Finding Text
Criteria: Per Office of Management and Budget (OMB) Compliance Supplement, 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), if required in the federal grant. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or 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). Condition: Management did not have a process in place to identify that Wage Rate Requirements applied to construction costs paid with ESF funds. For the four construction projects tested, there was no evidence that the contractors and subcontractors were notified that these were subject to federal Wage Rate Requirements. Therefore, certified payrolls were not obtained. Universe/population: Population of construction projects financed by ESF funds includes 4 contracts for a total of $115,307 of labor costs. Effect: Without obtaining required documentation for construction projects relating to wage-rate requirements, the School Board is at risk for non-compliance and potential loss of ESF grant funding. Cause: The School Board does not have a policy in place to notify contractors and subcontractors, paid with federal funding, of the requirements to comply with the Wage Rate Requirements nor obtain copies of certified payrolls. The construction costs were originally paid for by the General Fund and then the School Board received approval from the granting authority to be reimbursed by the ESF fund for these costs. Recommendation: The School Board should notify contractors when using federal dollars for construction projects and should obtain weekly certified payrolls for the construction period, when required by the federal grant award. The School Board should put in place safeguards and controls to ensure compliance with federal wage rate requirements when applicable. Views of Responsible Officials: Management will update their policies and procedures to ensure compliance with construction projects relating to wage rate requirements.