Finding Text
Finding 2022-003 Identification of federal program: US DEPARTMENT OF EDUCATION 84.425C, 84.425D, and 84.425U Education Stabilization Fund Criteria: 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) (2 CFR section 200.327; Appendix II.D. to 2 CFR Part 200). 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) (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 200.327). Condition: An LEA must use ESF funds for minor remodeling, renovation or construction contracts that are over $2,000 and use laborers and mechanics that must meet Davis-Bacon prevailing wage requirements. Cause: The School failed to timely notify a certain contractor about the Davis-Bacon Act contract clause requirements related to the prevailing wage rate for contractors and subcontractors. As a result, the contractor did not provide the certified payrolls or statement of compliance. Potential effect: The contractor may not have complied with the wage requirements. Questioned costs: $214,716.62. Context: A total sample of one (1) item related to a certain contractors HVAC project was selected as a part of allowable cost testing for the Education Stabilization Fund. Recommendation: We recommend that the School provide timely communication related to the prevailing wage rate requirements for contracts with future contractors and subcontractors. The School should also ensure that the proper prevailing wage rate clauses are included in future contracts. We further recommend that the School ensure the contractors and subcontractors compliance with the required federal compliance requirements. Views of Responsible Officials: See attached Corrective Action Plan.