Audit 369773

Federal Agency: United States Department of Health and Human Services Federal Assistance Listing Title and Number: Congressional Directives, 93.493 Federal Award Identification Number (FAIN) and Year: 6 CE1HS47160-01-04, 2022 Criteria: In accordance with 2 CFR §200.318(a), General Procurement Standards, the nonfederal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to 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. Condition: During our testing of the procurement compliance requirements, we identified three procurement samples out of a total of five tested where the Organization was unable to produce documentation of compliance with the general procurement standards noted in the criteria above. Cause: The Organization personnel did not retain proper documentation supporting procurement controls. Effect: Failure to obtain and retain sufficient supporting documentation could result in an incorrect application of procurement policies and procedures. There was also no supporting documentation to ensure that the vendor selected was in compliance with the Uniform Guidance. Questioned Costs: The total amount of the procurement transaction for which the formal method of procurement was not followed was $565,107, but questioned costs are undeterminable since the difference between the vendor price selected and potential other competitive bids or prices is unknown. Context: The population consisted of five vendor contracts entered into during the period subject to procurement. All items were tested, two of which had no exceptions in testing and the other three had the exceptions identified in the condition above. This was not a statistically valid sample. Repeat Finding: N/A, This is the first year of the finding. Recommendation: We recommend management ensure that procurement regulations are followed. We also recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy. Management's Response: RUMC follows applicable federal grant guidelines and requirements, including adherence to the three-bid policy and related procurement standards. However, there were two factors that impacted our ability to provide complete supporting documentation during the audit period: (1) the departure of the project manager who was responsible for maintaining procurement records for the project, and (2) a cyber event in 2023 that resulted in the loss of certain files and supporting documentation. While these circumstances limited our ability to produce documentation evidencing compliance, management affirms that the required procurement steps were performed and that RUMC remains in adherence with federal grant requirements. To further strengthen compliance, RUMC has established a Construction Grant Committee to ensure full adherence to all grant requirements. This committee is responsible for reviewing procurement actions, verifying compliance with the three-bid requirement, ensuring proper documentation is retained, and monitoring procurement processes throughout the life of each project. These corrective actions will ensure that complete and verifiable records are consistently available to support compliance with bidding requirements going forward.