Audit 303974

2023-002 Procurement U.S. Department of the Treasury ALN 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Fund Contract No. Y5283 FL0283 (2021) Criteria: 2 CFR Sections 202.303(a) and 200.320 set forth the requirements to establish and maintain effective internal controls over federal awards and for acquisition contracts awarded to vendors including the requirement to obtain price or rate quotations from an adequate number of qualified sources and the circumstances in which noncompetitive procurement methods can be used. The City’s Financial & Budget Operational Guidelines specify that purchases over $25,000 must go through a formal bid and proposal process. In addition, the City’s practice is to obtain three quotes for purchases between $5,000 and $25,000. Condition: Competitive quotes and/or bids were not appropriately obtained for purchases from two vendors. These purchases, however, were beneath the Simplified Acquisition Threshold required by Uniform Guidance. Cause of condition: The vendors were established vendors of the City selected for continuity of service and for their ability to obtain identical materials as previously used by the City. As a result, the City inadvertently exceeded procurement thresholds. Questioned costs: Known questioned costs $140,644. We calculated these costs by identifying all award expenses with vendors not subjected to competitive procurement practices. Perspective (context): We noted competitive procurement was not followed for three of the 40 expenses tested, representing two (2) different vendors (out of 14 vendors). The costs associated with these purchases were allowable costs for activities allowed under the grant program, confining the issue to procurement. While the City did not document competitive quotes for these purchases, we did not note any misuse of grant funds. Potential effect of condition: The City did not comply with Federal compliance requirements or City policies established to promote competition and make the procurement process more transparent. Recommendation: Competitive quotes should be obtained and retained as specified in the City’s procurement policies and Uniform Guidance. Non-competitive procurement (for sole source vendors) should be documented and approved prior to incurring expenses. The City should update and expand procurement policies to document competitive procurement practices for procurement less than the bid threshold Management’s response on planned corrective action: Staff have already implemented a procurement policy to attach all the quotes received from vendors to the purchase order. In the future when reviewing, staff will be able to see all the vendors that provided a quote and see the lowest quote was used to procure the item(s).

2023-002 Procurement U.S. Department of the Treasury ALN 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Fund Contract No. Y5283 FL0283 (2021) Criteria: 2 CFR Sections 202.303(a) and 200.320 set forth the requirements to establish and maintain effective internal controls over federal awards and for acquisition contracts awarded to vendors including the requirement to obtain price or rate quotations from an adequate number of qualified sources and the circumstances in which noncompetitive procurement methods can be used. The City’s Financial & Budget Operational Guidelines specify that purchases over $25,000 must go through a formal bid and proposal process. In addition, the City’s practice is to obtain three quotes for purchases between $5,000 and $25,000. Condition: Competitive quotes and/or bids were not appropriately obtained for purchases from two vendors. These purchases, however, were beneath the Simplified Acquisition Threshold required by Uniform Guidance. Cause of condition: The vendors were established vendors of the City selected for continuity of service and for their ability to obtain identical materials as previously used by the City. As a result, the City inadvertently exceeded procurement thresholds. Questioned costs: Known questioned costs $140,644. We calculated these costs by identifying all award expenses with vendors not subjected to competitive procurement practices. Perspective (context): We noted competitive procurement was not followed for three of the 40 expenses tested, representing two (2) different vendors (out of 14 vendors). The costs associated with these purchases were allowable costs for activities allowed under the grant program, confining the issue to procurement. While the City did not document competitive quotes for these purchases, we did not note any misuse of grant funds. Potential effect of condition: The City did not comply with Federal compliance requirements or City policies established to promote competition and make the procurement process more transparent. Recommendation: Competitive quotes should be obtained and retained as specified in the City’s procurement policies and Uniform Guidance. Non-competitive procurement (for sole source vendors) should be documented and approved prior to incurring expenses. The City should update and expand procurement policies to document competitive procurement practices for procurement less than the bid threshold Management’s response on planned corrective action: Staff have already implemented a procurement policy to attach all the quotes received from vendors to the purchase order. In the future when reviewing, staff will be able to see all the vendors that provided a quote and see the lowest quote was used to procure the item(s).