Finding Text
Reference Number: 2024-03
Compliance Requirement: Special Test and Provisions
Type of Finding: Internal control and Compliance
Internal Control Impact: Material weakness
Compliance Impact: Material noncompliance .
AL Number and Title: 84.425 – COVID-19 Education Stabilization Fund
Federal Awarding Agency: U.S. Department of Education
Federal Award Number: None
Pass-through Entity: Alabama Department of Education
Pass-through Award Number: None
Questioned Costs: $732,427
Condition: Construction contracts for three federally funded projects did not include the required prevailing wage rate clauses. Monitoring for compliance with the prevailing wage requirements was not performed by the Board.
Criteria: Title 29, U.S. Code of Federal Regulations, Part 5, Sub-Part A Davis Bacon and Related Acts and Provisions and Procedures (the “Davis-Bacon Act”) requires that any construction contract in excess of $2,000, funded wholly or in part by federal funds, include prevailing wage rate clauses. The Davis-Bacon Act requires that laborers and mechanics employed by contractors or subcontractors working on projects that meet this criteria must be paid wages not less than those established for the locality by the Department of Labor (DOL). In addition, the contractor and subcontractors must submit weekly certified payrolls, for each week in which any contract work is performed, to the nonfederal entity.
Cause: During the year, the Board had three projects that were funded at least in part with federal funds. The Board did not have sufficient internal controls in place to ensure that the Davis-Bacon Act wage rate requirements were included in the contracts and that the appropriate monitoring of certified payrolls was performed. As a result, those clauses were not included in the contracts. When the Board became aware, at the end of the previous fiscal year, that the Davis-Bacon Act applied to these projects, the project contracts were not modified, but the contractor was notified that the Davis-Bacon Act requirements must be met. The contractor prepared certified payrolls for each week that work was performed, but these payrolls were not requested by the Board or submitted to the Board for review.
Effect: The Board was not in compliance with the Davis-Bacon Act as it pertains to wage rate requirements.
Recommendation: The Board should devise controls to ensure construction contracts funded with federal sources include the required Davis-Bacon Act language and should implement controls to ensure that the required certified payrolls are received and reviewed by the Federal Programs Coordinator.
Client Response: We agree with this finding.