Audit 405996

Condition: We noted that the applicable wage determination information was not included in the funding agreement and related contract documentation for the project selected for testing. The City relied on Alabama Department of Transportation (ALDOT) to ensure all federally required provisions were included in the bid specifications and contracts. Although certified payrolls were submitted and the contractor complied with prevailing wage requirements, the required documentation was not formally included in the agreement package. Criteria: Federal regulations require that contracts and subcontracts for construction projects in excess of $2,000 financed with federal assistance funds include the applicable prevailing wage provisions and wage determinations under the Wage Rate Requirements (Davis-Bacon Act). In addition, contractors and subcontractors are required to submit weekly certified payrolls for each week work is performed. These requirements are established by 40 USC 3141–3147; 29 CFR Part 5; and 2 CFR section 200.326. Cause: The City relied on ALDOT’s review and approval process for inclusion of required federal labor standard provisions and did not perform an independent verification that all Wage Rate Requirement provisions and wage determinations were included in the executed agreements. Effect: Failure to include all required Wage Rate Requirement provisions and documentation in construction agreements could result in noncompliance with federal requirements and increases the risk that contractors may not be properly informed of applicable prevailing wage requirements. Recommendation: We recommend the City implement procedures to independently verify that all federally required contract provisions, including applicable wage determinations and Davis-Bacon provisions, are included in bid specifications, contracts, and funding agreements prior to execution, even when projects are administered in coordination with third parties such as ALDOT. View of Responsible Officials and Planned Corrective Action: Management stated the project was administered through ALDOT and the City historically relied on ALDOT to ensure all required federal provisions were included in project documentation. Management noted that the funding agreement for this project did not include the wage determination information, although ALDOT later confirmed the requirements were applicable and certified payrolls were submitted. Management further indicated the contractor regularly performs ALDOT work and complied with the requirements. The City has updated its procedures to independently verify inclusion of all required federal compliance provisions going forward.