Finding Text
Criteria or specific requirement (including statutory, regulatory, or other citation)
N. Special Tests and Provisions - All 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 the locality of the project (prevailing wage rates) by the Department of Labor. Nonfederal entities shall include in their construction contracts subject to Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the Department of Labor regulations (29 CFR Part 5). This should include a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, a copy of the payroll and a statement of compliance (certified payrolls) for each week in which contract work is performed.
Condition
For the 6 projects paid with ESSER funds that were reviewed, certified payrolls appeared to be provided directly from the vendor upon being requested by the auditor. As a result, there did not appear to be a control structure in place at the District for employees leading the project to gather the certified payrolls and ensure compliance with the requirements noted above. Additionally, one of the projects reviewed did not have certified payrolls provided for it and instead, the District provided certified payrolls for another project outside of the timeframe of the audit that did not appear to be related.
Questioned Costs
N/A
Contex
Although contracts reviewed had prevailing wage clauses included, the District was unable to demonstrate that District personnel were ensuring that the clauses were adhered to.
Effect
Failure to review certified payrolls for the weeks that contractual work was performed puts the District at risk of not being able to ensure that prevailing wages are being paid and the qualified, skilled employees are working on the District's projects.
Cause
Failure to implement a control structure where certified payroll information is obtained and maintained to ensure compliance with contractual clauses required by the U.S. Department of Labor has taken place.
Recommendation
The District should review grant compliance requirements related to the use of federal funds for construction projects to ensure that the District and its vendors are in compliance with contractual requirements. Such an action would be to appoint a District employee or hire an engineer to collect and review certified payrolls to ensure contractual compliance.