Audit 392352

Capital Funding Program-CDFA #14.872-Activities Allowed or Nonallowed Finding 2025-001-Standard Contracts Need Additional Clauses Criteria and Condition Construction contracts should include certain clauses required by federal regulations. Context The Authority uses a standard contract for various rehabilitation expenditures, and related construction costs. The contract does not include Section 3 (24 CFR Part 75) language, or Davis-Bacon language. Effect The Authority is aware of Section 3 requirements and appears to track, to some extent, the Section 3 hours worked of its various contractors. In addition, the Authority is aware of Davis-Bacon requirements. We tested reviewed various construction contracts. Most work was performed by the company owner and a family member, for which Davis-Bacon is not applicable. Cause Apparent oversight. Recommendation We recommend the Authority have an attorney familiar with construction contracts review for needed revisions, and add at a minimum to the existing contract the Section 3 language per HUD-5370, Section 1, #40, and the Davis Bacon language per HUD-5370, Section II, #1, Minimum Wages. View of Responsible Officials and Planned Corrective Action I am Hazel Lucas, Executive Director and Designated Person to answer this finding. We will comply with the auditor’s recommendation.