Wednesday, December 1, 2010

Receiving and Monitoring Payrolls on Federally Funded Construction Projects

If a public agency receives any federal funding for a construction project, the terms of the grant agreement will most likely require that the federal prevailing wage requirements of the Davis-Bacon Act will apply.

Receive and Review Payrolls Weekly:  One of the primary obligations of a public agency on such projects is to collect and review on a weekly basis the payroll reports from the contractor and each subcontractor, regardless of tier, to ensure that federal prevailing wages are being paid for the appropriate classification of work being performed.

Audit Finding:  In a recent audit finding by the Washington State Auditor's Office, the auditor found that a public hospital district, the Coulee Medical Center in Grand Coulee, Washington, rather than receiving and monitoring the weekly payroll reports, simply had the general contractor collect the payroll reports and then provide them to the hospital at the end of the project.  Without any review or monitoring of the prevailing wages being paid on a weekly basis on the $1.5 million of federal funding for the project, the district was out of compliance with the terms of their grant and was unable to ensure that prevailing wages were paid on an ongoing basis during the project.

Practical Tips:
  1. Read the terms of your grant agreement and know what your obligations are.
  2. Collect weekly payroll reports from the contractor and each subcontractor.
  3. Review the payroll reports on a weekly basis to ensure appropriate prevailing wages are being paid.
  4. Conduct interviews of construction workers on-site and compare information collected there with information reported on the payrolls.
  5. Work with the contractor to ensure they pay restitution to any workers underpaid the prevailing wage.
  6. Ensure that the staff who will be reviewing the payrolls have proper training on how to monitor the prevailing wages (overtime, appropriate classifications, apprentices, fringe benefits, relationship of federal to state prevailing wages, etc.).
Mike Purdy's Public Contracting Blog
© 2010 by Michael E. Purdy Associates, LLC

1 comment:

Nancy Smyth said...

What I'm hearing from contractors in all 50 states is that the people actually doing the reviews of the certified payroll reports - don't know the first thing about the requirements.

For example, a union contractor was told that she needed to show the base rate PLUS the fringe rate on the WH-347 (or she wasn't getting paid); when we all know that only contractors paying fringes in CASH are supposed to show rate of pay/cash fringe.

Very, very discouraging!