Finding Text
2025-003. Special Tests and Provisions United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. Subrecipients that use ESF funds for minor remodeling, renovation or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage compliance requirements, described in 2 CFR Part 200, Appendix XI - Compliance Supplement, Part 4, 20.001 Wage Rate Requirements Cross-Cutting Section. Condition: The District did not have formal contracts with the contractors for some of the construction projects funded with ARP ESSER 3 funds. Although the contractors indicated in their submitted proposals that their quoted price was based on prevailing wages, there was no legally-enforceable contractual language requiring the contractors and their subcontractors to comply with the federal Wage Rate Requirements clauses and DOL regulations. Cause: The District did not have procedures in place to ensure that capital construction projects have fully-executed contracts that include language requiring contractors to comply with federal Wage Rate Requirements, such as providing certified weekly payroll reports to support their invoices for payments. Effect: The lack of written contracts with Wage Rate Requirements clauses could expose the District to financial consequences if those contractors or their subcontractors are subsequently found to have violated the Wage Rate Requirements when performing their services for the District. Questioned Costs: None reported. Context: The District utilized ARP ESSER 3 funds to pay for its “Early Childhood Educational Center (ECEC) Door Project”, “ECEC Roof Project”, “Front Vestibule Project”, and “Playground Equipment & Rubber Surfacing of Upper Play Area”. The proposals submitted by contractors for the four projects stated that their quoted prices were based on prevailing wage rates, the District approved the proposals and issued purchase orders to the contractors; only one project has a fully executed agreement by the District and the contractor. However, neither the signed agreement for the one project nor the purchase orders issued for the other three projects contained requirements for the contractor to submit certified weekly payrolls as proof of compliance with the federal Wage Rate Requirements. Certified payrolls completed by the contractors and their subcontractors sometimes did not accompany the invoices submitted for payments, the District eventually requested and received all required certified payrolls from the contractors. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should review and revise its existing procedures for reviewing and approving capital construction projects to ensure that fully-executed contracts are obtained, and that such contracts contain clauses related to the compliance with the federal Wage Rate Requirements. Views of Responsible Officials of Auditee: Management acknowledges this finding. The District will review and update the existing procedures relating to capital-type construction projects.