To ensure that organized labor has a fair chance to bid for government contracts, U.S. law requires all employers engaged in the performance of federal contracts to pay “prevailing” wages to their workers. This ensures that nonunion employers cannot gain an unfair bidding advantage by paying wages far below the union rate and passing the savings on to the government in lower bids. Virtually all federal expenditures in the private sector are covered by prevailing wage provisions. The main statutes in this area are the Davis-Bacon Act governing federal construction contracts, the McNamara-O'Hara Service Contract Act governing contracts to provide services to the federal government, and the Walsh-Healey Public Contracts Act governing the manufacturing of goods for the government.
For more information, see DOL's Wage and Hour Division prevailing wage resource book, found at http://www.dol.gov/whd