PPI….HUD…DBA…and Of Course…Labor

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For some time now many have wondered how the Davis-Bacon Act (DBA ) affects the Property Preservation Industry (PPI). Many think it has no bearing on the PI unless an individual property goes over X-amount of money.
One of those people, IMHO, has misinterpreted the wording of the act. Gene O’Neil, VP of For What It’s Worth, feels that the DBA is only in play if the “bid” is over $2000.00. Mr. O’Neill has been an outspoken voice for Labor in South Florida these past couple years…
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Mr. O’Neill was also a key player in assisting a former member of the National Association of Mortgage Field Services, Bret Douglas, in establishing FAST. An organization designed to assist Labor. I caught up with Bret thus past week and talked about “diversification”, before we get to that conversation lets us address the DBA and the precise wording that puts it in play when any if you sign a contract with the Federal Government, or are completing work for a government agency.
The exact wording us as follows…

The Davis-Bacon Act, as amended, requires that each contract over $2,000 to which the United States or the District of Columbia is a party for the construction, alteration, or repair of public buildings or public works shall contain a clause setting forth the minimum wages to be paid to various classes of laborers and …

Notice the word is contract…not bid…many may not know this but there are cases in the courts over this issue. I said it six years ago and I will say it again. Those that actually have payroll records will come out ok. Those without…you have left a tremendous amount of money on the table. I have been screaming…pay yourself at the end of the week…many think I enjoy hearing my annoying ass talk.
The reality is:

I. Without paying yourself you have no way of knowing exactly how much a service costs to complete
II. You are not paying into your SSI fund
III. You are not paying UEID fund and will not be eligible for Unemployment benefits should you suddenly find yourself with no work.
IV. You’re not paying taxes.
V. You LOSE a serious tax deduction.

Now none of that may be all that important until you’re audited. However, when it comes to making a claim against AMS, PK Management, Asons, or any other Order Mill that carried and serviced the HUD contract, do I really need to spell it out??? If you have no payroll records because you don’t have employees because “YOU complete all the work”, well you have nothing to claim.
Here us how this works. If…in this case more like “when” the contract goes over $2000.00 DBA kicks in. Now the argument becomes, is the contract you sign with an order mill worth more than $2,000.00??? This becomes extremely important to you as a business owner paying Labor. Under the DBA Labor should be paid what is called “prevailing wage”,(PW).
Now PW is different for every skilled trade. In addition to the Federal guide lines for PW, most states have their own rules and laws governing PW. For example, the PW rates under the DBA  in California are higher than Nevada because of cost of living differences. Nevada PW laws in compliance with the DBA read in part,

Prevailing Wage Rates include the base rate as well as all applicable fringes.
NRS 338.010(21) “Wages” means:
(a) The basic hourly rate of pay; and
(b) The amount of pension, health and welfare, vacation and holiday pay, the cost of apprenticeship training or other similar programs or other bona fide fringe benefits which are a benefit to the workman.

NRS 338.035 Discharge of part of obligation of contractor or subcontractor engaged on public work to pay wages by making certain contributions in name of workman. The obligation of a contractor engaged on a public work or a subcontractor engaged on a public work to pay wages in accordance with the determination of the Labor Commissioner may be discharged in part by making contributions to a third person pursuant to a fund, plan or program in the name of the workman.
In accordance with AB 172:
The Labor Commissioner shall determine the prevailing wage to be 90 percent of the rate determined pursuant to paragraphs (a), (b) and (c) for:
(1) Any contract for a public work or any other construction, alteration, repair, remodeling or reconstruction of an improvement or property to which a school district or the Nevada System of Higher Education is a party; and
(2) A public work of, or constructed by, a school district or the Nevada System of Higher Education, or any other construction, alteration, repair, remodeling or reconstruction of an improvement or property of or constructed by a school district or the Nevada System of Higher Education.

That tells us what type of work under the DBA  will classified eligible for PW pay scale. But let’s get back to the issue. Your contract. Currently the argument in the ccout is

the contract in it’s entirety, taken as a whole is worth well over $2,000.00.

Of course the other side of the equation is each work order is a single contract, which is what the NAMFS. Offender Members are claiming. The rebuttal?????
It is the contract that was originally bid. In the original bid the order mill (what is called the awardee), should be bidding and allowing for the DBA in the cost if completing the job.

And as the Bard would say…There in lies the rub.
I have long stated if you want me to assist you in fulfilling your contractual obligations I need to be part of the negotiation process. While Mr. O’Neill has been vocal for Labor, unlike Mr. Douglas who has diversified and stopped assisting NAMFS financially, Mr. O’Neil continues to support the organization. And although he is a rational voice for labor in the PPI, I have to disagree with him on what he claims… this is a bid issue. It is far from a bid issue, as the wording states it’s a contract issue. Hope you keep good employment records. If you don’t already pay yourself, start. If you need assistance understanding how that works get a hold of me, it’s a pretty easy fix for your company. For more Information on the subject.

Can a company diversify in the PPI and make it selling the same services???

Well to answer that question a couple industry veterans. I caught up with both Bret Douglas if Ironclad Preservation and Matt Steffen.

Bret Douglas...Founder Ironclad Preservation Inc.
Bret Douglas…Founder Ironclad Preservation Inc.

Bret Douglas;
How are this g shaping up for Team Ironclad now that you no longer depend on PPI work as the majority of incoming revenues?
Bret: We are extremely happy that Team Ironclad took the liberty to diversify. If we had not started that process we would not have survived this year.

Sales and volumes in preservation work have plummeted. The inventory has all but dried up.
How grim were things?
Bret: We as a team were faced with losing our compound due to a two year construction delay. We finally have settled that issue and are pleased to be moving into a new much larger facility by Jan first. Our new address will have two warehouses side by side,7500 main and 3000 for the equipment. Almost 11,000 sqft for our three enterprises
You diversified into three departments?
Bret: We have split our firm into three sections.
Team ironclad is comprised of preservation, landscape management and FAST association.
Essentially providing PPI. Services to the public, so when will we hear about a new FAST event?
Bret: We are shooting for a February or March fast event as with the move we are unable to pull off a fall event
When I spoke with Matt, of course the conversation included a couple questions about the HIPR service NAMFS offender members were demanding be completed with unqualified personal and in an extremely dangerous manner. Many of you may remember Matt sent the service specs into OSHA, being this was for HUD, naturally OSHA asked if someone was crazy???
Matt was one of the first in the industry to diversify and seek private sector clients.
So how have things been since you diversified??
Matt: We diversified upon necessity. Their are virtually NO foreclosures here in Montana. 64 in the entire state last month to be exact. That said, we do provide the same services to the private sector
When you heard the news from Foreclosurepedia, what were your thoughts?
Matt: When Paul told me the news I was glad it finally came to light and people will now be held accountable.
Oh come on now there has to be a tiny little part of you jumping up and down…
Yes I’m ecstatic!!!
I know that last sentence is said in jest. Matt as myself Paul Williams and all the others that refused to complete this dangerous and in many places illegal practice of back-feeding electricity into a home, well truth is folks, those that refused got a black mark but we all acted in the best interests of our employees and our companies.
No amount of money is worth sacrificing your employees health nor your companies integrity.

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Until Next Time…
Happy Gardening

Organics Admin
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Organics Admin

COO at Aladay LLC
Organic Farmer, Property Preservation Specialist and Custom Glass & Wood Worker. Blogger extraordinaire...
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