Audit 16944

Finding: District controls did not always ensure compliance with the Davis-Bacon Act for Federally funded construction projects exceeding $2,000, resulting in questioned costs totaling $73,820. Criteria: The ESF ? Higher Education Emergency Relief Fund for the Improvement of Postsecondary Education Grant provides Federal funds for minor remodeling in a previously completed building for purposes associated with the coronavirus, such as minor building alterations to increase social distancing. Title 29, Section 5.5, Code of Federal Regulations (Davis-Bacon Act), requires the District to include prevailing wage rate clauses in any construction contract exceeding $2,000 that is financed either wholly or in part by Federal funds and ensure that contractors pay workers the prevailing wage rates established by the United States Department of Labor. This includes a requirement for the contractor to submit to the District weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). The United States Department of Labor established ?prevailing wages? by geographic area and interprets the Davis-Bacon Act to apply to construction, alteration, or repair of a public building or public work. Condition: The Board entered into a construction contract for building alterations to increase social distancing at the Flagler Technical Institute. During the 2021-22 fiscal year, the construction was completed and District ESF expenditures totaled $73,820 for the project. Our examination of the District records disclosed that the contract for the project did not contain clauses that required compliance with the Davis-Bacon Act. Also, according to District personnel, no one verified that the contractor submitted weekly certified payrolls demonstrating prevailing wage rates were paid. Cause: District personnel were not aware that the Davis-Bacon Act applied to the project and, therefore, did not include the appropriate wage rate clauses in the applicable procurement documents. In addition, according to District personnel, District procedures did not require them to verify that the contractor submitted weekly certified payrolls demonstrating prevailing wage rates were paid. Effect: Absent the required contract clauses and weekly certified payrolls, there is an increased risk that construction contractors paid with Federal moneys will not pay workers the prevailing wage rates established by the United States Department of Labor. Although we requested, the District did not provide the certified payrolls from the contractor demonstrating that the prevailing wage rates were paid for the project. Consequently, the District incurred questioned costs totaling $73,820. Recommendation: The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such procedures should ensure that applicable Federally funded construction contracts contain the prevailing wage rate clauses and require submittal of weekly certified payrolls and that District personnel verify the payrolls were received. In addition, the District should document to the United States Department of Education (ED) the allowability of the questioned costs or contact the ED regarding necessary corrective action. District Response: The District is currently working with the contractor to obtain the required documents to be in compliance with the Davis-Bacon Act. In addition, the District will enhance its procedures to ensure that it complies with the Davis-Bacon Act.

Finding: District controls did not always ensure compliance with the Davis-Bacon Act for Federally funded construction projects exceeding $2,000, resulting in questioned costs totaling $73,820. Criteria: The ESF ? Higher Education Emergency Relief Fund for the Improvement of Postsecondary Education Grant provides Federal funds for minor remodeling in a previously completed building for purposes associated with the coronavirus, such as minor building alterations to increase social distancing. Title 29, Section 5.5, Code of Federal Regulations (Davis-Bacon Act), requires the District to include prevailing wage rate clauses in any construction contract exceeding $2,000 that is financed either wholly or in part by Federal funds and ensure that contractors pay workers the prevailing wage rates established by the United States Department of Labor. This includes a requirement for the contractor to submit to the District weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). The United States Department of Labor established ?prevailing wages? by geographic area and interprets the Davis-Bacon Act to apply to construction, alteration, or repair of a public building or public work. Condition: The Board entered into a construction contract for building alterations to increase social distancing at the Flagler Technical Institute. During the 2021-22 fiscal year, the construction was completed and District ESF expenditures totaled $73,820 for the project. Our examination of the District records disclosed that the contract for the project did not contain clauses that required compliance with the Davis-Bacon Act. Also, according to District personnel, no one verified that the contractor submitted weekly certified payrolls demonstrating prevailing wage rates were paid. Cause: District personnel were not aware that the Davis-Bacon Act applied to the project and, therefore, did not include the appropriate wage rate clauses in the applicable procurement documents. In addition, according to District personnel, District procedures did not require them to verify that the contractor submitted weekly certified payrolls demonstrating prevailing wage rates were paid. Effect: Absent the required contract clauses and weekly certified payrolls, there is an increased risk that construction contractors paid with Federal moneys will not pay workers the prevailing wage rates established by the United States Department of Labor. Although we requested, the District did not provide the certified payrolls from the contractor demonstrating that the prevailing wage rates were paid for the project. Consequently, the District incurred questioned costs totaling $73,820. Recommendation: The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such procedures should ensure that applicable Federally funded construction contracts contain the prevailing wage rate clauses and require submittal of weekly certified payrolls and that District personnel verify the payrolls were received. In addition, the District should document to the United States Department of Education (ED) the allowability of the questioned costs or contact the ED regarding necessary corrective action. District Response: The District is currently working with the contractor to obtain the required documents to be in compliance with the Davis-Bacon Act. In addition, the District will enhance its procedures to ensure that it complies with the Davis-Bacon Act.