Noncompliance with Davis-Bacon Wage Requirements
Description of the Finding: BSEDC failed to comply with Davis-Bacon wage requirements for a loan disbursed to one entity due to a lack of awareness of Davis-Bacon wage requirements. Davis-Bacon wages are a requirement of the Federal EDA and apply to any Federal funds to ensure the prevailing wage is paid to workers on federally funded construction-related projects. The regulations apply to any loans that are used to fund directly or indirectly projects that cost over $2,000 involving construction and/or renovation. BSEDC received a grant from the U.S. Federal EDA in April 2021. BSEDC drafted an EDA-RLF Plan that was approved by the Federal EDA and BSEDC’s Board of Directors. Within the plan was a section on Environmental Issues and Davis Bacon. Within this section of the Plan, there was discussion and direction pertaining to Environmental Issues, but nothing pertaining to Davis-Bacon. Therefore, BSEDC’s Director of Business Finance/Program Finance Director was unaware of the specific requirements related to Davis-Bacon wages and construction/renovation projects funded by the EDA-RLF loans. Not having had any experience with this, it was thought Davis-Bacon requirements only applied to financing of public projects, and not to any project funded by Federal funds. The Director of Business Finance/Program Finance Director and BSEDC’s Senior Director of Finance are now aware of, and better educated on, the Davis-Bacon requirements. The specific cause of Big Sky Finance not requiring Davis-Bacon wages on its initial loans that fit the criteria was solely based on the Director of Business Finance/Program Finance Director’s lack of knowledge of this requirement, or any previous experience having had worked with Federal loan construction projects.
Planned Corrective Actions: BSEDC’s Director of Business Finance/Program Finance Director has amended the organization’s EDA-RLF Plan, including details on the Davis-Bacon requirements for any loan funding construction or renovations of more than $2,000. It will be the responsibility of Big Sky Finance to notify the borrower as soon as possible regarding the Davis-Bacon requirements for wages paid. The borrower will in turn notify their contractor of the requirement. Big Sky Finance will require evidence from the general contractor of the prevailing wages being paid prior to loan funds being disbursed.
Timeline for Completion: The Davis-Bacon requirement for funds disbursed through BSEDC’s Federal EDARLF loan fund will be immediately implemented for all EDA-RLF loans funded going forward. BSEDC’s EDARLF Plan will be amended and approved by its Board of Directors within a reasonable amount of time. A draft of this change is in place. However, as a matter of practice, Davis-Bacon requirements will be adhered to from this date forward.
Responsible Person or Party: BSEDC’s Director of Business Finance/Program Finance Director, will be responsible for making the changes to the plan, presenting to the Board and adhering to the plan going forward.