Finding Text
Finding Reference 2023-05
Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway
Program)
Name of Federal Agency Department of Transportation
Compliance Requirement Special Tests and Provisions – Wage Rate Requirements
Type of Finding Significant Deficiency on Internal Control and Non-Compliance
Condition:
From a sample of fifteen work weeks examined, we noted that three certified payroll weeks were not certified within
the required weekly period as required by federal regulations. The delays in certifications ranged from four days to
thirty-three days in excess of the required weekly timeframe.
Criteria:
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).
Cause:
The delays in the certification of payroll weeks may be due to inefficient payroll processing procedures within the
contractor or subcontractor's system.
Effect:
The failure to certify payrolls on a weekly basis as required by federal regulations can lead to noncompliance with
federal regulations, specifically the Davis-Bacon Act and related Department of Labor (DOL) regulations. However,
the fact that the Authority discharges its obligation by withholding payment to the contractor or subcontractor until
the certified payroll is received and reviewed, mitigates all economic risks.
Questioned Costs:
None.
Recommendation:
To address the identified issues, the following corrective actions are recommended:
• Enhance Oversight and Compliance Reviews: Designate a compliance officer or team responsible for
verifying that certified payrolls are submitted timely. Include within the internal audit functions to test
compliance with this requirement and recommend corrective actions promptly.
• Request a non-compliance waiver from the FHWA: The Authority should request the FHWA for a 20%
non-compliance waiver, as it is impracticable for the Authority to ascertain that all contractors or
subcontractors comply timely with this requirement.
Views of Responsible Officials
Refer to Management’s unaudited corrective action plan.
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