Audit 374709

Assistance Listing Number, Federal Agency, and Program Name - 10.553 and 10.555, U.S. Department of Agriculture, Child Nutrition Cluster Federal Award Identification Number and Year - 241960, 251960, 241970, and 251970 Pass through Entity - Michigan Department of Education Finding Type - Significant deficiency Repeat Finding - No Criteria - The School District is required to have processes that comply with applicable procurement rules in the Uniform Guidance, including initial identification of those requirements and subsequent compliance per 2 CFR 200.317 through 200.327, as well as contain required contract provisions for cost reimbursable contracts per the provisions in 7 CFR 210.21(f), 7 CFR 210.21(d)(3), and 7 CFR 220.16(d)(3). Condition The School District's internal controls did not effectively identify all of the required components necessary in formal solicitation documents for food service/cost reimbursable contracts and when using a third party entity (e.g., consortium) and did not utilize competitive procurement methods. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context- It was noted that the School District was not required to competitively bid any purchases during fiscal year 2025. Cause and Effect - Conducting solicitations or entering into contracts that do not follow the appropriate competitive procurement guidelines could result in the School District having an unallowable contract under the provisions of the grant and/or questioned costs. Recommendation - The School District should examine its processes and controls surrounding competitive procurement methods for the food service program to verify inclusions of the requirements under the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan - As a result of a rotational School Nutrition Programs Procurement Review, as administered by the Office of School Nutrition Services within the Michigan Department of Education (MDE), general procurement findings were identified in the food service program. To address, the School District is revising its food service procurement documents to explicitly include all required contract provisions under the Uniform Guidance. The School District is also incorporating recent interpretations and guidance from the U.S. Department of Agriculture (USDA), as communicated through MDE, particularly regarding cooperative purchasing and pricing structures for federal compliance. These actions are intended to strengthen the procurement controls to ensure all future food service contracts meet the compliance requirements of the Uniform Guidance and USDA regulations.