Finding 48183 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-03-01

AI Summary

  • Core Issue: The District failed to include necessary wage rate provisions in contracts for federal grant-funded construction projects, risking noncompliance with federal regulations.
  • Impacted Requirements: Contracts over $2,000 must comply with the Davis-Bacon Act and include weekly certified payroll reports to verify prevailing wages.
  • Recommended Follow-Up: Ensure all future contracts contain wage compliance provisions and establish a process to review certified payroll reports and report any violations to the federal awarding agency.

Finding Text

2 CFR 3474.1 provides that the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. Appendix II to 2 CFR part 200, Paragraph D states that all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: (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 ?Anti-Kickback? 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. Lack of proper internal controls over Federal Grants management led to the District expending $609,752 of its Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER II) Fund, AL #84.425D and $1,898,392 of its Education Stabilization Fund - American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) Fund, AL #84.425U, federal grant funds for the replacement/renovation of HVAC systems and related electrical work, and the design and build of kindergarten and high school classrooms without the District?s contracts including a provision to ensure the contractors complied with Federal wage rate requirements. Additionally, the District did not obtain weekly certified payroll reports from the contractors to verify prevailing wages were paid on a weekly basis. Without proper controls over wage rate requirements, there is an increased risk that the District and its contractors and subcontractors are not in compliance with applicable federal regulations. Noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The District should ensure contracts for construction in excess of $2,000 paid with federal grant monies contain a provision the contractor comply with the wage rate requirements and ensure certified payroll reports are provided weekly by the contractor. The District should review the certified payroll reports and report all suspected or reported violations to the Federal awarding agency.

Corrective Action Plan

Finding Number: 2022-001 Planned Corrective Action: See Below Anticipated Completion Date: 01/05/2023 Responsible Contact Person: Brian Haines, Treasurer The District has implemented the following Action Plan for Correction: 1. The Treasurer will ensure that all agreements intended to be sourced through Federal Funds will contain prevailing wage rate provisions prior to signing any such agreements. 2. The Treasurer will ensure that invoices from contractors contain the necessary prevailing wage certified payroll reports prior to approving such invoices for payment from Federal Funds. 3. The Treasurer will educate all responsible parties (Accounts Payable, Superintendent) in the District regarding prevailing wage documentation to ensure appropriate documentation is obtained prior to payment to the contractors and prior to requesting Federal Funds.

Categories

Matching / Level of Effort / Earmarking Subrecipient Monitoring

Other Findings in this Audit

  • 48184 2022-002
    Material Weakness
  • 48185 2022-001
    Material Weakness
  • 48186 2022-002
    Material Weakness
  • 624625 2022-001
    Material Weakness
  • 624626 2022-002
    Material Weakness
  • 624627 2022-001
    Material Weakness
  • 624628 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $1.91M
10.555 National School Lunch Program $316,136
84.010 Title I Grants to Local Educational Agencies $291,772
84.027 Special Education_grants to States $281,952
10.553 School Breakfast Program $214,336
84.367 Improving Teacher Quality State Grants $64,287
84.424 Student Support and Academic Enrichment Program $10,345
84.173 Special Education_preschool Grants $7,555
10.649 Pandemic Ebt Administrative Costs $614