Finding 584289 (2023-002)

Program: Education Stabilization Fund COVID-19 American Rescue Plan - Elementary and Secondary School Emergency Relief (84.425U) 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 or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor of 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). Context and Condition: We reviewed the District’s construction contract that was financed by the Education Stabilization Fund during the year ended June 30, 2023 and performed testing over internal controls and compliance as related to the Wage Rate Requirements as outlined in the criteria above. Cause: The District did not have processes or controls established to ensure certified payrolls for each week in which contract work was performed were obtained from the contractor or subcontractor for construction contracts financed by the Education Stabilization Fund until after the construction contract was completed. Effect: A potential failure to pay laborers and mechanics employed by contractors or subcontractors prevailing wage rates as required by the Wage Rate Requirements exists. Questioned Costs: No costs were questionable. Repeat Finding: No Statistically valid: Yes Recommendation: We recommend management of the District review processes related to construction projects subject to the Wage Rate Requirements and establish appropriate internal controls to ensure all wage rate requirements are met. Views of responsible officials: Management of the District has reviewed the processes and internal controls related to construction contracts and have implemented changes to ensure that the Wage Rate Requirements are adhered to when applicable.