Finding 384654 (2023-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-03-26

AI Summary

  • Core Issue: Construction projects funded by federal money did not comply with the Davis-Bacon Act requirements.
  • Impacted Requirements: Contractors must pay prevailing wages, submit weekly certified payrolls, and post wage determinations at job sites.
  • Recommended Follow-Up: The District should create internal controls to ensure compliance with the Davis-Bacon Act for future federal construction projects.

Finding Text

Material Weaknesses: 2023-001 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 ARP ESSER III Assistance Listing: 84.425U Grant Period: Year Ending June 30, 2023 Condition: Construction projects paid with federal monies did not meet the compliance requirements of the Davis-Bacon Act. Criteria: The Davis-Bacon Act requires that nonfederal entities shall meet certain requirements for the construction, alteration or repair of public buildings or public works in excess of $2,000.00. Any contract entered into must include the locally prevailing wage to be paid to workers including fringe benefits. The contractor is obliged to pay at least the prevailing wage listed in the contract. Contractors are required to pay covered workers weekly and submit weekly certified payrolls to the contracting entity. They are also required to post the applicable Davis-Bacon wage determination along with the Davis-Bacon poster at the job site. Cause: The District was unaware of the need to follow the requirements of the Davis-Bacon Act when expending federal monies on remodeling and the purchase and installation of HVAC units. Effect: The District could be liable for paying any additional wages if the contractor did not pay prevailing wage rates to laborers working on the project, or the expenditures could be disallowed for the expenditures that were subject to the Davis-Bacon Act. Recommendation: We recommend the District develop internal controls to meet the requirements of the Davis-Bacon Act that ensure any time federal awards are used on construction that compliance with contracts, including inserting the prevailing wage clauses and ensuring that federal wage rates and fringes are met by an effective monitoring process which includes collecting and reviewing weekly certified payroll reports from the contractor or subcontractor. Also, ensuring that all items are posted at the work site to ensure compliance. District’s Response: The District will develop internal controls to ensure that in the future if federal awards are expended on construction that all requirements of the Davis-Bacon Act will be met. Questioned Costs: $ 0

Corrective Action Plan

To address the specific points highlighted in your recommendation we will: 1. Insert Prevailing Wage Clauses - We will work closely with our legal and procurement teams to incorporate prevailing wage clauses consistently in all relevant contracts. This will be a standard practice for any construction project that involves federal awards. 2. Effective Monitoring Process - We acknowledge the importance of a rigorous monitoring process. To this end, we will develop and implement a comprehensive system to monitor compliance with contractual obligations, including regular checks to ensure that federal wage rates and fringes are met. This monitoring process will involve thorough reviews of weekly certified payroll reports submitted by contractors and subcontractors. 3. Work Site Compliance - Recognizing the significance of visible compliance, we will mandate the posting of all relevant items, such as wage rates and project details, at prominent locations on the work site. This measure aims to enhance transparency and serves as a tangible demonstration of our commitment to Davis-Bacon Act compliance. We understand the critical nature of adhering to federal regulations and appreciate your guidance in strengthening our internal controls. We will initiate these changes promptly, ensuring that they are integrated into our standard operating procedures for all future construction projects involving federal awards. Additionally, we welcome any further guidance or collaboration in this regard and are open to periodic reviews to ensure ongoing compliance. Our commitment to upholding the principles of the Davis-Bacon Act aligns with our dedication to transparent and ethical practices. Thank you once again for your valuable recommendations, and we look forward to implementing these measures in collaboration with your guidance.

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring Material Weakness Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 961096 2023-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $263,784
84.010 Title I Grants to Local Educational Agencies $179,497
84.027 Special Education_grants to States $136,581
10.555 National School Lunch Program $42,220
10.553 School Breakfast Program $35,994
84.367 Improving Teacher Quality State Grants $28,691
84.358 Rural Education $19,181
84.173 Special Education_preschool Grants $2,120