Finding 626603 (2022-002)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2022-10-16

AI Summary

  • Core Issue: The District failed to pay the required prevailing wages for a flooring installation contract funded by federal assistance, violating federal wage requirements.
  • Impacted Requirements: Compliance with the Davis-Bacon Act and related federal regulations, which mandate that contractors pay local prevailing wages for federally financed construction contracts over $2,000.
  • Recommended Follow-Up: The District should enhance its understanding of federal wage requirements for construction projects and ensure future contracts comply with these standards.

Finding Text

U.S. Department of Education Program Name: Education Stabilization Fund AL No. 84.425 MATERIAL WEAKNESS 2022-002 SPECIAL TESTS AND PROVISIONS Criteria: Per the 2022 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) (40 USC 3141?3144, 3146, and 3147). 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) (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).? Condition: During our testing of the District?s Education Stabilization Fund, we noted the District had a contract for flooring installation that was subject to the prevailing wage rate requirements under 20 USC 1232b; however, the contractor did not pay prevailing wages for the work performed. Questioned Costs: None Context: We noted that the District?s flooring contractor did not pay prevailing wages as required by the Department of Labor for federally-financed contracts. Cause: The District understood the threshold for compliance with the prevailing wage requirements to be more a federally-financed contract exceeding $75,000 rather than federally-financed contracts exceeding $2,000. Effect: The District did not comply with the prevailing wage requirements for the Education Stabilization Fund. Recommendation: We recommend that the District acquire understanding of requirements related to expenditure of federal funds on construction and remodeling projects. Response: The District was unaware of the prevailing wage requirements for federally financed contracts in excess of $2,000. The District was under the impression that the prevailing wage requirements only applied to federally financed contracts exceeding $75,000. The District has pursued education on the federal requirements regarding prevailing wage, and will make steps moving forward to ensure compliance with the federal standards relating to prevailing wage of federally financed contracts.

Categories

Special Tests & Provisions Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 50161 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 Covid-19 - National School Lunch Program $184,753
84.027 Special Education_grants to States $95,314
10.553 Covid-19 - School Breakfast Program $86,762
84.010 Title I Grants to Local Educational Agencies $45,801
84.358 Rural Education $35,758
10.555 National School Lunch Program $16,196
84.424 Student Support and Academic Enrichment Program $9,241
84.367 Improving Teacher Quality State Grants $9,117
84.425 Covid-19 - Education Stabilization Fund $119