FAC Explorer

Audit 311125

FY End
2023-09-30
Total Expended
$106.02M
Findings
2
Programs
1
Organization: Blueforge Alliance (DC)
Year: 2023 Accepted: 2024-06-29
Auditor: Grant Thornton LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
404744 2023-001 Material Weakness - I
981186 2023-001 Material Weakness - I

Programs

ALN Program Spent Major Findings
12.RD Cost Assessment and Program Evaluation (cape) Submarine Industrial Base (sib) Growth $106.02M Yes 1

Contacts

Name Title Type
F8PEZKXES8B1 Andy Hinton Auditee
9792094145 Tamara Bienert Auditor
No contacts on file

Notes to SEFA

Title: NOTE A - BUSINESS AND ORGANIZATION Accounting Policies: The accompanying schedule of expenditures of federal awards includes the federal grant activity of BFA and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. BFA generally operates under cost-type contracts with its federal sponsor and records costs as the effort is expended. Contract costs are recorded on the basis of direct costs, overhead and general and administrative expenses incurred. Indirect costs are allocated on the basis of direct labor cost incurred. De Minimis Rate Used: N Rate Explanation: BFA has elected not to use the 10% de minimis cost rate provided for in Subpart E, Section 200.414 of the Uniform Guidance. BlueForge Alliance (“BFA”) is a nonprofit organization established September 21, 2022, under the laws of the State of Texas to serve as an unbiased, neutral program integrator across industry, academia, and government to advance national security objectives. BFA was formed to help galvanize and revitalize the U.S. defense industrial base, with particular attention to the submarine industrial base, supporting the United States (“U.S.”) Department of Defense (“DoD”) and the U.S. Navy (“Navy”).
Title: NOTE C - RESEARCH AND DEVELOPMENT PROGRAM CLUSTER Accounting Policies: The accompanying schedule of expenditures of federal awards includes the federal grant activity of BFA and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. BFA generally operates under cost-type contracts with its federal sponsor and records costs as the effort is expended. Contract costs are recorded on the basis of direct costs, overhead and general and administrative expenses incurred. Indirect costs are allocated on the basis of direct labor cost incurred. De Minimis Rate Used: N Rate Explanation: BFA has elected not to use the 10% de minimis cost rate provided for in Subpart E, Section 200.414 of the Uniform Guidance. BFA has determined that its federal contract constitute a research and development program cluster. Accordingly, the accompanying schedule of expenditures of federal awards reflects its federal contract as a research and development program cluster.

Finding Details

Finding 2023-001
FINDING 2023-001 Internal Control over Compliance and Compliance with Procurement, Suspension and Debarment Program: Federal Agency: Department of Defense (U.S. Navy) Funding Year(s): 10/22/2022 – 9/30/2027 Passthrough Entity: General Dynamics Electric Boat Federal Award: 1000042855 AL Number: 12.RD Criteria: The Federal Acquisition Regulation (FAR) 52.244-5 outlines the following regarding competition: (a) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. (b) If the Contractor is an approved mentor under the Department of Defense Pilot Mentor-Protégé Program (Pub.L.101-510, section 831 as amended), the Contractor may award subcontracts under this contract on a noncompetitive basis to its protégés. The FAR subpart 6.3 outlines policies and procedures, and identifies authorities, for contracting without providing for full and open competition: (a) 41 U.S.C.3304 and 10 U.S.C. 3204 each authorize, under certain conditions, contracting without providing for full and open competition. The Department of Defense, Coast Guard, and National Aeronautics and Space Administration are subject to “ 10 U.S.C. 3204. Other executive agencies are subject to 41 U.S.C.3304. Contracting without providing for full and open competition or full and open competition after exclusion of sources is a violation of statute, unless permitted by one of the exceptions in 6.302. (b) Each contract awarded without providing for full and open competition shall contain a reference to the specific authority under which it was so awarded. Contracting officers shall use the U.S. Code citation applicable to their agency. (See 6.302.) (c) Contracting without providing for full and open competition shall not be justified on the basis of- (1) A lack of advance planning by the requiring activity; or (2) Concerns related to the amount of funds available (e.g., funds will expire) to the agency or activity for the acquisition of supplies or services. (d) When not providing for full and open competition, the contracting officer shall solicit offers from as many potential sources as is practicable under the circumstances. (e) For contracts under this subpart, the contracting officer shall use the contracting procedures prescribed in 6.102(a) or (b), if appropriate, or any other procedures authorized by this regulation. Per FAR 6.302, the following are circumstances permitting other than full and open competition: 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements. 6.302-2 Unusual and compelling urgency. 6.302-3 Industrial mobilization; engineering, developmental, or research capability; or expert services. 6.302-4 International agreement. 6.302-5 Authorized or required by statute. 6.302-6 National security. 6.302-7 Public interest. In accordance with FAR 9.405 (e)(1) After the opening of bids or receipt of proposals or quotes, the contracting officer shall review the exclusion records in SAM. Condition: During our testing of compliance and controls, we identified the following matters: • For four procurement samples of a total of 15 items sampled, management utilized a single source justification. However, the rationale did not conform to the requirements of FAR 6.302 Circumstances Permitted Other than Full and Open Competition. • For three procurement samples of a total of 15 items sampled, management was not able to provide evidence that they reviewed the exclusion records in sam.gov in accordance with FAR 9.405 (e)(1). Cause: The Entity did not follow its policies and procedures in place to ensure compliance with the requirements of procurement, suspension and debarment. Effect: Failure to perform procurement procedures in accordance with the Entity’s documented policies and Procurement Procedures as outlined in the FAR could result in the procurement being disallowed. Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering into a contract with an entity that is barred from performing work for the Federal government. Context: This is a condition identified based upon our review of the Entity’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above, for which the questioned costs total $12,604,205. The samples were selected using a non-statistical method. Questioned Costs: $12,604,205 Identification as a Repeat Finding: This is not a repeat finding.   Recommendation: We recommend that the entity follow established policies, procedures, and internal controls to comply with the FAR procurement standards regarding full and open competition when the rationale for vendor selection do not conform to the requirements of FAR 6.302 Circumstances Permitted Other than Full and Open Competition. The entity should also ensure that independent checks for suspension and debarment are completed for all vendor procurements.
Finding 2023-001
FINDING 2023-001 Internal Control over Compliance and Compliance with Procurement, Suspension and Debarment Program: Federal Agency: Department of Defense (U.S. Navy) Funding Year(s): 10/22/2022 – 9/30/2027 Passthrough Entity: General Dynamics Electric Boat Federal Award: 1000042855 AL Number: 12.RD Criteria: The Federal Acquisition Regulation (FAR) 52.244-5 outlines the following regarding competition: (a) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. (b) If the Contractor is an approved mentor under the Department of Defense Pilot Mentor-Protégé Program (Pub.L.101-510, section 831 as amended), the Contractor may award subcontracts under this contract on a noncompetitive basis to its protégés. The FAR subpart 6.3 outlines policies and procedures, and identifies authorities, for contracting without providing for full and open competition: (a) 41 U.S.C.3304 and 10 U.S.C. 3204 each authorize, under certain conditions, contracting without providing for full and open competition. The Department of Defense, Coast Guard, and National Aeronautics and Space Administration are subject to “ 10 U.S.C. 3204. Other executive agencies are subject to 41 U.S.C.3304. Contracting without providing for full and open competition or full and open competition after exclusion of sources is a violation of statute, unless permitted by one of the exceptions in 6.302. (b) Each contract awarded without providing for full and open competition shall contain a reference to the specific authority under which it was so awarded. Contracting officers shall use the U.S. Code citation applicable to their agency. (See 6.302.) (c) Contracting without providing for full and open competition shall not be justified on the basis of- (1) A lack of advance planning by the requiring activity; or (2) Concerns related to the amount of funds available (e.g., funds will expire) to the agency or activity for the acquisition of supplies or services. (d) When not providing for full and open competition, the contracting officer shall solicit offers from as many potential sources as is practicable under the circumstances. (e) For contracts under this subpart, the contracting officer shall use the contracting procedures prescribed in 6.102(a) or (b), if appropriate, or any other procedures authorized by this regulation. Per FAR 6.302, the following are circumstances permitting other than full and open competition: 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements. 6.302-2 Unusual and compelling urgency. 6.302-3 Industrial mobilization; engineering, developmental, or research capability; or expert services. 6.302-4 International agreement. 6.302-5 Authorized or required by statute. 6.302-6 National security. 6.302-7 Public interest. In accordance with FAR 9.405 (e)(1) After the opening of bids or receipt of proposals or quotes, the contracting officer shall review the exclusion records in SAM. Condition: During our testing of compliance and controls, we identified the following matters: • For four procurement samples of a total of 15 items sampled, management utilized a single source justification. However, the rationale did not conform to the requirements of FAR 6.302 Circumstances Permitted Other than Full and Open Competition. • For three procurement samples of a total of 15 items sampled, management was not able to provide evidence that they reviewed the exclusion records in sam.gov in accordance with FAR 9.405 (e)(1). Cause: The Entity did not follow its policies and procedures in place to ensure compliance with the requirements of procurement, suspension and debarment. Effect: Failure to perform procurement procedures in accordance with the Entity’s documented policies and Procurement Procedures as outlined in the FAR could result in the procurement being disallowed. Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering into a contract with an entity that is barred from performing work for the Federal government. Context: This is a condition identified based upon our review of the Entity’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above, for which the questioned costs total $12,604,205. The samples were selected using a non-statistical method. Questioned Costs: $12,604,205 Identification as a Repeat Finding: This is not a repeat finding.   Recommendation: We recommend that the entity follow established policies, procedures, and internal controls to comply with the FAR procurement standards regarding full and open competition when the rationale for vendor selection do not conform to the requirements of FAR 6.302 Circumstances Permitted Other than Full and Open Competition. The entity should also ensure that independent checks for suspension and debarment are completed for all vendor procurements.