Finding Text
2024-003 Wage Rate Compliance
CFDA Title: Education Stabilization Fund
CFDA Number: 84.425
Federal Award Number and Year: 2021
Federal Agency: U.S. Department of Education
Pass-through Entity: Montana Office of Public Instruction
Condition:
The District did not comply with the wage rate compliance related to construction using Education Stabilization Fund (ESSER) Grant monies.
Context:
During the testing of significant claims for the ESSER major programs related to construction, we noted claims in which there should be contracts in place and that the wage rate requirements would apply.
Criteria:
Section 7007 construction funds, as well as any Section 7002 or 7003(b) funds spent for construction or minor remodeling, are subject to Wage Rate Requirements (20 USC 1232b).
Compliance Requirement – 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).
Non-federal 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 non-Federal 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).
Effect:
Noncompliance with the Wage Rate Requirement for construction paid for out of the ESSER Grants.
Cause:
The District was not aware of the requirement.
Recommendation:
The District should implement internal controls to determine the federal compliance requirements of all federal funds received. In addition, procedures should be implemented to ensure any federal funds received in which the Wage Rate Requirement is required the following are implemented:
1. Any construction vendor is by contract, and that contract includes the Prevailing Wage clauses for the contractors and subcontractors.
2. The weekly certified payrolls are submitted to the District.