Finding Text
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: 2023
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:
2 of the 5 contracts with companies providing construction or maintenance services for the District did not include the
required language relating to the Davis-Bacon Act or the Copeland “AntiKickback” Act or obtain the date wage rate
determinations.
2 of the 5 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.
In the prior year’s audit none of the contracts reviewed included the required language related to the Davis-Bacon Act or Copeland
“Antikickback” Act nor had the District obtained a wage determination decision from the State for the projects. One of the three
contracts tested did not have weekly payroll certifications.
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 early in the school year. 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.
A few months into the school year, District personnel over this area became aware of these requirements and began obtaining wage
rate determinations and weekly payroll certifications from the vendors.
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:
The Purchasing Department is working with contracted law firm to review current contract to include the Davis Bacon
Act and the Copeland Compliance. The School District will offer training on EDGAR and CFR compliance including
Wage Rate/Davis Bacon Act Procurement, Construction, and Grants Staff.
Timeline for completion of corrective action plan:
June 2024
Employee position(s) responsible for meeting the timeline
Grants Department, Construction Department, Purchasing Department, Finance Director
Schedule X