Audit 371305

Criteria - Non-federal entities are prohibited from contracting with parties that are suspended or debarred. Non-federal entities must have internal controls in place to verify that contractors are not suspended or debarred or otherwise excluded from participating in the transaction before entering into agreements or awarding contracts. Per CFR section 180.300, this verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the contractor, or (3) adding a clause or condition to the covered transaction with the contractor. Condition - The Institute did not have proper internal controls in place to verify that contractors are not suspended or debarred prior to entering into contracts. The Institute entered into a contract for construction activities totaling $499,814 and did not verify that the contractor was not suspended or debarred prior to entering into the contract. Subsequent to auditor inquiry, the Institute performed a search for the contractor on the SAM exclusion list and noted the contractor was not listed as suspended or debarred. Effect - In addition to not complying with grant requirements, failing to verify suspension and debarment status puts the Institute at risk of doing business with unreputable contractors. Cause - The Institute lacked established internal controls and procedures to ensure timely and documented verification of suspension and debarment status for contractors. Recommendation - We recommend the Institute develop and implement a documented process for verifying the suspension and debarment status of all contractors before entering into agreements. Response - Morrison Institute of Technology understands the finding and the importance of verifying the suspension and debarment status of all contractors. Verifications will be performed timely in the future. Conclusion - Response accepted.