Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), states:
“The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.”
Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases.
POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327.
The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely.
Questioned costs: No costs are questioned.
Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects.
Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures.
It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1).
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), states:
“The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.”
Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases.
POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327.
The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely.
Questioned costs: No costs are questioned.
Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects.
Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures.
It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1).
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Documentation of Procurement File): Uniform Guidance under 2 CFR 200.318(i), provides that a “nonfederal entity must maintain records sufficient to detail the history of procurement.” These records shall include: “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Further, Uniform Guidance contains procurement requirements for architectural and engineering services under 200.320(b)(2)(iv). Such policies and procedures for architectural and engineering services provide that competitive proposals for professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation.”
Condition: Capitalization Grants for Clean Water State Revolving Funds, CFDA 66.458: The engineer/construction manager on this project was selected for testing from a population of two vendors over the individually significant threshold of $47,219. The District explains that the District and the engineer/construction manager have a relationship which goes back 60 years. This engineering firm acts as the outside engineer for the District. The District further explains that this engineering firm has successfully completed numerous similar, smaller scale projects for the District and that this engineer is very familiar with the District’s existing system. The District further explains that these criteria were important considerations in selection this engineering firm for engineering services and construction management.
We inquired about documentation of the rationale for the method of procurement, basis of contract price and negotiation of fair and reasonable compensation. The District’s file did not contain documentation of such.
Water and Waste Disposal Systems for Rural Communities, CFDA 10.760: We selected a sample of three from a population of five vendors over the individually significant threshold of $29,516 for this grant. We noted one exception. The District explained the rationale for the vendor selection stating that unique construction material had to match other such construction material previously installed. However, the District did not have documentation of the rational for selection and negotiation of the price in the procurement file.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Without a document which shows a rational for selection of, and arrival at the price, there is no way to monitor this aspect of the procurement process.
Questioned costs: No costs are questioned.
Perspective: We noted extensive documentation of the general contractor procurement with bidding procedures, advertising for bids, etc. In all tests, the District’s explanations as to why a particular vendor was selected appeared reasonable. Nonetheless, the requirement is that the District document the “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Perspective Specific to CFDA 10.760. A sample of three was selected from a population of five vendors over the micro-purchase threshold of $10,000. There was one exception. Under attribute sampling, this is an exception rate of 33%. However, we note that the one exception represented only 1.37% of the dollar value of sample selected. Extrapolating the 1.37% to the population, the expected dollar error for debarment checks is $30,353.
Perspective Specific to CFDA 66.458: Initially, we noted that the population was two vendors over the micro-purchase threshold of $10,000. We selected a sample of one with no exceptions. However, it came to our attention that grantor had questioned procurement procedures for the engineer. We determined to test this procurement and noted an exception. Under attribute sampling, this is an exception rate of 50%. However, we note that the one exception represented 19.38% of the dollar value of the total population. As 100% of the population of two was tested, no extrapolation is suggested.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR 200.318(i) and 200.320(b)(2)(iv) requiring documentation of procurement “rationale for the method of procurement, . . . contractor selection or rejection, and the basis for the contract price and also negotiation of fair and reasonable compensation when architectural or engineering services are procured.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Documentation of Procurement File): Uniform Guidance under 2 CFR 200.318(i), provides that a “nonfederal entity must maintain records sufficient to detail the history of procurement.” These records shall include: “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Further, Uniform Guidance contains procurement requirements for architectural and engineering services under 200.320(b)(2)(iv). Such policies and procedures for architectural and engineering services provide that competitive proposals for professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation.”
Condition: Capitalization Grants for Clean Water State Revolving Funds, CFDA 66.458: The engineer/construction manager on this project was selected for testing from a population of two vendors over the individually significant threshold of $47,219. The District explains that the District and the engineer/construction manager have a relationship which goes back 60 years. This engineering firm acts as the outside engineer for the District. The District further explains that this engineering firm has successfully completed numerous similar, smaller scale projects for the District and that this engineer is very familiar with the District’s existing system. The District further explains that these criteria were important considerations in selection this engineering firm for engineering services and construction management.
We inquired about documentation of the rationale for the method of procurement, basis of contract price and negotiation of fair and reasonable compensation. The District’s file did not contain documentation of such.
Water and Waste Disposal Systems for Rural Communities, CFDA 10.760: We selected a sample of three from a population of five vendors over the individually significant threshold of $29,516 for this grant. We noted one exception. The District explained the rationale for the vendor selection stating that unique construction material had to match other such construction material previously installed. However, the District did not have documentation of the rational for selection and negotiation of the price in the procurement file.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Without a document which shows a rational for selection of, and arrival at the price, there is no way to monitor this aspect of the procurement process.
Questioned costs: No costs are questioned.
Perspective: We noted extensive documentation of the general contractor procurement with bidding procedures, advertising for bids, etc. In all tests, the District’s explanations as to why a particular vendor was selected appeared reasonable. Nonetheless, the requirement is that the District document the “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Perspective Specific to CFDA 10.760. A sample of three was selected from a population of five vendors over the micro-purchase threshold of $10,000. There was one exception. Under attribute sampling, this is an exception rate of 33%. However, we note that the one exception represented only 1.37% of the dollar value of sample selected. Extrapolating the 1.37% to the population, the expected dollar error for debarment checks is $30,353.
Perspective Specific to CFDA 66.458: Initially, we noted that the population was two vendors over the micro-purchase threshold of $10,000. We selected a sample of one with no exceptions. However, it came to our attention that grantor had questioned procurement procedures for the engineer. We determined to test this procurement and noted an exception. Under attribute sampling, this is an exception rate of 50%. However, we note that the one exception represented 19.38% of the dollar value of the total population. As 100% of the population of two was tested, no extrapolation is suggested.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR 200.318(i) and 200.320(b)(2)(iv) requiring documentation of procurement “rationale for the method of procurement, . . . contractor selection or rejection, and the basis for the contract price and also negotiation of fair and reasonable compensation when architectural or engineering services are procured.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Obtaining Certificate of Non-Debarment or Checking Sam.gov for Debarment): Debarment is an action by a federal agency to prohibit a recipient from receiving federal funds through procurement transactions and applicable non-procurement transactions. (Examples given for applicable non-procurement transactions are: grants, cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan guarantees, subsidies, insurances, payments for specified uses, and donation agreements.)
Non-Federal entities cannot contract with nor make subawards under procurement transactions and applicable non-procurement transactions to parties that are suspended or debarred or whose principals are suspended or debarred.
2 CFR § 180.300 provides that a non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Condition: We inquired about the District’s procedures under 2 CFR § 180.300 regarding suspension and debarment. We were informed that self-certifications are contained in the District’s contracts. We selected a sample of three vendors in the population of six vendors which received over $25,000 during the audit period. The District provided a contract provision self-certifying on suspension and debarment on one procurement, which was the general contractor’s contract. However, the District stated they could not locate a suspension and debarment self-certification for the other two vendors. We inquired if perhaps the District had checked the Sam.gov website, but the District had not.
Cause: It appears that the primary cause of this condition is that the District has limited experience with Single Audit requirements in general. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: The federal government can disqualify any transaction and reject the claim for federal funds when the underlying transaction is with a suspended or debarred individual or entity.
Questioned costs: No costs are questioned.
Perspective: The population of vendors with expenditures over $25,000 was six. The electric company was excluded as an obvious sole source. The general contractor had already been tested during walk throughs. A sample of two in addition to the general contractor test was selected; both vendors produced exceptions.
We note that the two exceptions represented 5.2% of the dollar value of sample tested with the general contractor representing 94.8% of the dollar value. Extrapolating the 5.2% to the population, of vendors subject to debarment requirements, the expected dollar error for debarment checks is $103,162.
It is noted that the auditor checked SAM.gov on all three vendors tested, and neither vendor was suspended or debarred.
Repeat Finding: No
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR § 180.300 requiring that the non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), states:
“The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.”
Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases.
POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327.
The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely.
Questioned costs: No costs are questioned.
Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects.
Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures.
It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1).
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), states:
“The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.”
Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases.
POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327.
The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely.
Questioned costs: No costs are questioned.
Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects.
Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures.
It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1).
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Documentation of Procurement File): Uniform Guidance under 2 CFR 200.318(i), provides that a “nonfederal entity must maintain records sufficient to detail the history of procurement.” These records shall include: “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Further, Uniform Guidance contains procurement requirements for architectural and engineering services under 200.320(b)(2)(iv). Such policies and procedures for architectural and engineering services provide that competitive proposals for professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation.”
Condition: Capitalization Grants for Clean Water State Revolving Funds, CFDA 66.458: The engineer/construction manager on this project was selected for testing from a population of two vendors over the individually significant threshold of $47,219. The District explains that the District and the engineer/construction manager have a relationship which goes back 60 years. This engineering firm acts as the outside engineer for the District. The District further explains that this engineering firm has successfully completed numerous similar, smaller scale projects for the District and that this engineer is very familiar with the District’s existing system. The District further explains that these criteria were important considerations in selection this engineering firm for engineering services and construction management.
We inquired about documentation of the rationale for the method of procurement, basis of contract price and negotiation of fair and reasonable compensation. The District’s file did not contain documentation of such.
Water and Waste Disposal Systems for Rural Communities, CFDA 10.760: We selected a sample of three from a population of five vendors over the individually significant threshold of $29,516 for this grant. We noted one exception. The District explained the rationale for the vendor selection stating that unique construction material had to match other such construction material previously installed. However, the District did not have documentation of the rational for selection and negotiation of the price in the procurement file.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Without a document which shows a rational for selection of, and arrival at the price, there is no way to monitor this aspect of the procurement process.
Questioned costs: No costs are questioned.
Perspective: We noted extensive documentation of the general contractor procurement with bidding procedures, advertising for bids, etc. In all tests, the District’s explanations as to why a particular vendor was selected appeared reasonable. Nonetheless, the requirement is that the District document the “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Perspective Specific to CFDA 10.760. A sample of three was selected from a population of five vendors over the micro-purchase threshold of $10,000. There was one exception. Under attribute sampling, this is an exception rate of 33%. However, we note that the one exception represented only 1.37% of the dollar value of sample selected. Extrapolating the 1.37% to the population, the expected dollar error for debarment checks is $30,353.
Perspective Specific to CFDA 66.458: Initially, we noted that the population was two vendors over the micro-purchase threshold of $10,000. We selected a sample of one with no exceptions. However, it came to our attention that grantor had questioned procurement procedures for the engineer. We determined to test this procurement and noted an exception. Under attribute sampling, this is an exception rate of 50%. However, we note that the one exception represented 19.38% of the dollar value of the total population. As 100% of the population of two was tested, no extrapolation is suggested.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR 200.318(i) and 200.320(b)(2)(iv) requiring documentation of procurement “rationale for the method of procurement, . . . contractor selection or rejection, and the basis for the contract price and also negotiation of fair and reasonable compensation when architectural or engineering services are procured.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Documentation of Procurement File): Uniform Guidance under 2 CFR 200.318(i), provides that a “nonfederal entity must maintain records sufficient to detail the history of procurement.” These records shall include: “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Further, Uniform Guidance contains procurement requirements for architectural and engineering services under 200.320(b)(2)(iv). Such policies and procedures for architectural and engineering services provide that competitive proposals for professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation.”
Condition: Capitalization Grants for Clean Water State Revolving Funds, CFDA 66.458: The engineer/construction manager on this project was selected for testing from a population of two vendors over the individually significant threshold of $47,219. The District explains that the District and the engineer/construction manager have a relationship which goes back 60 years. This engineering firm acts as the outside engineer for the District. The District further explains that this engineering firm has successfully completed numerous similar, smaller scale projects for the District and that this engineer is very familiar with the District’s existing system. The District further explains that these criteria were important considerations in selection this engineering firm for engineering services and construction management.
We inquired about documentation of the rationale for the method of procurement, basis of contract price and negotiation of fair and reasonable compensation. The District’s file did not contain documentation of such.
Water and Waste Disposal Systems for Rural Communities, CFDA 10.760: We selected a sample of three from a population of five vendors over the individually significant threshold of $29,516 for this grant. We noted one exception. The District explained the rationale for the vendor selection stating that unique construction material had to match other such construction material previously installed. However, the District did not have documentation of the rational for selection and negotiation of the price in the procurement file.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Without a document which shows a rational for selection of, and arrival at the price, there is no way to monitor this aspect of the procurement process.
Questioned costs: No costs are questioned.
Perspective: We noted extensive documentation of the general contractor procurement with bidding procedures, advertising for bids, etc. In all tests, the District’s explanations as to why a particular vendor was selected appeared reasonable. Nonetheless, the requirement is that the District document the “rationale for the method of procurement, contractor selection or rejection, and the basis for the contract price.”
Perspective Specific to CFDA 10.760. A sample of three was selected from a population of five vendors over the micro-purchase threshold of $10,000. There was one exception. Under attribute sampling, this is an exception rate of 33%. However, we note that the one exception represented only 1.37% of the dollar value of sample selected. Extrapolating the 1.37% to the population, the expected dollar error for debarment checks is $30,353.
Perspective Specific to CFDA 66.458: Initially, we noted that the population was two vendors over the micro-purchase threshold of $10,000. We selected a sample of one with no exceptions. However, it came to our attention that grantor had questioned procurement procedures for the engineer. We determined to test this procurement and noted an exception. Under attribute sampling, this is an exception rate of 50%. However, we note that the one exception represented 19.38% of the dollar value of the total population. As 100% of the population of two was tested, no extrapolation is suggested.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR 200.318(i) and 200.320(b)(2)(iv) requiring documentation of procurement “rationale for the method of procurement, . . . contractor selection or rejection, and the basis for the contract price and also negotiation of fair and reasonable compensation when architectural or engineering services are procured.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria or Specific Requirement (Obtaining Certificate of Non-Debarment or Checking Sam.gov for Debarment): Debarment is an action by a federal agency to prohibit a recipient from receiving federal funds through procurement transactions and applicable non-procurement transactions. (Examples given for applicable non-procurement transactions are: grants, cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan guarantees, subsidies, insurances, payments for specified uses, and donation agreements.)
Non-Federal entities cannot contract with nor make subawards under procurement transactions and applicable non-procurement transactions to parties that are suspended or debarred or whose principals are suspended or debarred.
2 CFR § 180.300 provides that a non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Condition: We inquired about the District’s procedures under 2 CFR § 180.300 regarding suspension and debarment. We were informed that self-certifications are contained in the District’s contracts. We selected a sample of three vendors in the population of six vendors which received over $25,000 during the audit period. The District provided a contract provision self-certifying on suspension and debarment on one procurement, which was the general contractor’s contract. However, the District stated they could not locate a suspension and debarment self-certification for the other two vendors. We inquired if perhaps the District had checked the Sam.gov website, but the District had not.
Cause: It appears that the primary cause of this condition is that the District has limited experience with Single Audit requirements in general. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: The federal government can disqualify any transaction and reject the claim for federal funds when the underlying transaction is with a suspended or debarred individual or entity.
Questioned costs: No costs are questioned.
Perspective: The population of vendors with expenditures over $25,000 was six. The electric company was excluded as an obvious sole source. The general contractor had already been tested during walk throughs. A sample of two in addition to the general contractor test was selected; both vendors produced exceptions.
We note that the two exceptions represented 5.2% of the dollar value of sample tested with the general contractor representing 94.8% of the dollar value. Extrapolating the 5.2% to the population, of vendors subject to debarment requirements, the expected dollar error for debarment checks is $103,162.
It is noted that the auditor checked SAM.gov on all three vendors tested, and neither vendor was suspended or debarred.
Repeat Finding: No
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR § 180.300 requiring that the non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.