Finding Text
Finding 2024-003: Material Weakness - Internal Control and Compliance Over Special Tests and Provisions
Program: COVID-19: Education Stabilization Fund
Assistance Listing Number: 84.425
Pass-Through Agency: Wisconsin Department of Public Instruction
Criteria: 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 (DOL) (40 USC 3141–3144, 3146 and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to 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) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326).
Condition/Context: The District did not enter into a contract with the primary contractor for the HVAC construction project paid for with federal assistance funds, nor did the District verify that prevailing wage rate requirements were included in subcontracts. Additionally, the District does not have controls in place to track weekly certified payrolls.
Cause: The District did not have controls in place to ensure federal requirements were met in the process for selecting contractors and monitoring subcontractors. The District also does not have a process in place to track the weekly certified payrolls.
Effect: Federal Funds may be paid to a contractor that does not follow prevailing wage laws.
Questioned Costs: Not determinable.
Recommendation: We recommend the District implement a system for procurement procedures to ensure contacts are obtained and include the required prevailing wage rate requirements. This should also include monitoring all subcontractors to ensure they meet these requirements. We also recommend the District implement a system to track weekly certified payrolls to ensure all payrolls are received.
Views of Responsible Officials: The District is in the process of developing a procurement policy, including prevailing wage rate requirements and will ensure that subcontractors meet the requirements.