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Estimating & Biddingaka: Davis-Baconaka: prevailing wage

Davis-Bacon Wages

In Plain English

Government-mandated minimum pay rates that contractors must use on federally funded construction jobs.

Definition

Davis-Bacon wages are the prevailing wage rates that federal law requires contractors to pay workers on federally funded construction projects. The Davis-Bacon Act requires these rates to be determined by the Department of Labor for each locality and trade classification. Contractors must pay at least the published wage rate plus fringe benefits for each classification used on covered projects.

Why It Matters in Bidding

Davis-Bacon wage determinations directly set labor unit costs on federally funded work, so estimators must price every classification at the published rate plus fringes or risk a noncompliant, unprofitable bid. Misreading the applicable wage determination or omitting fringe benefits can understate labor by a wide margin. Compliance also adds certified-payroll administrative cost that should be carried in general conditions.

Example

Bidding a federally funded school addition, an estimator pulls the current wage determination from SAM.gov and prices each trade at the listed base rate plus fringe, then adds staff time for weekly certified payroll reporting.

Related Terms

Prevailing WageLabor BurdenDirect CostsGeneral Conditions

Frequently Asked Questions

They establish a mandatory floor for labor costs by trade classification, so estimators must build labor rates from the applicable wage determination rather than local market wages. Because prevailing rates often exceed open-shop pay, ignoring them produces a short bid, and underpaying workers risks penalties and contract termination on covered projects.
Yes. Each determination lists a base hourly rate plus a separate fringe benefit amount, and contractors must furnish both, either as bona fide benefits or as additional cash wages. Estimators who price only the base rate and omit fringes understate labor cost on every covered hour, which can erode margin significantly.
Covered projects require certified payroll submitted regularly, accurate worker classification, on-site posting of wage rates, and recordkeeping subject to audit. Estimators should carry staff labor for weekly payroll certification and compliance management in general conditions, since this overhead is real and frequently overlooked in prevailing-wage bids.

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