Audit 367164

Finding 2024-002 – Procurement Federal Agency: U.S. Department of Health and Human Services Federal Program: Rural Health Care Services Outreach, Rural Health Network Development, and Small Health Care Provider Quality Improvement Program AL Number: 93.912 Pass-through: Not applicable Award Number: GA1RH33512 & G26RH49901 Award Year: 2020/2021 & 2023/2024 Type of Finding: Significant Deficiency Criteria: Per 2 CFR 200.318(a) – Documented procurement procedures, “The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” Condition: The Organization did not follow their procurement policy for single-source justification procurement transactions. Two sample items selected for testing within the small purchase threshold were appropriately determined to be single-source items. However, in both instances, no documentation was maintained as to the reasoning for determining this. Cause: The primary underlying cause appears to be a failure to consistently follow established procurement procedures. Both procurements were appropriately determined to be single-source bids by management based on various factors. However, the Organization did not fully adhere to their procurement policy because justification for that determination was not maintained. Effect: Failure to adhere to the Organization’s procurement policies, which are designed in accordance with the Uniform Guidance, could result in the Organization not receiving competitive bids or proposals from multiple vendors, potentially leading to overpayment for contracts or services. Questioned costs: Not applicable. Context: The Organization did not provide documentation for single source justification for two of the samples selected for procurement testing. Recommendation: We recommend the Organization should implement a formal review and approval process for single-source justifications to ensure they are consistently completed, approved by appropriate management, and retained in procurement files. Maintaining complete and accurate documentation will support compliance with federal regulations, facilitate audit reviews, and reduce the risk of overpayment or challenges to procurement decisions. Management’s Response: See Corrective Action Plan.

Finding 2024-002 – Procurement Federal Agency: U.S. Department of Health and Human Services Federal Program: Rural Health Care Services Outreach, Rural Health Network Development, and Small Health Care Provider Quality Improvement Program AL Number: 93.912 Pass-through: Not applicable Award Number: GA1RH33512 & G26RH49901 Award Year: 2020/2021 & 2023/2024 Type of Finding: Significant Deficiency Criteria: Per 2 CFR 200.318(a) – Documented procurement procedures, “The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” Condition: The Organization did not follow their procurement policy for single-source justification procurement transactions. Two sample items selected for testing within the small purchase threshold were appropriately determined to be single-source items. However, in both instances, no documentation was maintained as to the reasoning for determining this. Cause: The primary underlying cause appears to be a failure to consistently follow established procurement procedures. Both procurements were appropriately determined to be single-source bids by management based on various factors. However, the Organization did not fully adhere to their procurement policy because justification for that determination was not maintained. Effect: Failure to adhere to the Organization’s procurement policies, which are designed in accordance with the Uniform Guidance, could result in the Organization not receiving competitive bids or proposals from multiple vendors, potentially leading to overpayment for contracts or services. Questioned costs: Not applicable. Context: The Organization did not provide documentation for single source justification for two of the samples selected for procurement testing. Recommendation: We recommend the Organization should implement a formal review and approval process for single-source justifications to ensure they are consistently completed, approved by appropriate management, and retained in procurement files. Maintaining complete and accurate documentation will support compliance with federal regulations, facilitate audit reviews, and reduce the risk of overpayment or challenges to procurement decisions. Management’s Response: See Corrective Action Plan.

Finding 2024-002 – Procurement Federal Agency: U.S. Department of Health and Human Services Federal Program: Rural Health Care Services Outreach, Rural Health Network Development, and Small Health Care Provider Quality Improvement Program AL Number: 93.912 Pass-through: Not applicable Award Number: GA1RH33512 & G26RH49901 Award Year: 2020/2021 & 2023/2024 Type of Finding: Significant Deficiency Criteria: Per 2 CFR 200.318(a) – Documented procurement procedures, “The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” Condition: The Organization did not follow their procurement policy for single-source justification procurement transactions. Two sample items selected for testing within the small purchase threshold were appropriately determined to be single-source items. However, in both instances, no documentation was maintained as to the reasoning for determining this. Cause: The primary underlying cause appears to be a failure to consistently follow established procurement procedures. Both procurements were appropriately determined to be single-source bids by management based on various factors. However, the Organization did not fully adhere to their procurement policy because justification for that determination was not maintained. Effect: Failure to adhere to the Organization’s procurement policies, which are designed in accordance with the Uniform Guidance, could result in the Organization not receiving competitive bids or proposals from multiple vendors, potentially leading to overpayment for contracts or services. Questioned costs: Not applicable. Context: The Organization did not provide documentation for single source justification for two of the samples selected for procurement testing. Recommendation: We recommend the Organization should implement a formal review and approval process for single-source justifications to ensure they are consistently completed, approved by appropriate management, and retained in procurement files. Maintaining complete and accurate documentation will support compliance with federal regulations, facilitate audit reviews, and reduce the risk of overpayment or challenges to procurement decisions. Management’s Response: See Corrective Action Plan.