Finding 393068 (2023-002)

Reference Number: 2023-002 Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control and Compliance Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance AL Number and Title: 84.425- COVID-19 Education Stabilization Fund Federal Awarding Agency: U. S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: None Questioned Costs: $2,197,968.75 Money from the COVID-19 Education Stabilization Fund (ESF) was used to fund construction contracts in excess of $2,000.00 without the inclusion of prevailing wage rate clauses. Finding Title 29, U. S. Code of Federal Regulations, Part 5, Sub-Part A Davis Bacon and Related Acts Provisions and Procedures (the “Davis-Bacon Act”), requires that any construction contract in excess of $2,000 that is funded wholly or in part by federal funds include prevailing wage rate clauses. The laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for locality of project (prevailing wage rates) by the Department of Labor (DOL) and the contractor or subcontractor must submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). During fiscal year 2022, the Blount County Board of Education (the “Board”) entered into two construction project contracts totaling $6,781,138.00 that did not include prevailing wage rate clauses. As of September 30, 2023, the Board had expended $2,197,968.75 of COVID-19 Education Stabilization Funds on the projects. The Board did not have controls in place to ensure the Davis-Bacon Act wage rate requirements were included in construction contracts; therefore, the two construction project contracts awarded during the fiscal year did not include prevailing wage rate clauses nor did the contractors submit weekly certified payrolls to the Board. As a result, the Board was not in compliance with the Davis-Bacon Act as it pertains to wage rate requirements. Recommendation: The Board should comply with Title 29, U. S. Code of Federal Regulations, Part 5, Sub-Part A Davis Bacon and Related Acts Provisions and Procedures (the “Davis-Bacon Act”) when using COVID-19 Education Stabilization Funds to fund construction contracts in excess of $2,000. Views of Responsible Officials of the Auditee The Board agrees with the finding.