Finding Text
2 CFR § 3474.1 gives regulatory effect to the Department of Education (DOE) for Appendix II to 2 CFR Part 200 which states, in part, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: “(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.” The Davis Bacon Act is applicable to the DOE COVID-19 Education Stabilization Fund program pursuant to the General Education Provisions Act of 1931. Specifically, pursuant to 20 U.S.C. § 1232b, all “laborers and mechanics employed by contractors or subcontractors on all construction and minor remodeling projects assisted under any applicable program shall be paid wages at rates not less than those prevailing on similar construction and minor remodeling in the locality as determined by the Secretary of Labor in accordance with” the Davis Bacon Act. Compliance with the Davis-Bacon Act is verified by weekly payroll reports. 29 C.F.R. § 3.3(b) and 29 C.F.R. § 3.4(a) require contractors or subcontractors performing work under projects covered by the Davis-Bacon Act to submit certified weekly payroll reports to the contracting agency. These certified payrolls must be accompanied by a “statement of compliance” in accordance with 29 C.F.R. § 3.3(b) that certifies the accuracy of the weekly payroll information. This statement of compliance is “executed by the contractor or subcontractor or by an authorized officer or employee of the contractor or subcontractor who supervises the payment of wages[.]” 29 C.F.R. 3.3(b). “After the certified payrolls have been reviewed in accordance with the contracting or sponsoring agency’s procedures, such certified payrolls must be preserved by the agency for a period of 3 years after all the work on the prime contract is completed[.]” 29 C.F.R. 3.4(a). Lucas Local School District received COVID-19 Economic Stabilization Fund program federal grant funding through the Ohio Department of Education and Workforce and expended $77,268 on construction projects within the district. Lack of effective controls led to the District expending AL# 84.425 COVID-19 Education Stabilization Fund federal grant funds on the following projects without verifying that prevailing wages were paid in accordance with the requirements of the Davis Bacon Act: • Seaman’s Custom Fence for an outdoor fencing project at the elementary school in the amount of $44,635. • Adena Corporation for installation of exterior frames and doors at the middle school in the amount of $32,633. For the above-listed contracts, the District did not enter into a written agreement with the contractor which contained a provision to ensure the contractor complied with Federal wage rate requirements. Further, the District did not obtain weekly certified payroll reports from the contractors to verify prevailing wages were paid on a weekly basis. This noncompliance also resulted in a qualified opinion over the AL# 84.425 COVID-19 Education Stabilization Fund program. Failure to have effective controls in place over wage-rate requirements may result in the District and its contractors or subcontractors failing to pay prevailing wages when required by Federal law and could result in reduction of future Federal funding or other sanctions imposed by Federal grantors. When required by Federal grant legislation, the District should ensure prime construction contracts in excess of $2,000 paid with Federal grant monies contain provisions that require the contractor to comply with wage rate requirements. Further, the District should ensure certified payroll reports are provided weekly by the contractor. The District should review the certified payroll reports and report all suspected or reported violations to the Federal awarding agency.