Audit 319544

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Commerce Economic Development Cluster Assistance Listing Number 11.307 Economic Adjustment Assistance Federal Award Number – 08-79-05441 Award Period – 7/12/2021 – 7/11/2026 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) Per the May 2023 OMB Compliance Supplement, “All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141–3144, 3146, and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). This reporting is often done using Optional Form WH-347, which includes the required statement of compliance (OMB No. 1235-0008).” Condition Texas Biomed did not obtain the required weekly certified payrolls from contractors and subcontractors for each week in which work was performed. Texas Biomed did not include the required provision that the contractor or subcontractor comply with the wage rate requirements in 1 of 5 selected construction contracts. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed complied with wage rate requirements. Effect or potential effect Texas Biomed did not comply with the wage rate requirements noted above. As a result, Texas Biomed did not have the ability to review required certified payroll reports to ensure contractors and subcontractors are paying prevailing wage rates. Questioned costs None. Context EY selected and tested 5 of 28 contractors and subcontractors in relation to the Economic Development Cluster. For 3 contractors/subcontractors, Texas Biomed did not obtain certified payrolls. For 2 contractors/subcontractors, Texas Biomed obtained minimal certified payrolls which did not cover the period in which work was performed. Texas Biomed did not include the required provision that the contractor or subcontractor comply with the wage rate requirements in 1 of 5 selected construction contracts. All of the expenditures for the Economic Development Cluster were for construction costs, including the $4,000,000 federal grant and Texas Biomed’s $6,000,000 match. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation We recommend Texas Biomed design and implement internal controls to ensure weekly certified payrolls are obtained from contractors and subcontractors and the required wage rate provisions are included in contracts for federally funded construction grants, as required. Views of responsible officials Management agrees with the finding and will implement controls to ensure compliance with Wage Rate Requirements.

Identification of the federal program U.S. Department of Commerce Economic Development Cluster Assistance Listing Number 11.307 Economic Adjustment Assistance Federal Award Number – 08-79-05441 Award Period – 7/12/2021 – 7/11/2026 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) According to the Economic Development Administration (EDA) Reporting Requirements document provided by Texas Biomed, “The Recipient shall submit a Quarterly Progress Report on a quarterly basis for the periods ending March 31, June 30, September 30, and December 31, or any portion thereof. Each Quarterly Progress Report must be submitted in accordance with the deadlines outlined in the specific award conditions, or, where not otherwise specified, Quarterly Progress Reports will be due on a quarterly basis not later than January 31, April 30, July 31, and October 31 for the immediate previous quarter.”   Condition Texas Biomed submitted 2 of 3 quarterly progress reports to EDA after the due dates. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed submitted quarterly progress reports by the due dates. Effect or potential effect Texas Biomed did not comply with progress reporting due dates. Questioned costs None. Context EY selected and tested all 3 quarterly progress reports submitted to EDA during the year. 2 quarterly progress reports were submitted late, as follows: Quarterly Report Due Date Date Submitted Quarter Ended 3/31/2023 4/30/2023 6/26/2023 Quarter Ended 6/30/2023 7/31/2023 8/7/2023 Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation We recommend Texas Biomed design and implement internal controls to ensure progress reports are submitted by the required due dates. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure reports are submitted timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomed Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 5 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3).   Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.   Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Identification of the federal program U.S. Department of Commerce Economic Development Cluster Assistance Listing Number 11.307 Economic Adjustment Assistance Federal Award Number – 08-79-05441 Award Period – 7/12/2021 – 7/11/2026 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”   Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) Per the May 2023 OMB Compliance Supplement, “All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141–3144, 3146, and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). This reporting is often done using Optional Form WH-347, which includes the required statement of compliance (OMB No. 1235-0008).” Condition Texas Biomed did not obtain the required weekly certified payrolls from contractors and subcontractors for each week in which work was performed. Texas Biomed did not include the required provision that the contractor or subcontractor comply with the wage rate requirements in 1 of 5 selected construction contracts. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed complied with wage rate requirements. Effect or potential effect Texas Biomed did not comply with the wage rate requirements noted above. As a result, Texas Biomed did not have the ability to review required certified payroll reports to ensure contractors and subcontractors are paying prevailing wage rates. Questioned costs None. Context EY selected and tested 5 of 28 contractors and subcontractors in relation to the Economic Development Cluster. For 3 contractors/subcontractors, Texas Biomed did not obtain certified payrolls. For 2 contractors/subcontractors, Texas Biomed obtained minimal certified payrolls which did not cover the period in which work was performed. Texas Biomed did not include the required provision that the contractor or subcontractor comply with the wage rate requirements in 1 of 5 selected construction contracts. All of the expenditures for the Economic Development Cluster were for construction costs, including the $4,000,000 federal grant and Texas Biomed’s $6,000,000 match. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation We recommend Texas Biomed design and implement internal controls to ensure weekly certified payrolls are obtained from contractors and subcontractors and the required wage rate provisions are included in contracts for federally funded construction grants, as required. Views of responsible officials Management agrees with the finding and will implement controls to ensure compliance with Wage Rate Requirements.

Identification of the federal program U.S. Department of Commerce Economic Development Cluster Assistance Listing Number 11.307 Economic Adjustment Assistance Federal Award Number – 08-79-05441 Award Period – 7/12/2021 – 7/11/2026 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) According to the Economic Development Administration (EDA) Reporting Requirements document provided by Texas Biomed, “The Recipient shall submit a Quarterly Progress Report on a quarterly basis for the periods ending March 31, June 30, September 30, and December 31, or any portion thereof. Each Quarterly Progress Report must be submitted in accordance with the deadlines outlined in the specific award conditions, or, where not otherwise specified, Quarterly Progress Reports will be due on a quarterly basis not later than January 31, April 30, July 31, and October 31 for the immediate previous quarter.”   Condition Texas Biomed submitted 2 of 3 quarterly progress reports to EDA after the due dates. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed submitted quarterly progress reports by the due dates. Effect or potential effect Texas Biomed did not comply with progress reporting due dates. Questioned costs None. Context EY selected and tested all 3 quarterly progress reports submitted to EDA during the year. 2 quarterly progress reports were submitted late, as follows: Quarterly Report Due Date Date Submitted Quarter Ended 3/31/2023 4/30/2023 6/26/2023 Quarter Ended 6/30/2023 7/31/2023 8/7/2023 Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation We recommend Texas Biomed design and implement internal controls to ensure progress reports are submitted by the required due dates. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure reports are submitted timely.