Audit 18426

Section III: Federal Award Findings and Questioned Costs Finding considered a Significant Deficiency in Internal Control over Compliance and Noncompliance that is not considered Material ? Finding 2022-001. Covid-19 ? Elementary & Secondary School Emergency Relief Fund II ?84.425D - Special Tests and Provisions ? Wage Rate Requirements. Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141-3144, 3146, and 3147). Nonfederal entities must include in their construction contracts subject to the Wage Rate Requirements (the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Applicable to Contracts Governing Federally Financed and Assisted Construction). This includes the requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition: A contract for the purchase of ion generators and roof-top air conditioning units was awarded on November 8, 2021. The project was bid, with the bid opening held on October 21, 2021. The contract outlined construction labor for the installation of roof-top units (RTUs) at a cost of $113,900 and total labor costs at $156,100. There was no language included in the advertisement for bids, construction documents, and project manual documents that contained the wage determination and Davis-Bacon labor standards clauses. After the bid opening, the district realized that the project was subject to Davis-Bacon labor standards and notified the architect that the contractor must pay wages not less than prevailing wage rates established by the Department of Labor. The architect contacted the contractor, who added an addendum to the contract recognizing the requirements of the Davis-Bacon act. The contractor provided weekly time reports on Department of Labor forms. The district failed to monitor the wage determination rates and weekly time reports throughout the contract period. The district also failed to ensure that the Davis-Bacon poster and wage determination rates were posted at work sites and failed to ensure that onsite interviews were conducted. Cause: The district did not fully understand that the project was subject to Davis-Bacon labor requirements at the beginning of the bid process and was not aware of these requirements until the bids were officially opened. The district did not fully understand all of its responsibilities outlined in the Davis-Bacon labor requirements. Effect: The effect is that certain provisions of the Davis-Bacon labor requirements were not met. Questioned Costs: Costs are not being questioned since the contractor ultimately followed the wage determination rates for labor paid on the project. Perspective: The contract awarded on November 8, 2021, was awarded in the total amount of $1,343,371. The contract costs were heavily weighted on equipment costs, with labor being $156,100 of the total contract award. For the 2021-2022 year, $760,886.45 was paid on the contract with $59,800 of the amount paid representing total labor costs. Recommendation: The district should familiarize itself with the requirements of the Davis-Bacon Labor Act and make sure that all requirements are understood, make sure that an action plan is developed to ensure compliance with the requirements, and monitor compliance throughout the life of any contract subject to the Act. Any questions or assistance with wage determination rates or the applicability of the Davis-Bacon Labor Act to particular projects may be directed to the United States Department of Labor. Views of Responsible Officials: The views of district administration are outlined in the Auditee?s Correction Plan.

Section III: Federal Award Findings and Questioned Costs Finding considered a Significant Deficiency in Internal Control over Compliance and Noncompliance that is not considered Material ? Finding 2022-001. Covid-19 ? Elementary & Secondary School Emergency Relief Fund II ?84.425D - Special Tests and Provisions ? Wage Rate Requirements. Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141-3144, 3146, and 3147). Nonfederal entities must include in their construction contracts subject to the Wage Rate Requirements (the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Applicable to Contracts Governing Federally Financed and Assisted Construction). This includes the requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition: A contract for the purchase of ion generators and roof-top air conditioning units was awarded on November 8, 2021. The project was bid, with the bid opening held on October 21, 2021. The contract outlined construction labor for the installation of roof-top units (RTUs) at a cost of $113,900 and total labor costs at $156,100. There was no language included in the advertisement for bids, construction documents, and project manual documents that contained the wage determination and Davis-Bacon labor standards clauses. After the bid opening, the district realized that the project was subject to Davis-Bacon labor standards and notified the architect that the contractor must pay wages not less than prevailing wage rates established by the Department of Labor. The architect contacted the contractor, who added an addendum to the contract recognizing the requirements of the Davis-Bacon act. The contractor provided weekly time reports on Department of Labor forms. The district failed to monitor the wage determination rates and weekly time reports throughout the contract period. The district also failed to ensure that the Davis-Bacon poster and wage determination rates were posted at work sites and failed to ensure that onsite interviews were conducted. Cause: The district did not fully understand that the project was subject to Davis-Bacon labor requirements at the beginning of the bid process and was not aware of these requirements until the bids were officially opened. The district did not fully understand all of its responsibilities outlined in the Davis-Bacon labor requirements. Effect: The effect is that certain provisions of the Davis-Bacon labor requirements were not met. Questioned Costs: Costs are not being questioned since the contractor ultimately followed the wage determination rates for labor paid on the project. Perspective: The contract awarded on November 8, 2021, was awarded in the total amount of $1,343,371. The contract costs were heavily weighted on equipment costs, with labor being $156,100 of the total contract award. For the 2021-2022 year, $760,886.45 was paid on the contract with $59,800 of the amount paid representing total labor costs. Recommendation: The district should familiarize itself with the requirements of the Davis-Bacon Labor Act and make sure that all requirements are understood, make sure that an action plan is developed to ensure compliance with the requirements, and monitor compliance throughout the life of any contract subject to the Act. Any questions or assistance with wage determination rates or the applicability of the Davis-Bacon Labor Act to particular projects may be directed to the United States Department of Labor. Views of Responsible Officials: The views of district administration are outlined in the Auditee?s Correction Plan.