DC Auditor Recommends Better Internal Controls for School Modernization Program

The Office of the D.C. Auditor (ODCA) released its annual report this week on the city’s school modernization program as managed by the Department of General Services (DGS). The auditor found that DGS cannot prove that it complies with the federal Davis-Bacon Act, which requires contractors to pay prevailing wages on all federal and District construction projects totaling over $2,000. This audit of FY 2016 school modernizations follows two previous audits (FY14 and FY15) which found similarly deficient internal controls.

ODCA recommends that the D.C. Council conduct a fact-finding hearing, draft and enact its own local Davis-Bacon law that gives a D.C. government agency the explicit authority to ensure any wage law violations result in appropriate action. D.C. Auditor Kathy Patterson said, “Davis-Bacon is a holdover from D.C.’s time as part of the federal government, and we’ve never had the kind of stringent oversight needed. We are recommending local law to improve that oversight.” ODCA also found it impossible to verify D.C. compliance with the Davis-Bacon Act because of insufficient documentation processes for complaints.

The report also recommends that DGS improve its processes for closing out and transferring custody of completed school modernization projects. DGS is currently developing a set of checklists to verify that construction projects are completed properly. Once a project is complete, DGS must also show that it has a process in place to transfer custody of the school from its construction division to its facilities management division. Without such transfer processes, school-based facilities staff may not receive adequate training on how to support the new building.

ODCA says it plans to research a draft a white paper on wider state of internal control development throughout District government. This paper will culminate in a set of formal recommendations for the D.C. Council and Mayor.

Below are ODCA’s six major recommendations from the report:

1. The Mayor of the District of Columbia should ensure that DGS has the guidance and technical assistance necessary to properly design and implement effective internal controls.
2. DGS needs to design, document and implement effective controls for the review and approval of invoices for its school modernization projects.
3. DGS should finish the design and implementation of a process for verifying that each school modernization project is properly closed out.
4. DGS should finish the design and implementation of a process for verifying that custody of each school modernization project is properly transferred between the construction division and the facilities division.
5. DGS should ensure that processes used to detect Davis-Bacon Act violations are properly designed and implemented, including the retention of sufficient appropriate documentation to facilitate ODCA’s review of the operating effectiveness of the processes.
6. The D.C. Council should conduct a fact-finding oversight hearing, and draft and enact a local law providing implementation guidelines for the District’s compliance with and enforcement of the Davis-Bacon Act, including specific responsibility for receiving and following up on complaints that are currently forwarded to DOL. At a minimum, a D.C. government agency should have explicit authority, responsibility, and funding to ensure that any prevailing wage law violations result in appropriate action by D.C. agencies, including debarment of a contractor.