Understanding the Davis-Bacon Act and Its Role Under DOE Loan Programs

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The U.S. Department of Energy (DOE) Loan Programs Office (LPO) released a guide earlier this year to explain how LPO financing programs are subject to Davis-Bacon labor standards, the Davis-Bacon requirements that apply, and a summary of those requirements.

The Davis-Bacon Act (DBA), enacted in 1931, sets the standard for contractors and subcontractors working on federally funded construction projects exceeding $2,000. The Davis-Bacon and Related Acts (DBRA) apply these requirements to projects financed by the federal government.

Projects financed by LPO must comply with DBRA. This requirement includes most projects, though some, like those under specific programs such as the Tribal Energy Finance Program, may follow different guidelines unless they opt into tax benefits under the Inflation Reduction Act (IRA), where prevailing wage compliance is required.

The Inflation Reduction Act links tax incentives to prevailing wage standards, drawing a clear connection between these two laws. This connection means contractors must adhere to wage decisions determined by geographic location and construction classification, ensuring wages reflect local economies.

By tying tax incentives under the IRA to Davis-Bacon wage standards, contractors must prioritize fair wages in their planning to qualify for benefits. This balance ensures that projects under the Inflation Reduction Act support the workforce and sustainability initiatives.

The LPO Davis-Bacon guide can be found at: https://www.energy.gov/lpo/articles/ensuring-prevailing-wages-closer-look-davis-bacon-act