Finding Text
Questioned Cost, Noncompliance and Material Weakness 2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR part 200, Appendix II(D), states that all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following. . .the ?Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144 and 3146-3148) as supplemented by Department of Labor regulations (29 CFR ? 5, ?Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction?). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency.? The District entered into a locker room renovation and expansion project contract with Midwest Contracting. The District subsequently paid Midwest Contracting $505,000 from Elementary and Secondary School Emergency Relief (ESSER) federal grant monies. Due to deficiencies in policies and procedures, the required prevailing wage rate provision was not included in the contract. In addition, the District did not obtain certified payroll reports from Midwest Contracting to verify prevailing wages were paid. Accordingly, a questioned cost is issued in the amount of $505,000. Without proper controls over wage rate requirements, there is an increased risk that the District and its contractors and subcontractors are not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The District should ensure contracts for construction in excess of $2,000 paid with federal grant monies include a provision that contractors comply with the prevailing wage rate provisions and ensure certified payroll reports are provided by the contractor weekly. The District should also maintain the certified payroll reports to document compliance with the program requirements. In addition, the District should report all suspected violations to the Federal awarding agency.