Audit 391740

FINDING - District controls did not always ensure compliance with the Davis-Bacon Act for construction projects exceeding $2,000 and financed by the Federal Education Stabilization Fund, resulting in questioned costs totaling $234,614. CRITERIA -The Federal Education Stabilization Fund provides funding for school facility repairs and improvements. 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 in 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 - For the 2024-25 fiscal year, the District expended Federal Education Stabilization Fund funds totaling $1.6 million, including $499,130 based on a contract for roofing, heating, ventilation, and air conditioning (HVAC); and building automation upgrade services; and $46,373 based on a contract for flooring services. While the contract for roofing, HVAC, and building automation upgrade services included a general requirement to comply with the Davis-Bacon Act provisions, neither that contract nor the flooring services contract explicitly required submittals of weekly certified payrolls demonstrating that prevailing wage rates were paid. Subsequent to our inquiry, in October 2025 the District obtained certified payrolls from the contractor for the HVAC work completed; however, certified payrolls were not obtained for expenditures totaling $234,614 for roofing, building automation upgrade, and flooring services. CAUSE - District contracts did not specifically require contractors to submit weekly certified payrolls to the District and District procedures had not been established to require District personnel to verify that payrolls were received. 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 obtain certified payrolls from the contractors demonstrating that the prevailing wage rates were paid for certain services, resulting in questioned costs totaling $234,614. RECOMMENDATION - The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such enhancements should include provisions in applicable contracts requiring weekly submittals of certified payrolls and District procedures documenting verifications that the payrolls were received. In addition, the District should document to the FDOE allowability of the questioned costs or contact the FDOE regarding necessary corrective action. DISTRICT RESPONSE - District procedures have been put in place to ensure that the Davis-Bacon Act requirements to submit weekly payroll certifications will be included in all contract language for federally funded projects as well as on our purchase orders. The finance department will continue to follow up with vendors to ensure payroll certifications are collected before invoice payments are made.