2023-001 The County’s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027, COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: Yes, Finding 2022-001
Background
The purpose of the Coronavirus State and Local Fiscal Recovery Funds program is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2023, the County spent $3,220,677 in program funds.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The County must verify this before entering into the contract, and must keep documentation demonstrating compliance with this federal requirement
Description of Condition
Our audit found the County’s controls were ineffective for ensuring it verified the suspension and debarment status for three of 12 contractors it paid $25,000 or more, all or in part with federal funds. Specifically, the County did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify the three contractors were not suspended or debarred before entering into contracts with them. The County paid these contractors $560,320 in fiscal year 2023.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
County staff did not consistently follow established procedures to perform this verification for all applicable transactions.
Effect of Condition
Without this verification, the County increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments made to an ineligible party would be unallowable, and the awarding agency could potentially recover them.
We subsequently verified the contractors were not suspended and debarred, so we are not questioning costs.
Recommendation
We recommend the County establish internal controls to verify all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs. We also recommend the County maintain documentation demonstrating compliance with this requirement.
County’s Response
In 2023 the County hired a Grants and Public Relations Specialist. This position provides technical assistance to county staff and outside contractors to ensure compliance with grant requirements. Unfortunately, some of the contracts were entered into before this position was filled. This should not be an issue going forward.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-001 The County’s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027, COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: Yes, Finding 2022-001
Background
The purpose of the Coronavirus State and Local Fiscal Recovery Funds program is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2023, the County spent $3,220,677 in program funds.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The County must verify this before entering into the contract, and must keep documentation demonstrating compliance with this federal requirement
Description of Condition
Our audit found the County’s controls were ineffective for ensuring it verified the suspension and debarment status for three of 12 contractors it paid $25,000 or more, all or in part with federal funds. Specifically, the County did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify the three contractors were not suspended or debarred before entering into contracts with them. The County paid these contractors $560,320 in fiscal year 2023.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
County staff did not consistently follow established procedures to perform this verification for all applicable transactions.
Effect of Condition
Without this verification, the County increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments made to an ineligible party would be unallowable, and the awarding agency could potentially recover them.
We subsequently verified the contractors were not suspended and debarred, so we are not questioning costs.
Recommendation
We recommend the County establish internal controls to verify all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs. We also recommend the County maintain documentation demonstrating compliance with this requirement.
County’s Response
In 2023 the County hired a Grants and Public Relations Specialist. This position provides technical assistance to county staff and outside contractors to ensure compliance with grant requirements. Unfortunately, some of the contracts were entered into before this position was filled. This should not be an issue going forward.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.
2023-002 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation (WSDOT)
Pass-through Award/Contract Number: HSIP-5908(012)
STPUS-5903(001)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2023, the County spent $2,443,615 in Highway Planning and Construction program funds. The County used this program funding for various road improvement projects.
Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When using federal funds to pay for consulting services, governments must apply the more restrictive of federal requirements, state law or local policies. For consulting services, the County must perform a competitive negotiation process, which includes selecting the most qualified firm.
Description of Condition
When procuring transactions, the County must adhere to the Local Agency Guidelines (LAG) Manual, which WSDOT maintains. The LAG Manual contains requirements for procuring consulting services and specific requirements for limited competition situations. Although the County references the LAG Manual when procuring these types of services, it did not have controls effective to comply with the requirements specific to limited competition. When selecting two consultants, the County did not obtain the minimum three proposals required. For one project, the County only received two proposals, evaluated them and selected the most qualified firm. For the other project, the County only received one proposal, did not perform any further evaluation and awarded the contract to the only submitter.
For both projects, the County did not complete or submit a sole source public interest finding to WSDOT for review and approval as required. For the project with one proposal submitted, the County also did not follow requirements to evaluate the consultant's qualifications with a phone interview, at minimum, based on established criteria. Both these procurement activities did not comply with the requirements in the LAG Manual. The County paid a total of about $140,000 to these consultants during the period.
Cause of Condition
Although County staff responsible for procurement used the LAG Manual, they were unaware of the requirements regarding limited competition.
Effect of Condition
Without following the required procurement procedures, the County cannot be sure it selected the most qualified firms for consulting services or provided fair and open competition in the selection of public contracts.
Recommendation
We recommend the County improve its internal controls over procurement requirements to verify that it meets all requirements, including those in the LAG Manual, before awarding contracts.
County’s Response
The County coordinates all consultant contracts with WSDOT Local Programs on federally funded projects, and it was not mentioned that we needed additional controls. We recognize now the need for phone interviews and sole source public interest findings. The County appreciates the opportunity to learn and grow and will endeavor to provide a fair and open selection process for all future public contracts.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this issue. We will review the condition during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Section 318, General procurement standards, establishes requirements for written procedures and for maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, Section 319 – Competition, establishes requirements that all procurement transactions are to be conducted in a manner providing full and open competition.
Title 2 CFR Part 200, Uniform Guidance, Section 320 – Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities.
The Local Agency Guidelines (LAG) manual, chapter 13.2 contains requirements for limited competition. Chapter 31.1 contains requirements for selecting consultants.