Six months into Trump’s presidency, we wrote about how Trump’s $1 trillion infrastructure plan was likely to include more federal deregulation, including possible repeal or suspension of the Davis Bacon Act (DBA). Two months after that article, comments from the House Transportation and Infrastructure Committee suggested Trump had changed his tune and would retain the DBA protections perhaps in part to gain support from typically pro-DBA democrats for the administration’s infrastructure plan.
While media sources have reported that the administration’s infrastructure plan all but “died” several months ago, Trump’s Supreme Court nominee somewhat refocuses on the DBA and other government contract industry related legislation. And while nominee Brett Kavanaugh’s confirmation won’t mean repeal of the DBA, his confirmation could mean the reach and application of the Act (and other related legislation) to federally funded projects could be even further limited.
Such potential limitations are foreshadowed in a decision Kavanaugh issued during his time on the D.C. Circuit in the case of District of Columbia v. Dep’t of Labor, 819 F.3d 444 (D.C. Cir. 2016). There, the contract at issue was one for the lease of certain property that would be used to construct a privately-funded mixed-use development, known as CityCenterDC. The Department of Labor made the determination that CityCenterDC was a “public work” within the meaning of the DBA, and thus the contract – between the property lessor and the private developer – was subject to the prevailing wage requirements of the Act. Finding that the lease agreement was not one “for construction,” and was separate and apart from the construction agreements that would follow between the developers and general contractors, Kavanaugh found the DBA was not intended to have such far-reaching application:
The text of the Act is straightforward. As relevant here, the Act covers contracts “for construction” to which the District Columbia is a party. . . Contrary to the U.S. Department of Labor’s suggestion, moreover, neither the lease agreements nor the development agreements between D.C. and the developers are themselves contracts for construction to which D.C. is a party. . .
The Department’s interpretation of the statutory term “contract…for construction” would significantly enlarge the scope of the Davis-Bacon Act. The Department’s interpretation would embrace any lease, land-sale, or development contract between the Federal Government or D.C. and another party, so long as to the agreements required the counterparty in turn to undertake more than an incidental amount of construction. The terms of the Davis-Bacon Act are not so malleable. A contract for construction is a contract for construction. And a lease, land-sale, or development agreement that contemplates one of the parties entering into a future contract for construction with a third party construction contractor is not itself a contract for construction.
In applying his hallmark strict constructionist views, Kavanaugh’s decision in District of Columbia could be a sign of what’s to come – i.e., more limitations on what some in the industry consider bureaucratic overreach. While it is rare that a decision directly impacting the government contracting industry reaches the United States’ highest court, Kavanaugh’s judicial “style” could mean legislation such as the DBA and other, ancillary legislation becomes more limited in its reach.