Finding Text
Federal Program Information:
Funding Agency: U.S. Department of Education Title: Education Stabilization Fund
FAL Number: 84.425D,U,W
Passthrough: New Mexico Public Education Department Award Year: 2022 Criteria: APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER
FEDERAL AWARDS
(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 ‘‘AntiKickback’’ 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.
Condition: During our review of the requirements of Special Tests provisions of the Compliance
Supplement and the District’s implementation of controls related to compliance with these
provisions for the Education Stabilization Fund, we identified the following issues:
• None of the contracts with companies providing construction or maintenance services for the
District included the required language relating to the Davis-Bacon Act or the Copeland
“AntiKickback” Act.
• One of three contracts tested for compliance with weekly payroll certifications did not have
weekly certifications provided to District whereby the contractor attested that all laborers were
paid wages in rates to be in compliance with the prevailing wage rate for the contractor’s
employees.
Questioned Costs: Unknown
Cause: District personnel were unaware of requirement to include language in contracts
regarding the Davis-Bacon Act or the Copeland “AntiKickback” Act with companies providing
construction or maintenance work for the District when Federal funds are being used to pay for
those services. Additionally, District personnel were unaware of the $2,000 threshold and had
mistakenly been using a $60,000 threshold, which is a state threshold for wage rate determinations.
The District had been obtaining New Mexico Wage Rate Determinations for all projects with costs
exceeding $60,000 and obtaining weekly payroll certifications from those vendors, but had not been
obtaining this for projects with costs in excess of $2,000. Those obtaining these services for the
District were not always aware that Federal funds were being used to pay for these projects.
Many of the construction contracts entered into by the District come through companies with
approved contracts with Cooperative Educational Services. As such, the District has not been in the
habit of creating an additional contract directly with the vendor including the additional language
which is necessary to be in compliance with Federal requirements when grant funds are used in
construction or maintenance projects. Effect: The District is not in compliance with Federal requirements when using grant funds to pay
for construction or maintenance projects in excess of $2,000. Noncompliance with these provisions
could cause reimbursement of these funds to be questioned or require the District to reimburse the
granting agency for any costs incurred under these projects. Additionally, companies providing
these services may not know they are subject to particular wage rate determinations for the project
which may cause them to bid or quote amounts which do not provide for payment of required wages to
the employees participating on those projects.
Auditor’s Recommendation: We recommend that the District establish a practice of including the
required language for the Davis- Bacon Act and the Copeland “AntiKickback” Act in contracts
with all companies which provide construction or maintenance projects to the District. When
companies are selected that have Cooperative Educational Services agreements, the District should
require an additional contract be signed by the company which includes these provisions.
Additionally, we recommend that District personnel be trained in identifying which funds fall under
Federal regulations versus State regulations so that when purchase orders are created and contracts
are entered into that these individuals know they are including the proper requirements.
Responsible Official’s Plan:
• Specific corrective action plan for finding:
Future wage decisions will be submitted to Finance. Grants Department to complete
monthly review to verify information.
• Timeline for completion of corrective action plan:
June 2023
• Employee position(s) responsible for meeting the timeline:
Operations Director and Grants Department