{"id":133465,"date":"2023-10-13T15:50:15","date_gmt":"2023-10-13T14:50:15","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=133465"},"modified":"2023-10-13T15:50:15","modified_gmt":"2023-10-13T14:50:15","slug":"davis-bacon-act-us-modular-construction-industry","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/mmc-news\/davis-bacon-act-us-modular-construction-industry\/133465\/","title":{"rendered":"Davis-Bacon Act: A victory for the US modular construction industry"},"content":{"rendered":"

Plans by the US Department of Labour to extend the Davis-Bacon Act to cover modular and offsite construction sparked a staunch lobbying effort by the industry opposed to what they saw as an ill-suited and impractical change. John McMullen of the Modular Building Institute takes us inside a major victory for the US modular construction industry<\/h2>\n

On 8 August 2023, the United States Department of Labour (DOL) published its final rule revising and expanding the Davis-Bacon Act. As proposed, the act would have been expanded to include \u201csecondary sites\u201d such as modular factories on federally funded projects.<\/p>\n

However, after an extensive year-and-a-half long lobbying effort by the Modular Building Institute (MBI) and its members, the DOL recently published the final rule WITHOUT the proposed expansion to the modular building industry.<\/a><\/p>\n

The modular building industry voiced concerns over the Davis-Bacon Act<\/h3>\n

MBI members expressed numerous concerns over the rule, including its legality, its impact on small business and its inflationary impact on housing.<\/p>\n

Additionally, a big concern for the industry was the 26 states with so-called \u201cLittle Davis Bacon\u201d acts (state-level laws that mirror the Davis-Bacon Act\u2019s requirements) that would have likely adopted the federal government\u2019s reinterpretation, thus eliminating all state-funded projects from consideration as well.<\/p>\n

MBI members submitted dozens of written comments opposing the expansion during the proposed rule phase. Members also participated in calls with the Office on Information & Regulatory Affairs (OIRA) to express their concerns.<\/p>\n

Additionally, MBI executive director Tom Hardiman, Jim Gabriel of member company MODLOGIQ and Alan Rasmussen of member company Modern Building Systems went to Washington DC<\/a> to personally share their testimony of the negative impacts of this rule with key Congressional staffers.<\/p>\n

\u201cWe had a fantastic team in place,\u201d said MBI\u2019s board president, Chuck Walen of Satellite Shelters. \u201cWe had one of the nation\u2019s top labour law firms in our corner, allies on Capitol Hill, supporters in the affordable housing sector and, most importantly, the support of our members.\u201d<\/p>\n

It is important to note that MBI was specifically mentioned eight times in the final rule, while members including Blazer Industries, Phoenix Modular Elevator, Southeast Modular, Modular Solutions, Cloud Apartments, Quartz Properties and many others were also specially cited.<\/p>\n

\u201cIt\u2019s great to see that the Department of Labour heard the voice of MBI and our membership,\u201d said Jon Hannah-Spacagna, MBI\u2019s government affairs director. \u201cThis will allow the partnerships our industry has established with government agencies to support affordable housing and government projects to continue to grow.\u201d<\/p>\n

\u201cIn my 20 years with MBI, this is by far the biggest win for our industry,\u201d said MBI executive director Tom Hardiman. \u201cMBI and our members were able to delay this rule\u2019s implementation for over a year and ultimately prevailed in getting the anti-industry language removed.\u201d<\/p>\n

How has the Davis-Bacon Act affected modular construction?<\/h3>\n

The Davis\u2013Bacon Act of 1931 is a federal law that requires paying labourers and mechanics the local prevailing wages for work done on public works projects. Specifically, it applies to contractors and subcontractors performing work on federally funded or assisted contracts valued in excess of $2,000. Simply put, a prevailing wage is the basic hourly rate of wages and benefits paid to a number of similarly employed workers in a given area.<\/p>\n

Until recently, the effects of Davis-Bacon on the modular construction industry were minimal. Because modular buildings are not built at the \u201csite of the work\u201d (being instead built using more modern manufacturing techniques in one or more offsite factories, often in different states), prevailing wages didn\u2019t apply to modular construction projects, public or otherwise.<\/p>\n

Under the DOL\u2019s original proposals, the definition of \u201csite of the work\u201d would have been changed to apply to offsite construction of \u201csignificant portions\u201d of a building or work.<\/p>\n

The MBI argued that the changes would have had a multi-faceted effect on the modular construction industry. Firstly, that the 26 states with \u201cLittle Davis-Bacon\u201d acts would adopt the federal government\u2019s reinterpretation, limiting the financial viability of offsite and modular construction for public projects in those states.<\/p>\n

The second concern was that federal and eventually state developers and contractors would simply turn to foreign modular companies, who would not have to abide by the Davis-Bacon Act. This could have led to US-based modular construction, which is being used to combat the urgent need for affordable housing and infrastructure precisely due to its speed and lower labour costs, becoming \u201cfinancially impractical\u201d.<\/p>\n

In addition, the MBI argued that, at a time when the modular and industrialised building industry is growing by leaps and bounds, a labour law created in the Great Depression would be a poor fit.<\/p>\n

Modular construction more closely resembles a manufacturing process rather than traditional onsite construction, and therefore imposing construction trade rates to factory workers makes no more sense than applying car worker rates to carpenters.<\/p>\n

The MBI\u2019s said its position is not anti-union and indeed it has a number of union factories within its membership. Instead, it said the issue comes down to federal government overreach in an area where it does not have regulatory authority, reversing decades of legal precedent.<\/p>\n

A victory for the modular construction industry in the United States<\/h3>\n

The changes to the final published rule represent a tremendous victory for the United States\u2019 modular construction industry.<\/p>\n

Without the support of MBI members in the form of written and in-person feedback, fundraising, travel and direct donations to MBI\u2019s regulatory relief fund, MBI would not have been successful.<\/p>\n

In particular, the testimony from the following MBI members was critical in helping communicate the industry\u2019s opposition to the proposed rules:<\/p>\n