Listed below are brief descriptions of the state and federal acts that apply to project contracts involving public facilities, public works and housing construction and rehabilitations. Additional guidance can be obtained from your state program manager.
Davis-Bacon and Related Acts (40 USC 276(a) 276(a) 7)
Mechanics and laborers employed in construction work financed in whole or in part with Federal assistance, including State CDBG assistance, must be paid wages and fringe benefits equal to those of corresponding classes of workers on similar construction in the area in which the work is performed, as determined by the U.S. Department of Labor.
Applicable wage decisions must be incorporated in the prime construction contract, in all subcontracts, and in any lower-tier subcontracts. For negotiated contracts, the lock-in date for a wage decision is the date the contract is awarded or construction starts, whichever occurs first. (With CDBG projects, most contracts are competitively bid.)
For competitively bid projects, a wage decision is locked-in at bid opening. The wage decision which is used in the bid specifications may be modified prior to bid opening. If this is the case, the modified wage decision must be used. There is one exception to this rule – if the modification was issued 10 days prior to bid opening, the grantee must certify they were unable to notify all bidders of the modified decision, then the decision used in the bid specifications package may be used. In addition, the contract must be awarded within 90 days of bid opening. If the contract is awarded on the 91st day or later after the bid-opening date, the grantee is required to update the wage decision. If the wage decision has been modified, the new wage decision must be incorporated into the contract document.
There are some types of work which are exempt from DavisBacon prevailing wage rate provisions. These are discussed in the next subsection. It is always important to consult your program manager before assuming these provisions do not apply to your project.
Copeland "Anti-Kickback" Act (40 USC 276c)
Wage "kickbacks" and salary deductions other than those prescribed by law (e.g. tax withholding and FICA) or those voluntarily authorized by the wage earner are prohibited.
Copeland applies to all federally assisted (including State CDBG assisted) contracts subject to DavisBacon wage standards. The Act also provides for the submission of weekly statements of compliance and weekly payrolls by all contractors in an approved format.
Contract Work Hours and Safety Standards Act (40 USC 327332)
Workers on federally assisted (including State CDBG assisted) construction projects must be compensated for overtime and be provided safe and healthy working conditions. CWHSSA applies to all construction contracts for projects over $100,000. Financial assistance which is in the form of a loan guarantee or loan insurance is exempt from this requirement.
CWHSSA also holds the contractor and subcontractor(s) liable to workers as a result of overtime violations. The law also permits liquidated damages to be assessed in the amount of $10.00 per day, per violation payable to the U.S. Treasury.
Fair Labor Standards Act (FLSA) (29 USC 102 et seq)
The FLSA provides for minimum wages, record keeping, overtime pay (forty hour work week), and child labor standards.
Review Process for Water Works and Wastewater Projects
The Water Quality Control Division within the State Department of Health must review and approve all plans and specifications for new water works and wastewater projects or for improvements or modifications to existing water and wastewater works prior to construction.
Minimum Wage (816101 CRS 1973, as amended)
This State law requires contracts over $5,000 involving the employment of laborers or mechanics in the construction, alteration or repair of any building or public work, with certain exceptions, pay not less than the prevailing rate of wages of a similar nature in the town, city, village or other civil subdivisions of the State in which the building or other public work is located.
Discrimination and Affirmative Action (2434402 CRS, 1973 as amended)
This State law requires contracts to comply with the Colorado Antidiscrimination Act of 1957 and other applicable law regarding discrimination, unfair employment practices and Equal Opportunity and Affirmative Action.
Colorado Labor Preference (817101 & 102 CRS 2013, as amended)
Provides that Colorado labor is preferred for public works contracts within the State which are financed in whole or in part by State funds. The Special Provisions Section of the grant contract between the State and recipient outline the above provisions as well as other applicable requirements.
Procurement Standards
The Financial Management Section of this Guide, Section II, outlines required procedures for selection and award of contracts funded in whole or in part by federal funds. These procedures are designed to:
- avoid unnecessary or duplication of purchases;
- obtain favorable prices for goods and services without sacrificing quality;
- ensure maximum open and free competition; and,
- promote national goals related to equal employment opportunity and affirmative action.
Bonding and Insurance
Colorado Department of Local Affairs’ regulations require a Grantee and/or its contractor (or subcontractors) performing the work to secure the following:
- a bid guarantee from each bidder equivalent to five percent (5%) of the bid price; see Exhibit VIII-M if contract is over $100,000.
- a performance bond on the part of the contractor for one hundred percent (100%) of the contract price; see Exhibit VIII-N if contract is over $100,000 and,
- a payment bond on the part of the contractor for one hundred percent (100%) of the contract price if contract is over $100,000; see Exhibit VIII-N.
Section 3: Local Employment, Training and Contracting (Housing & Urban Development Act of 1968, as amended)
Section 3 Projects. All grantees receiving CDBG must prepare and submit a Section 3 report with their close-out report. The reporting format and definitions used for Section 3 are contained in Section V Exhibit-E.
Section 3 of the Housing and Urban Development Act of 1968 requires, to the greatest extent feasible, that: 1) opportunities for training and employment be given to lower income residents of the project area; and 2) service and construction contracts for work in connection with the project be awarded to businesses which are located in, or owned in substantial part by persons residing in the project area. ("Project area" means the unit of local government or the metropolitan area or nonmetropolitan county. In rural Colorado, HUD has ruled the “Project area” can be defined by the grantee.)
This means that all projects using CDBG funds should perform certain actions which include:
- notifying Section 3 residents service and construction contractors about training, employment and contracting opportunities,
- including the Section 3 clause in all solicitations and contracts see Exhibit VIII-I page 5 in Instructions to Bidders and Exhibit VIII-J page 17 in the Construction Contract Documents,
- taking affirmative actions which will facilitate the training and employment of Section 3 residents and award to compliant contractors and subcontractors and refrain from entering into any contract with a contractor known to have violated the requirements of Section 3,
- obtaining compliance of service and construction contractors and refraining from entering into any contract with a contractor known to have violated the requirements of Section 3,
- documenting the actions taken to implement Section 3 requirements, the results of such actions and the impediments to implementing Section 3,
- reporting these actions annually to the Department of Local Affairs as long as the project remains open IF the project is considered a "Section 3 project" as described above.