A public entity plans to award multiple small public works contracts over a fiscal year, each valued at less than $25,000, for routine maintenance and repair of public facilities. To streamline the process and ensure compliance, the entity wishes to enter into an annual 'maintenance contract' with a single contractor, covering all these small jobs. Which of the following is true regarding prevailing wage requirements for such a contract?
- APrevailing wages are not required for any individual job under $25,000, regardless of the overall contract value.
- BThe entity must break down the annual contract into separate, distinct projects, each assessed individually for prevailing wage applicability.
- CPrevailing wages are only required if the scope of work for an individual job involves new construction, not maintenance.
- DIf the total value of the annual maintenance contract exceeds $25,000, all work performed under it is subject to prevailing wages.
Show answer & explanationAnswer & explanation
Correct answer: D. If the total value of the annual maintenance contract exceeds $25,000, all work performed under it is subject to prevailing wages.
For public works projects, the $25,000 threshold for prevailing wage applicability (or $15,000 for alteration, demolition, repair, or maintenance) applies to the total contract value. If an annual contract aggregates multiple smaller jobs and its total value exceeds this threshold, then all work performed under that contract is subject to prevailing wages, even if individual tasks are below the threshold.
Why the other options are wrong
- A. This is incorrect; the aggregate value of the contract is often considered.
- B. While possible, the question asks what is true regarding prevailing wage requirements, and the aggregate rule is key.
- C. Maintenance work is generally subject to prevailing wages if the contract meets the threshold.
Aggregate Contract Value for Prevailing Wage
For public works, particularly annual or master contracts covering multiple tasks, the prevailing wage threshold applies to the total aggregate value of the contract, not just individual work orders, if the work is considered part of a single project or purpose.
- Thresholds: $25,000 new construction/alteration; $15,000 repair/maintenance/demolition.
- If master contract exceeds threshold, all work under it is covered.
- Prevents circumvention by breaking down larger projects.
Memory trick: Total value matters, don't split the bill!