Finding 948366 (2023-009)

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: A301032 - 2021 35A301050M23E - 2015 693JJ22030000Z230NMA301050 - 2015 693JJ22130000M23ENMA300759 - 2021 693JJ22130000M230NMA300847 - 2021 693JJ22130000M23ENMA300847 - 2021 Pass-Through Agency: New Mexico Department of Transportation (NMDOT) Pass-Through Number(s): A301032, A301050, A300759, and A300847 Award Period: A301032 - 9/22/2021 - 9/30/2023 A301050 - 6/17/2015 - 6/26/2024 A300759 - 9/17/2021 - 3/27/2025 A300847 - 9/22/2021 - 12/30/2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to§ 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the 2023 Compliance Supplement Part 4, 20.001 Wage Rate Requirements Cross-Cutting Section, 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. 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). According to the New Mexico Department of Transportation TLPA Handbook for Federal Projects, the contractor and each subcontractor shall furnish certified payrolls to the T/LPA for each consecutive week starting from the second week it performs work on the project. Certified payrolls shall be submitted by uploading required payroll information into LCPtracker. The T/LPA shall verify the data contained on each certified payroll and, should errors or discrepancies be found, the T/LPA shall reject the payroll in LCPtracker and notify the contractor or subcontractor of the error. The contractor or subcontractor will be required to correct the error and submit a revised payroll. The T/LPA may utilize Form A-1102, NMDOT Contractors and Subcontractors Payroll Checklist on a weekly basis. Condition: During our testing, we noted that the City did not follow wage rate requirements nor state requirements. Management's Progress for Repeat Findings: This is a repeated and modified.finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, we noted the following exceptions related to wage rate requirements. • For one of the five contracts, the City does not have a monitoring process in place to ensure that the consultant hired to perform the duties related to certified payrolls is done correctly and in compliance with federal requirements. • For two of the five contracts, there are certified payrolls after the completion date on the change order provided to us. However, the City was unable to provide clarification or supporting documentation to confirm if the completion date on the change order provided to us is the final completion date. As such, we are unable to verify that the contractor or subcontractor submitted the required certified payrolls. • For one of the five contracts, the contract book was not provided to us. • For three of the five contracts, the City did not provide all of the signed and dated NMDOT contractors and subcontractors payroll checklists to us. Cause: The City was unaware of it being ultimately the responsible party for the project even in situations in which the City hires consultants. Specific to the remaining, the City lacks effective internal controls over wage rate requirements to ensure documentation is in place supporting compliance with federal requirements. Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure compliance with federal and state wage rate requirements. Management Response: The City agrees with the finding. The Grant Administrator will work with City departments with construction contracts subject to wage rate requirements to ensure policies and procedures are documented and that a monitoring process is implemented to ensure adherence to established policies and grantor requirements. This will be complete by June 30, 2024. Timeline and Responsible Position: June 2024 - Grants Administrator