Finding Text
Finding No. 2023-016 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Under 29 CFR 5.5(a), contracts exceeding $2,000 for construction, alteration, or repair of public buildings or public works financed in whole or in part with federal funds must include the required Davis-Bacon labor standards clauses, including the incorporation by reference of all applicable rulings and interpretations (29 CFR parts 1, 3, and 5). Additionally, pursuant to 29 CFR 5.5(a)(3)(ii)(A), contractors or subcontractors must submit weekly, for each week in which any Davis Bacon Act (DBA)- or Related Acts-covered work is performed, certified payrolls to the appropriate Federal agency, if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the agency. Condition: 1. For eight (or 100%) of eight construction contracts selected for testing, the required clauses, as identified in 29 CFR 5.5(a)(1) and 29 CFR 5.5(a)(8), were not inserted or referenced in the contract or purchase order. No questioned costs are presented as we are unable to quantify the extend of the noncompliance. 2. For eight (or 100%) of eight construction expenditures selected for testing, PSS did not provide the certified payrolls from contractors or subcontractors for work subject to Davis-Bacon Act requirements. No questioned costs are presented as we are unable to quantify the noncompliance. Cause: PSS did not establish and effectively implement internal control procedures to address or prevent noncompliance of the applicable wage rate requirements. Effect or potential effect: PSS is in noncompliance with applicable wage rate requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should establish and implement effective internal controls to ensure compliance with federal wage rate requirements. At a minimum, PSS should: 1. Ensure all applicable contracts and purchase orders include or reference the required Davis‑Bacon labor standards clauses; 2. Require contractors and subcontractors to submit certified payrolls for all Davis‑Bacon–covered work; and 3. Implement procedures to review, approve, and retain certified payrolls and supporting documentation. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.