Audit 317709

U.S. Department of Transportation Federal Audit Cluster 20.507 Federal Transit Formula Grant (applies to all grants) 2023-004 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (2 CFR section 200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and non-competitive proposals. Additionally, 2 CFR Section 200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items and 2 CFR section 200.303(a) regulations require the entity to establish and maintain effective internal control over compliance with Federal statues, regulations, and the terms and conditions of grant awards. In addition, non-federal entities are prohibited from contracting with parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The portion related to procurement is a repeated finding from 2019, 2020, 2021, and 2022. During our testing of purchases under the procurement regulations, for 3 out of 8 vendors selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in 2 CFR section 200.320. Additionally, while the System does maintain written policies and procedures related to procurement standards, these procedures were followed for items procured directly through the procurement department, however, FTA expenditures procured by the maintenance department did not follow the approved procedures and internal controls in accordance with the regulations referenced in the criteria above. During our testing of compliance with the suspension and debarment regulations, for 3 out of 8 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendors were not suspended or debarred. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Known - $214,478, Likely - $561,548 for Procurement but not Suspension and Debarment. Cause: A significant deficiency exists in the internal controls over procurement and suspension and debarment for expenditures procured outside the normal processes of the procurement department. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System’s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and non-competitive proposals or its determination of whether the vendor is suspended or debarred, when procured outside of the procurement department. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with 2 CFR Section 200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a annual basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exists regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors. View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with 2 CFR Section 200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.

U.S. Department of Transportation Federal Audit Cluster 20.507 Federal Transit Formula Grant (applies to all grants) 2023-004 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (2 CFR section 200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and non-competitive proposals. Additionally, 2 CFR Section 200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items and 2 CFR section 200.303(a) regulations require the entity to establish and maintain effective internal control over compliance with Federal statues, regulations, and the terms and conditions of grant awards. In addition, non-federal entities are prohibited from contracting with parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The portion related to procurement is a repeated finding from 2019, 2020, 2021, and 2022. During our testing of purchases under the procurement regulations, for 3 out of 8 vendors selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in 2 CFR section 200.320. Additionally, while the System does maintain written policies and procedures related to procurement standards, these procedures were followed for items procured directly through the procurement department, however, FTA expenditures procured by the maintenance department did not follow the approved procedures and internal controls in accordance with the regulations referenced in the criteria above. During our testing of compliance with the suspension and debarment regulations, for 3 out of 8 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendors were not suspended or debarred. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Known - $214,478, Likely - $561,548 for Procurement but not Suspension and Debarment. Cause: A significant deficiency exists in the internal controls over procurement and suspension and debarment for expenditures procured outside the normal processes of the procurement department. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System’s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and non-competitive proposals or its determination of whether the vendor is suspended or debarred, when procured outside of the procurement department. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with 2 CFR Section 200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a annual basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exists regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors. View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with 2 CFR Section 200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.