Labor Has Implemented a Program to Verify Wage Data

In response to the House Appropriations Committee’s directive and our recommendation, Labor has implemented a program to verify wage survey data submitted by construction contractors and interested third parties, such as contractor associations and trade unions. To verify these data, Labor established procedures to select samples of wage data forms for telephone verification that differ depending on the entity that submitted the form. In addition, Labor has hired a private accounting firm to conduct on-site verification reviews. In both the telephone and on-site verification process, all data—regardless of which party submitted them—are verified only with the contractors. 4). Verification Will Have Limited Impact on Accuracy of Prevailing Wage Determinations and Will Reduce Timeliness

Verification efforts conducted to date will have a limited impact on the accuracy of prevailing wage rate determinations and will increase the time required to issue them. Errors Identified, but Impact on Accuracy of Wage Determinations Is Limited

Although Labor has identified and corrected numerous errors in the wage data submitted, it has been able to correct only the limited number of wage data forms verified. As a result, even though we found that errors the auditors identified in all nine area surveys averaged 76 cents per hour, Labor officials estimate that the changes to wage determinations will amount to an average of 10 cents per hour. Furthermore, both the Committee directive to use a random sample of wage data forms to select wage data for verification and the procedures Labor uses to implement the directive also limit the extent to which errors found will improve the accuracy of wage determinations. Labor assumes that data from contractors that are unable to provide or refuse access to supporting documentation are correct by including them in the wage rate calculations. Objectives, Scope, and Methodology

The House Committee on Appropriations in its reports on appropriations for the Departments of Labor, Health and Human Services, and Education and related agencies for fiscal years 1998 and 1999 asked us to (1) review the Department of Labor’s efforts to verify a random sample of employers’ wage data submissions and select a sample of submissions for on-site data verification and (2) determine the likely effect of these efforts on the accuracy and timeliness of Davis-Bacon wage determinations. These data include the following: all available WHD preliminary analyses (forms WD-22) for all wage surveys sent to the contractor for verification for the 18-month period from the beginning of on-site verification in April 1997 through September 1998; all preliminary and final reports completed by the accounting firm for on-site audits as of September 30, 1998; and electronic records of wage data forms (forms WD-10) maintained by WHD under contract with Computer Data Systems, Inc., concerning the area surveys for which the accounting firm had issued final reports for on-site verification. 2).
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the: (1) Department of Labor's response to the House Appropriations Committee's directive that it verify a random sample of employers' wage data submissions and select a sample of submissions for on-site data verification; and (2) likely effect of these efforts on the accuracy and timeliness of Davis-Bacon Act wage determinations.

What GAO Found

GAO noted that: (1) in response to a Committee directive and GAO's recommendation, Labor has implemented a program to verify wage survey data submitted on standardized wage data forms by construction contractors and interested third parties, such as contractor associations and trade unions; (2) to verify these data, Labor has developed procedures to select samples of these forms for telephone verification that differ depending on whether the forms are submitted by contractors or third parties; (3) in addition, Labor has hired a private accounting firm to conduct on-site verification reviews; (4) as of September 30, 1998, the accounting firm had issued final reports for 9 of the 85 geographic area surveys scheduled for audit from April 1997 to June 1998 and had identified errors in wages reported in about 70 percent of the wage data forms reviewed; (5) in both the telephone and on-site verification processes, all data--regardless of the entity that submitted them--are verified only with the contractors; (6) even though Labor has identified and corrected numerous errors in the wage data submitted, its verification efforts will have limited impact on the accuracy of the wage determinations and will increase the time required to issue them; (7) specifically, errors the accounting firm identified and corrected in all nine area surveys averaged 76 cents per hour; (8) but, because Labor was only able to correct the limited number of wage data forms verified, which contain a small portion of the wage rates submitted, on average, changes to these wage determinations will be less than 10 cents per hour, according to Labor officials' estimates; (9) the extent to which correcting the errors found through verification will improve the accuracy of wage determinations is limited by: (a) the Committee directive to use a random sample of wage data forms for verification, given the characteristics of the wage data with respect to the universe being sampled; and (b) the procedures Labor uses to implement this directive; (10) for example, in its procedures, Labor assumes that data from contractors that refuse access to supporting documentation are correct and includes the wages in calculating wage determinations; and (11) while the time needed for verification reduced timeliness of wage determinations, telephone verification added less time to the process than did on-site verification--an estimated average of 2 weeks as compared with an average of 211 days for the 30 area surveys for which the auditor completed preliminary reports.