Monday, March 25, 2013

Monitoring Prevailing Wages on Federally Funded Projects

Federal funding for public works construction projects brings with it requirements for monitoring to ensure that the contractor and all subcontractors are paying their workers at least the prevailing wage rate applicable for the type of work performed.

Audit finding:  Unfortunately, it's fairly common that public agencies receiving federal funding are not aware of these requirements.  The Washington State Auditor's Office recently issued audit findings against the Oroville Housing Authority in Okanogan County, Washington for failure to obtain and review weekly certified payrolls from the contractor and all subcontractors.  According to the audit, "the Housing Authority spent $2,371,300 in grant funding in 2011, approximately 76 percent of which was paid to the contractor."  

What should be reviewed?  Public agency staff should be trained in the complexities of federal prevailing wages and what should be monitored.  Here's a quick list of some of the things that should be reviewed as part of the process of monitoring payment of prevailing wages.
  • Frequency:  Are you collecting payroll reports weekly from the contractor and all subcontractors?
  • Subcontractors:  Do you have a system for determining what subcontractors are working on site?
  • Reviewing payrolls:  Are you reviewing the certified payroll reports on a weekly basis to ensure that prevailing wages are being paid to the workers?  As part of your review, are you evaluating the following: a) whether the classifications reported are appropriate, b) the hourly wage rate is at least the prevailing wage rate, c) the proper overtime rates are being paid, d) apprentices are registered apprentices who may be paid less than the journey-level wage, e) the payroll report is signed by an authorized individual?
  • Documenting your review:  Are you documenting your review of the payrolls by marking the payroll reports?
  • Weekly pay:  Are you monitoring to ensure that the contractor and their subcontractors paying their workers on a weekly basis?  This is required by the federal Davis-Bacon Act.
  • Worker interviews:  Are you interviewing a representative sample of workers on-site, asking them questions about what work they are performing and how much they are being paid?  Are you correlating this information with what is reported on weekly payroll reports?
  • Invoices:  Do you have a process that ties in your approval of a contractor's monthly pay application and invoice with your review and approval of the weekly payroll reports?
Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC

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