Greenhouse Gas Reduction Fund Program Compliance with Davis-Bacon Act

As recipients of Greenhouse Gas Reduction Fund (GGRF) awards plan and implement programs to combat the climate crisis, they need to ensure compliance with worker protection requirements outlined by U.S. laws known as the Davis-Bacon and Related Acts (DBRA). Because official agency guidance is still being developed, they’ll likely need assistance to understand the key provisions and develop the right strategies.

How These Laws Evolved and Will Affect the Work

First enacted in 1931 and amended as recently as 2023, the DBRA suite of rules requires contractors and subcontractors working on projects funded through certain federal programs to pay laborers and mechanics at prevailing wage and fringe benefits levels (or higher, depending on project geographic location) when the total project contract value exceeds $2,000.

While U.S. agencies that regularly oversee construction and capital projects such as the Department of Housing and Urban Development (HUD) and the Department of Transportation have implemented these requirements for years, DBRA is receiving increased attention following passage of the Bipartisan Infrastructure Law and Inflation Reduction Act. These historic pieces of legislation enacted during the Biden Administration will infuse billions of dollars into the economy to fund construction, repairs, alteration of public works, public and private building stocks, energy systems, and more.

The Inflation Reduction Act authorized the Environmental Protection Agency (EPA) to create and implement the GGRF—an historic $27 billion investment to combat the climate crisis by mobilizing financing and private capital for greenhouse gas and air pollution-reducing projects in communities nationwide. Section 314 of the Clean Air Act requires construction projects funded under its auspices to comply with the DBRA.

Through such GGRF programs as the National Clean Investment Fund, Clean Community Investment Accelerator, and Solar for All, numerous entities nationwide have already received grant award notifications for billions of dollars. These funds will help accelerate solar investment and mobilize private capital greenhouse gas-reducing technologies in buildings, transportation, and communities. This represents a significant opportunity as long as recipients can overcome the inherent challenges, which include DBRA compliance.

Key DBRA Provisions and Complications

Some key DBRA provisions include:

• Paying the federally designated prevailing wage, which in some geographies is higher than a local wage or mandate
• Posting the applicable wage determination and Davis-Bacon poster (WH-1321) at the job site
• Reporting and submission of weekly certified payroll records to the contracting agency
• Ensuring contract clauses and applicable wage determinations in the primary contract are incorporated into all subcontracts

Individual states also have prevailing wage laws that must be tracked and adhered to. And federal regulations such as the Fair Labor Standards Act, Copeland “Anti-Kickback” Act, and Contract Work Hours and Safety Standards Act have specific clauses that must be complied with throughout the program and for at least three years after it concludes.

As the current structure of GGRF programs stands, multiple recipients and subrecipients (including smaller community lenders and organizations) will be responsible for managing federal funds and meeting DBRA and other compliance requirements—many for the first time. As a further complication, many projects will engage small- and medium-size contractors with low sophistication on compliance topics to perform construction and installation activities. Other recipients and subrecipients will be focused primarily on financing transactions, where the arm’s-length relationship can make compliance data tracking difficult.

Recipient and Subrecipient Roles and Responsibilities

Designing an effective DBRA compliance program that outlines roles and responsibilities for recipients, subrecipients, and contractors is critical. In the absence of clear EPA guidance, awardees and their partners will need to keep the following strategic considerations in mind as they embark on tactical planning:

• Product and program strategies that consider construction cost variability for DBRA-impacted projects as well as the capital costs to complete them
• Establishing an administrative system to address the requirements, including data management, reporting, and fieldwork
• Waiver requests at the program and project levels

Successful tactical compliance programs build in regular data reviews—which can be powered by artificial intelligence tools—and in-person spot-checks rather than relying solely on trust. Issues to anticipate and proactively plan for include laborer and mechanic misclassification, incomplete or inaccurate recordkeeping, failure to submit weekly certified payrolls, and failure to post the Davis-Bacon poster and applicable wage determination information prominently at worksites. As construction, repairs, and alterations are expected to accelerate rapidly in the months ahead, laying the groundwork and establishing internal processes for effective DBRA compliance now will help to reduce future risks and costs.

Tips for Ensuring Compliance

Recipients and subrecipients of GGRF funds should:

• Develop a programmatic compliance strategy Coordinate with EPA on roles and responsibilities early on, including consideration for programmatic waivers where applicable and appropriate
• Identify and train organization staff who will manage the day-to-day tasks of the DBRA compliance program
• Develop internal processes, tools, and templates to collect data from program participants and submit required supporting DBRA data and documentation
• Review all procurements, award documents, and contracts (including those for subrecipients and contractors) to ensure DBRA standards and regulations are included
• Develop and execute communications, technical assistance, and training for all project participants (including subrecipients, development teams, contractors, and subcontractors) to clarify roles, expectations, and data schedules
• Deploy DBRA compliance on a small scale, pilot with early projects, and refine approach, tools, and communications as needed

Lessons Learned from Other DBRA Approaches

Until the EPA has finalized its guidance, analyzing similar programs can provide insights into how GGRF’s DBRA compliance will look when fully built out. For example, HUD’s HOME Investment Partnerships program and the U.S. Department of Energy’s Weatherization Assistance Program both require DBRA compliance, although only for projects of a certain size. Because the EPA hasn’t yet differentiated DBRA requirement application by project size or indicated whether categorical or program-level waivers will be provided, though, awardees and other stakeholders may wish to engage in public and private dialogue about the costs and administrative burdens of applying DBRA without thresholds or waivers.

How Guidehouse Can Help

At Guidehouse, we’re uniquely positioned to help in this arena because we have extensive experience with grants management, optimizing funding opportunities, DBRA compliance, and GGRF programs. Our experts in energy financial assistance, state government, community finance, and technology deliver tailored solutions for GGRF recipients.

We've provided support to recipients of over $60 billion in federal funds, helping them maximize funding sources ranging from state-specific and federal-targeted programs to mixed-use funds to funds of general applicability. We’ve also advised federal funding recipients on the complete lifecycle of DBRA compliance (including strategy, program design, deployment, and reporting) and secured over $9 billion in GGRF funds. We’re providing support to Solar for All awardees, Power Forward Communities, and Clean Community Investment Accelerator award recipients as well as assisting a $2 billion GGRF recipient with operational planning, program design, and implementation.