HOWLAND LOCAL SCHOOL DISTRICT

ESC – Federal Procurement Finding Number: 2024-001 Assistance Listing Number and Title: AL # 84.027 / 84.173 Federal Award Identification Number / Year: 2024 Federal Agency: United States Department of Education Compliance Requirement: Procurement Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS Ohio Rev. Code §§ 3313.843 and 3313.845 allow traditional schools to contract with Educational Service Centers (ESCs) to provide services as outlined in the agreement between the two parties. Ohio Rev. Code §3313.843(C) requires these agreements to be filed with the Ohio Department of Education and Workforce by the first day of July of the school year for which the agreement is in effect. Effective on December 26, 2014, 2 CFR § 200.320 outlined the methods of procurement to be followed by state subrecipient non-Federal entities when expending certain types of Federal funds, including those received through Grant Agreements. However, 2 CFR § 200.110(a), created a “grace period” for compliance with 2 CFR §200.320, by permitting non-Federal entities to comply with previously issued Office of Management and Budget procurement guidance for all fiscal years beginning prior to December 26, 2017. In January 2020, the Ohio Department of Education and Workforce (DEW) published a form that allows schools to request DEW authorize a noncompetitive proposal for their ESC Services. This form is available on DEW’s website. During the fiscal year, the School District contracted with Trumbull County Educational Service Center (ESC) to provide purchased services. These services included expenditures of $55,860, which were paid for out of the Special Education Cluster Grants and subject to the Federal procurement laws. The School District did not complete the form that allows schools to request DEW authorize a noncompetitive proposal for their ESC Services that is available on the DEW website. Under 2 CFR §200.320 the School District should have competitively bid the services needed or obtained price quotes from qualified sources as further defined in the School District’s procurement policy. The School District should develop a control(s) and/or procedure(s) to verify that established procurement procedures are followed when entering into contracts using Federal monies. The DEW form that allows schools to request DEW authorize a noncompetitive proposal for their ESC Services should be utilized for any ESC contract in the future. Failure to follow proper procurement procedures could result in contracts awarded to entities which do not meet all the needs of the School District or have a cost significantly higher than their competitors, as well as a loss in future federal funding and possible questioned costs in future audits. Official’s Response: See Corrective Action Plan.

NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY 2 CFR part 200 Appendix II requires 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). This reporting is often done using Optional Form WH-347, which includes the required statement of compliance (OMB No. 1235-0008). The DOL, Employment Standards Administration, maintains a Davis-Bacon and Related Acts web page (https://www.dol.gov/agencies/whd/government-contracts/construction). The District did not obtain the required certified payroll reports for a construction contract in excess of $2,000. The related labor costs were $36,360. The District should include prevailing wage provisions in all construction contracts or agreements involving federal funds exceeding $2,000. The District should obtain weekly certified payroll reports from the contractor.

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