Finding 540344 (2024-001)

FINDING - District controls did not always ensure compliance with the Davis-Bacon Act for construction projects exceeding $2,000 and financed by the ESF Program, resulting in questioned costs totaling $1,227,623. CRITERIA - The ESF Program provides Federal funds for school facility repairs and improvements. Title 29, Section 5.5, Code of Federal Regulations (Davis-Bacon Act), requires the District to include prevailing wage rate clauses in any construction contract exceeding $2,000 that is financed either wholly or in part by Federal funds and ensure that contractors pay workers the prevailing wage rates established by the United States Department of Labor. This includes a requirement for the contractor or subcontractor to submit to the District weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). The United States Department of Labor established “prevailing wages” by geographic area and interprets the Davis-Bacon Act to apply to construction, alteration, or repair of a public building or public work. CONDITION - For the 2023-24 fiscal year, the District expended ESF Program funds totaling $18,800,468, including $1,227,623 for three contracts (each exceeding $2,000) related to roofing and heating, ventilation, and air-conditioning replacement projects. While the contracts included a general requirement to comply with Davis-Bacon Act provisions, the contracts did not explicitly require, and the contractors did not submit, weekly certified payrolls to the District demonstrating prevailing wage rates were paid. CAUSE - District contracts did not specifically require contractors to submit to the District weekly certified payrolls and District procedures had not been established to require District personnel to verify that the payrolls were received. EFFECT - Absent specific contract clauses to require weekly certified payrolls, there is an increased risk that construction contractors paid with Federal funds will not pay workers the prevailing wage rates established by the United States Department of Labor. Although we requested, the District did not provide certified payrolls from the contractors demonstrating that the prevailing wage rates were paid for the services, resulting in questioned costs totaling $1,227,623. RECOMMENDATION - The District should enhance procedures to ensure compliance with all Davis-Bacon Act requirements. Such procedures should ensure that applicable Federally funded facility contracts specifically require submittal of weekly certified payrolls and that District personnel verify the payrolls were received. In addition, the District should document to the FDOE the allowability of the questioned costs or contact the FDOE regarding necessary corrective action. DISTRICT RESPONSE - We concur with the finding.