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Component Unit-HOME Investment Partnerships Program-CDFA#-14.239 Finding 2022-001-Procurement and Davis Bacon-Special Tests Criteria and Condition During the year, the Authority expended $700,000 of federal HOME funds passed through the City of Lawton on a construction project. The HOME funds were received and the construction in progress was expended in a Component Unit, Lawton Support Services, Inc., which is explained on page 17 of the financial statements. Since the Component Unit does not have its own Procurement Policy, required procedures default to the Housing Authority?s policy. For a construction project that will approximate $700,000, The Authority?s policy calls for competitive sealed bidding procedures. Federal and state requirements also call for these type of bidding procedures, for a project this size. Competitive bids were not sought. For all federal programs, including HOME grants, Davis-Compliance testing must be done, as required by the Wage Rate Requirements (42 USC 12836). Context The Authority obtained ownership of an old USO building in downtown Lawton. With various federal funds, donations and grants, the property was renovated and is now a Veteran?s Resource Center. Management, using in-house experience with renovation costs, determined that a projected renovation cost of $700,000 was reasonable. The contract was awarded to a licensed architect to be the general contractor. The Authority and the City of Lawton are very familiar with the architect?s work. In addition, the architect was instrumental (if not solely responsible) in assisting the Authority in receiving a substantial foundation grant that was also used by the Component Unit. The architect asserts to Management, as a result of this finding, that with the current labor shortage in Lawton, that sub-contractors are all paying above the Davis Bacon minimum wage rate. Therefore, he did not believe it necessary to test the sub-contractor payrolls for compliance. Cause See above Effect Federal procurement regulations were not complied with. We note, however, that the Authority?s Procurement Policy notes the ?award will be made to the lowest responsible and responsive bidder whose bid meets the requirements of the invitation for bids.? In other words, the award would not be made solely on the low bid. Federal regulations require that the responsible party review and test payrolls for Davis Bacon compliance. Questioned Costs None Recommendation In the future, the Authority should comply with its Procurement Policy. Regarding Davis Bacon, we recommend a sampling of sub-contractor payrolls be obtained by the Authority. If any compliance exceptions should be noted by Authority personnel, the sample should be expanded. The testing documentation should be kept for possible third- party review. If there are any compliance exceptions, the Authority should contact the Wage and Hour Division. View of Responsible Official I am Rita Love, Executive Director and Designated Person to answer this finding. We will follow the auditor?s recommendations.