Finding Text
Noncompliance with Davis-Bacon Wage Requirements
Assistance Title: COVID-19 - Economic Adjustment Assistance - Coronavirus Aid, Relief, and Economic Security (CARES) Act Revolving Loan Fund
Assistance Listing Number: 11.307
Federal Agency: U.S. Department of Commerce
Type of Finding: Significant Deficiency
Category of Finding: Special Tests and Provisions – Davis-Bacon Act
Known Questioned Costs: $0
Likely Questioned Costs: $0
Criteria In accordance with section 602 of PWEDA (42 U.S.C. § 3212), all laborers and mechanics employed by contractors or subcontractors on construction-related projects receiving investment assistance under PWEDA shall be paid wages not less than those prevailing on similar construction in the locality, as determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. See 13 CFR § 302.13.
Condition During the fiscal year ended June 30, 2024, the Organization did not disburse any loans that were subject to Davis-Bacon wage requirements. However, we noted there are no internal controls in place to verify compliance with prevailing wage rates in the event that such loans are disbursed in the future.
Cause There are no controls in place to verify compliance with prevailing wage rates for federally funded projects, risking legal and financial penalties due to potential noncompliance with federal wage laws.
Effect Without proper controls, the Organization risks noncompliance with federal wage laws if loans subject to Davis-Bacon requirements are disbursed. This could lead to legal and financial penalties, including potential repayment of federal funds or jeopardizing future funding opportunities.
Repeat Finding This is a repeat finding from the prior year.
Recommendation We recommend that the Organization implement procedures to ensure compliance with Davis-Bacon wage requirements. This includes training staff on federal wage laws, incorporating compliance checks into the loan disbursement process, and regularly monitoring contractor adherence to prevailing wage rates.
Management’s Response Management concurs with this finding. See Management’s Response and Corrective Action plan section.