Audit 370716

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Center Program Cluster Assistance Listing Number: 93.224/93.527 Federal Award Identification Number and Year: H80CS00758 / 2025 Award Period: April 1, 2024 to March 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria: Federal regulations (2 CFR §§ 200.212 and 200.318(h); 2 CFR § 180.300; 48 CFR § 52.209-6) require that entities entering into covered transactions with federal award recipients be verified as not debarred, suspended, or otherwise excluded from participation in federal programs. This verification must be performed annually and prior to entering into any transaction exceeding the applicable threshold. Condition: We identified one instance in which the agency did not perform timely suspension and debarment verification for a vendor prior to entering into a covered transaction. Questioned costs: None Context: The vendor in question had a long-standing relationship with the agency and was considered reputable by management. Due to this familiarity, verification procedures were not followed as required, resulting in a lapse in compliance. Cause: The agency relied on the vendor’s history and reputation, assuming compliance without conducting the required verification. Effect: The agency’s failure to consistently perform timely suspension and debarment verifications resulted in noncompliance with federal procurement requirements. Although the vendor in question was ultimately eligible, without a reliable and documented verification process, the Agency risks unintentionally engaging with ineligible vendors in future transactions. Repeat Finding: No Recommendation: We recommend management implement suspension and debarment verification process for all covered vendors, regardless of their history or reputation, to ensure compliance with federal regulations. Views of the Responsible Officials and Planned Corrective Action: Management agrees with the finding and acknowledges that timely suspension and debarment verification was not consistently performed across all vendors. To address this deficiency, the agency is implementing a standardized process to ensure suspension and debarment checks are conducted prior to entering into any covered transaction, regardless of vendor history. This process will include documented verification steps, annual review protocols, and staff training to reinforce compliance with federal procurement regulations.