark
demands that the several statutes be either revised or repealed.
Setting a Reasonable Wage Rate. Establishing the minimum wage under
the Fair Labor Standards Act proved to be relatively simple. Congress would
conduct hearings and, at some point, would mandate a national wage floor. The rate
(with certain variations) was set forth in the statute, leaving little to the discretion of
the Secretary of Labor.⁸⁵ There was no need to assess local standards or to develop
a database from which to determine comparability. Congress passed legislation and
the wage floor was set.
Prevailing wage rates, however, have been quite a different matter. First. There
were three different approaches: the locally prevailing wage (Davis-Bacon), the
locally prevailing minimum wage (Walsh-Healey), and “the minimum monetary
wages ... in accordance with prevailing rates for such employees in the locality”
(McNamara-O’Hara). Second. In none of the statutes was the concept of minimum
and/or prevailing actually defined. Nor did the statutes provide the Secretary with
a precise formula for their calculation. As discussed above, the Walsh-Healey rate
would become, by default, coequal with the federal minimum wage under the FLSA.
Third. There were a variety of qualifiers that the Department had to take into
account. For example, how was one to define the “various classes of laborers and
mechanics” for Davis-Bacon purposes or the “various classes of service employees”
for McNamara-O’Hara rates? In the case of the latter, the Secretary was directed to
“give due consideration to” the “rates that would be paid by the Federal agency to”
service employees had they chosen to use direct federal workers — but not
necessarily to be bound by it. Ultimately, Davis-Bacon and McNamara-O’Hara rates
would include a fringe benefit component: not an easy figure to determine. Fourth.
The rates (for Davis-Bacon and McNamara-O’Hara) were to be associated with the
individual crafts or types of work performed — notwithstanding the absence of
“standardization of job titles and job content.”⁸⁶

⁸⁵ Secretarial discretion was allowed in administration of the FLSA: for example, in refining
certain of the concepts the act and in applying the statute to the workplace and to certain
specialized groups of workers such as children and persons with disabilities.
⁸⁶ Gerald D. Reilly, Reuben S. Haslam, and Rudolf Modley, “Threat of the Walsh-Healey
Act,” Harvard Business Review, January 1951, p. 87. (Hereafter cited as Reilly, et al., The
Threat.) Concerning the wage rate determination process, see also Modley, et al., Problem
Child, pp. 221-246; Armand J. Thieblot, Jr., The Davis-Bacon Act (Philadelphia: University
of Pennsylvania Press, 1975), pp. 31-76 (hereafter cited as Theiblot, The Davis-Bacon Act.);
Jules Backman and Marvin Levine, “The Prevailing Minimum Wage under the Walsh-
Healey Act,” in Emanuel Stein, ed., Proceedings of the Fourteenth Annual Conference on
(continued...)

The Locality Issue. The concept of “locality” might be reasonably clear
where Davis-Bacon was concerned. If one were building a dam, the work had a fixed
site — unless, of course, portions of the work were to be fabricated at a distant
location and transported to the actual “site of the work.” Moreover, workers of the
skill needed for a project might not be locally available. Both the Department in
calculating a wage and the contractor when recruiting a workforce might need to look
to an adjoining jurisdiction (perhaps a locality several states away) in order to find
comparably skilled workers employed “on projects of a character similar ....”⁸⁷
With Walsh-Healey, the process was more difficult. A contract for army
uniforms, for example, might be let out for bids in Washington, D.C.; but the actual
work might be performed anywhere: New Orleans, Grand Rapids, San Juan. The
production location might not be known when bids were solicited. And, to add a
dimension of complexity, a uniform might involve components from a variety of
jurisdictions: buttons, zippers, braid. Under such circumstances, what was the
locality for wage rate determination purposes?
The concept of locality appears in the Walsh-Healey Act in the phrase, “... or
groups of industries currently operating in the locality ....” Rudolf Modley, et al.,
explain that, because the Secretary has never used “groups of industries” as a basis
for wage rate determination, “he always felt free to ignore the ‘locality’ language of
the act.” Further, they note, the Secretary “has taken the position that determinations
are to be made on a nationwide or industrywide basis where an analysis of
government procurement shows that bids are submitted, and contracts awarded, for⁸⁸
delivery on a nationwide basis.” Thus, a variety of geographical standards might
apply.
Under the Service Contract Act, the problems are similarly difficult. Wage rates
for janitors, working under a McNamara-O’Hara contract to clean a federal building
in downtown El Paso, could readily be identified through a local market survey. But,
when service workers came to include diverse crafts, white collar and technical
workers, the range of rates became equally diverse. Computer service workers, for
example, could be sited almost anywhere.

⁸⁶ (...continued)
Labor, New York University (Albany: Matthew Bender, 1961), pp. 393-435; and James C.
Fontana, “Employer Obligations under the Service Contract Act: Just Another Minimum
Wage Law?,” Public Contract Law Journal, spring 1996, pp. 495-505. O. R. Strackbein,
in The Prevailing Minimum Wage Standard: A Study of the Wage Standard Established by
the United States Government for the Purchase of Its Supplies (Washington: Graphic Arts
Press, 1939), presents a clear discussion of the wage rate determination problems associated
with Davis-Bacon and Walsh-Healey during the 1930s. (Hereafter cited as Strackbein, The
Prevailing Minimum Wage Standard.)
⁸⁷ On the locality issue, see Strackbein, The Prevailing Minimum Wage Standard, pp. 69-

108.

⁸⁸ Modley, et al., Problem Child, p. 218.

Competing or Complementary Structures. Through the years, an
elaborate structure of labor standards has been developed: each with its own body
of implementing regulations and enforcement/compliance guidelines.
^!There is the body of laws enacted to protect persons engaged in
federal contract work: Davis-Bacon, Walsh-Healey and McNamara-
O’Hara. Variously (and differently), these statutes deal with wages
and hours of work (overtime pay rates). In the case of Walsh-
Healey, there are concerns about child and prison labor, and
industrial homework.
^!To these must be added the Contract Work Hours and Safety
Standards Act (CWHSSA, supplementing the Davis-Bacon Act and,
in some cases, the McNamara-O’Hara Act). Most employers of
workers, engaged on federal contract work, will also be subject to
the Occupational Safety and Health Act.
^!Separate from the federal contract labor standards statutes (but
applicable to the same bodies of workers), there is the FLSA setting
minimum wages, overtime pay rates, restraining child labor and
industrial homework, etc. Most often, employers engaged in federal
contract work will be subject to the FLSA and the CWHSSA — in
addition to Davis-Bacon, Walsh-Healey and McNamara-O’Hara.
^!Although not treated here (it is not directly a federal issue) there is
a body of state labor standards that deal with minimum wages,
overtime pay, and occupational safety laws (sometimes in
conjunction with OSHA). Where work is conducted with mixed
state and federal funding, the higher standard or a combination of
requirements could apply.
^!More recently, there has developed a new body of wage laws, largely
at the municipal level: namely, the “living wage” laws. Though they
vary among jurisdictions, they generally set minimum wage and
related standards that must be met when contractors do business
with local governmental units.⁸⁹
The various labor standards laws are different, each from the other: in their
requirements, the triggering mechanisms, their coverage, etc. Since they are living
statutes, they can be expected to change from time to time.

⁸⁹ The literature on the “living wage” laws is extensive. Among other sources, see Robert
Pollin and Stephanie Luce, The Living Wage: Building a Fair Economy (New York: The
New Press, l998); Stephanie Luce, “‘The Full Fruits of Our Labor’: The Rebirth of the
Living Wage Movement, Labor History, November 2002, pp. 401-409; Charles W. Baird,
“The Living Wage Folly,” Government Union Review, September 2002, pp. 31-37.

Concluding Comment
Each of these protective legal structures — the federal contract labor standards
statutes, the FLSA, and the state and local protective legislation — was enacted to
protect workers and to assist, in some measure, in stabilizing industry and the
workplace. Each, very largely, has developed in a separate pattern as legislators
(responding to workplace realities: accommodating workers, employers and the
public) have modified the statutes, adding technical corrective provisions and giving
way to the need for flexibility. Hardly static, the statutes have been in a continuing
state of evolution.
Some have argued with respect to the federal structure, that it is dated, difficult
to enforce and to comply with, and very much in need of updating.⁹⁰ Is such updating
worth considering? Could it be achieved without major change to the substance of
protections that have been crafted through nearly a century? At the same time, some
may question whether advocates of modernity (of flexibility, of bringing labor
standards law into the 21^st century) want to update or to diminish the protective⁹¹
qualities of the statutes to the point of de facto repeal.
Through the years, some have questioned a certain redundancy in the labor
standards law structure and the continuing need for protective standards for federal⁹²
contract workers separate from those applicable to the workforce at large. Might
a consolidation of the statutes be useful? Were that attempted, how complex might
that process become and what difficulties might be encountered?
Are there areas in which reform is needed and where, through restructuring, the
labor standards statutes could be rendered easier to enforce, more protective of
workers and less burdensome for employers?

⁹⁰ See, for example Timothy J. Bartl, Work and Pay in the New Century: Upgrading Our
Wage and Hour Laws To Meet the Needs of Today’s Employees (Washington: Labor Policy^st
Association, 2002); and Building America’s Workforce for the 21 Century (Washington:
Employment Policy Foundation, 2001).
⁹¹ See, for example Reinventing the Fair Labor Standards Act To Support the Reengineered
Workplace, a report prepared by the Labor Policy Association, an industry-oriented group,
October 7, 1994, reprinted in U.S. Congress, House Committee on Economic and
Educational Opportunities, Subcommittee on Workforce Protections, Hearings on the Fair^th^st
Labor Standards Act, 104 Cong., 1 sess., March 30, June 8, October 25, and November

1, 1995 (Washington, GPO, 1996), pp. 26-53.

⁹² See, for example Reilly, et al., The Threat, p. 87; Modley, et al., Problem Child, p. 210;
and Charles Donahue, “The Davis-Bacon Act and the Walsh-Healey Public Contracts Act:
A Comparison of Coverage and Minimum Wage Provisions,” Law and Contemporary
Problems, spring 1964, pp. 511-512.