Finding 1105746 (2024-101)

REFERENCE: 2024-101 CFDA NUMBER 84.425U – COVID 19 – EDUCATION STABILIZATION FUND U.S. DEPARTMENT OF EDUCATION – 2024 PASSED THROUGH ARIZONA STATE DEPARTMENT OF EDUCATION GRANT NUMBER: S425U210038 QUESTIONED COSTS N/A CONDITION The two construction contracts executed during fiscal year 2023-2024, did not include the provisions required under the Davis-Bacon-Act. Accordingly, weekly certified payroll reports were not obtained or reviewed. CRITERIA In accordance with Title 2 of the Code of Federal Regulations, Subtitle A Office of Management and Budget Guidance for Grants and Agreements, Chapter II Office of Management and Budget Guidance, Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Appendix II to Part 200 – Contract Provisions for non-Federal Entity Contracts Under Federal Awards, In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (D), Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. In accordance with the OMB Compliance Supplement, Part 4 – Wage Requirements Cross-Cutting Section, 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 shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as 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 Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a 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; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). In accordance with OMB Compliance Supplement, Part 6 – Internal Control, non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. EFFECT Program requirements were not complied with. The School did not ensure that the construction contractor complied with Davis-Bacon-Act (prevailing wage requirements). CAUSE Training over Davis-Bacon-Act requirements was not completed by the appropriate personnel. Accordingly, internal controls were not designed appropriately to ensure that the vendors were notified of the contracts being funded with federal monies and that prevailing wage requirements had to be complied with. RECOMMENDATION AND BENEFIT A control system should be developed and implemented to ensure that the contracts funded with federal monies contain the appropriate provisions to comply with the Davis-Bacon-Act requirements. Additionally, procedures should be established to obtain and review weekly certified payroll reports for construction services funded with federal monies. All documentation supporting prevailing wages requirements should be retained. This will help ensure that program requirements are complied with. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.