FAR 22.404-2—General requirements.
Plain-English Summary
FAR 22.404-2 explains how contracting officers must select, limit, and apply Davis-Bacon wage determinations in solicitations, contracts, and option exercises. It covers the requirement to use only the appropriate wage determination, to identify exactly which work each determination applies to, and to avoid placing project wage determinations into contracts or options for which they were not issued. It also addresses what to do when exercising an option to extend a contract term: the contracting officer must use the most current wage determination(s) from the same schedule(s) already incorporated. For wage determinations with multiple rate schedules, the section requires either including only the applicable schedules or including the full determination with a clear allocation of which work each schedule covers, and it prohibits incorporation by reference. Finally, it provides Wage and Hour Division guidance for classifying construction as building, residential, highway, or heavy, and directs contracting officers to rely on local area practice and seek DOL guidance before bid opening or receipt of final offers when classification is uncertain. In practice, this section is meant to prevent misclassification, underpayment, bid protests, and contract administration problems by ensuring the right wage rates are applied to the right work at the right time.
Key Rules
Use only applicable determinations
The contracting officer must include only the wage determinations that apply to the solicitation or contract and must identify the specific work covered by each determination or portion of a determination. This prevents unrelated wage rates from being imposed on work they do not govern.
No project determination carryover
Project wage determinations may not be inserted into contracts or options other than the project for which they were issued. A project-specific determination is tied to its intended project and cannot be reused elsewhere.
Update wage rates on options
When exercising an option to extend the contract term, the contracting officer must use the most current wage determination(s) from the same schedule(s) originally incorporated. The option exercise must reflect current applicable labor standards, not stale rates.
Handle multi-schedule determinations carefully
If a general or project wage determination contains more than one rate schedule, the contracting officer must either include only the schedules that apply to the type of construction involved or include the entire determination and clearly state which parts of the work each schedule covers. The contract cannot simply refer to the determination by citation or reference.
No incorporation by reference
Wage determinations must be physically included in the solicitation or contract, not merely referenced. This ensures bidders and contractors can see the exact wage obligations without searching external documents.
Classify construction correctly
The Wage and Hour Division’s general guidelines distinguish building, residential, highway, and heavy construction based on the nature of the project. Correct classification matters because it determines which wage schedule applies and whether incidental work is covered under the same schedule.
Use area practice and seek guidance
When the project type is unclear, local area practice is a primary factor in classification. If doubt remains, the contracting officer must seek guidance from the Wage and Hour Division before bid opening or receipt of best and final offers.
Responsibilities
Contracting Officer
Select only the appropriate wage determinations, identify the work each determination applies to, exclude project wage determinations from unrelated contracts or options, update wage determinations when exercising options, and ensure multi-schedule determinations are properly limited or clearly allocated. The contracting officer must also avoid incorporation by reference and obtain Wage and Hour Division guidance when classification is uncertain.
Contractor
Review the incorporated wage determinations and apply the correct wage schedule to the covered work. The contractor must understand which portions of the project are subject to which rates and comply with the applicable labor standards during performance.
Agency/Wage and Hour Division
Provide general classification guidance and, when requested, advise on the proper application of wage rate schedules before bid opening or receipt of final offers. The Wage and Hour Division also issues the wage determinations and area-practice-based guidance used to classify construction.
Practical Implications
Misclassifying the project can lead to using the wrong wage schedule, which can trigger underpayments, contract administration disputes, and potential labor compliance findings.
Contracting officers should document exactly which work is covered by each wage schedule, especially on mixed-scope projects where building, highway, or heavy elements overlap.
Option exercises are not a chance to keep outdated labor rates; the most current applicable wage determination must be used, so labor compliance must be checked before exercising the option.
If a project is borderline between construction categories, local area practice and early DOL consultation are critical; waiting until after bid opening or final offers can create procurement delays or require corrective action.
Because incorporation by reference is prohibited, solicitations and contracts should attach or otherwise fully include the wage determination text so bidders and contractors can see the exact obligations without ambiguity.
Official Regulatory Text
(a) The contracting officer must incorporate only the appropriate wage determinations in solicitations and contracts and must designate the work to which each determination or part thereof applies. The contracting officer must not include project wage determinations in contracts or options other than those for which they are issued. When exercising an option to extend the term of a contract, the contracting officer must select the most current wage determination(s) from the same schedule(s) as the wage determination(s) incorporated into the contract. (b) If the wage determination is a general wage determination or a project wage determination containing more than one rate schedule, the contracting officer shall either include only the rate schedules that apply to the particular types of construction (building, heavy, highway, etc.) or include the entire wage determination and clearly indicate the parts of the work to which each rate schedule shall be applied. Inclusion by reference is not permitted. (c) The Wage and Hour Division has issued the following general guidelines for use in selecting the proper schedule(s) of wage rates: (1) Building construction is generally the construction of sheltered enclosures with walk-in access, for housing persons, machinery, equipment, or supplies. It typically includes all construction of such structures, installation of utilities and equipment (both above and below grade level), as well as incidental grading, utilities and paving, unless there is an established area practice to the contrary. (2) Residential construction is generally the construction, alteration, or repair of single family houses or apartment buildings of no more than four (4) stories in height, and typically includes incidental items such as site work, parking areas, utilities, streets and sidewalks, unless there is an established area practice to the contrary. (3) Highway construction is generally the construction, alteration, or repair of roads, streets, highways, runways, taxiways, alleys, parking areas, and other similar projects that are not incidental to "building," "residential," or "heavy" construction. (4) Heavy construction includes those projects that are not properly classified as either "building," "residential," or "highway," and is of a catch-all nature. Such heavy projects may sometimes be distinguished on the basis of their individual characteristics, and separate schedules issued ( e.g. ,"dredging," "water and sewer line," "dams," "flood control," etc.). (5) When the nature of a project is not clear, it is necessary to look at additional factors, with primary consideration given to locally established area practices. If there is any doubt as to the proper application of wage rate schedules to the type or types of construction involved, guidance shall be sought before the opening of bids, or receipt of best and final offers, from the Administrator, Wage and Hour Division. Further examples are contained in Department of Labor All Agency Memoranda Numbers 130 and 131.