District of Columbia – Public Participation in Private Development Venture does not trigger Davis-Bacon Act

D.C., et al. v. Department of Labor, et al.

On April 5, 2016, the U.S. Court of Appeals for the D.C. Circuit determined whether the Davis-Bacon Act applies to the construction of CityCenterDC.   According to the Court, CityCenterDC is a large private development in the heart of Washington, D.C. It features upscale retail stores such as Hermès, Boss, and Louis Vuitton; high-end restaurants such as DBGB and Centrolina; the large private law firm of Covington & Burling; and luxury residences.

The Davis-Bacon Act applies when the District of Columbia enters into a “contract . . . for construction” of “public works.” The Act guarantees prevailing wages to construction workers on those projects. If the Davis-Bacon Act were applied to the CityCenterDC, the construction workers who built CityCenterDC could be entitled to higher wages than they actually received.

Two conditions must be present in order for the Davis-Bacon Act to apply to the development of CityCenterDC: (1) D.C. must have been a party to the contracts for construction of CityCenterDC, and (2) CityCenterDC must be a public work.

The Court held that for two independent reasons, the Davis-Bacon Act does not apply to the construction of CityCenterDC.

First, DC was not a party to the construction contracts for the building of CityCenterDC. Although DC owns the land on which CityCenterDC, D.C. rented the land to private developers in a series of 99-year leases.

These private developers then entered into construction contracts with general contractors to build CityCenterDC. The developers – not DC – contracted with the construction contractors who built CityCenterDC.

The Court held that because D.C. was not a party to the construction contracts, the Davis-Bacon Act does not apply to CityCenterDC.

Second, the Court held that CityCenterDC is not a “public work.”

To qualify as a public work, a project must possess at least one of the following two characteristics: (i) public funding for the project’s construction or (ii) government ownership or operation of the completed facility, as with a public highway or public park.

CityCenterDC’s construction was not publicly funded, and CityCenterDC is not a government-owned or government-operated facility. So CityCenterDC is not a public work.

Most significant quotes:

Under the Department’s reading, many future D.C. construction projects that are privately funded, privately owned, and privately operated would be covered by the Davis-Bacon Act, at least so long as the Federal Government or D.C. has some hand in leasing the property or even just in planning or approving the use of the property. We are unwilling to green-light such a massive, atextual, and ahistorical expansion of the Davis-Bacon Act.

The concept of a public work may well be elastic. But it cannot reasonably be stretched to cover a Louis Vuitton. CityCenterDC is not a public work.

 

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