2 CFR §1200.10 gives regulatory effect to the Department of Transportation for 2 CFR §180.305 which provides that participants are prohibited from entering into a covered transaction with parties that are excluded or disqualified and 2 CFR §180.315 prohibits participants from entering into covered transactions with parties whose principals are excluded or disqualified, unless the Federal agency responsible for the transaction grants an exception under 2 CFR §180.135. 2 CFR §1200.10 gives regulatory effect to the Department of Transportation for 2 CFR §180.200 and 2 CFR §180.220. 2 CFR §180.200 identifies “covered transactions” as non-procurement or procurement transactions subject to the prohibitions of 2 CFR §180 subpart B, and may be a transaction at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Under 2 CFR §180.220, procurement contracts for goods and services awarded by a participant in a non-procurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria. All non-procurement transactions (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt under 2 CFR §180.215. 2 CFR §1200.220 states, in part, in addition to the contracts covered under 2 CFR 180.220(b), this part applies to any contract, regardless of tier, that is awarded by a contractor, subcontractor, supplier, consultant, or its agent or representative in any transaction, if the contract is to be funded or provided by the Department of Transportation under a covered nonprocurement transaction and the amount of the contract is expected to equal or exceed $25,000. This extends the coverage of the Department of Transportation nonprocurement suspension and debarment requirements to all lower tiers of subcontracts under covered nonprocurement transactions, as permitted under the OMB guidance at 2 CFR 180.220(c). 2 CFR §180.330 requires that before a participant enters into a covered transaction with another party, the participant must verify that the party the participant is seeking to do business with is not excluded or disqualified. This verification may be accomplished by checking SAM exclusions (https://sam.gov); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The Village did not have the proper internal controls in place to verify that all entities, with whom the Village had entered into covered transactions, had not been suspended or debarred. During testing of Highway Planning and Construction, we noted the Village entered into a contract (one of one tested) with a vendor for more than $25,000 and there was no evidence the Village checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verifications were not completed for the awarded contract during 2024. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the Village should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
2 CFR §1201.1 states, in part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). 2 CFR §200.318(h) states, in part, the non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. The Village’s LPA Federal Local-Let Project Agreement between the Village and Ohio Department of Transportation (ODOT), section 7.8, states before awarding a contract to the selected contractor, the LPA shall verify that the contractor is not subject to a finding for recovery under ORC Section 9.24, that the contractor has taken the appropriate remedial steps required under ORC Section 9.24, or that the contractor otherwise qualifies under the exceptions to this section. Findings for recovery can be viewed on the Auditor of State’s website at https://ohioauditor.gov/findings.html. If the LPA fails to verify, ODOT may immediately terminate this Agreement and release all Federal funding commitments. The Village had one contract subject to bid for the Highway Planning and Construction program. The Village did not verify the contractor was not subject to a finding for recovery, that the contractor has taken the appropriate remedial steps, or that the contractor otherwise qualifies under the exceptions prior to entering into the contract. This error was caused by a failure in controls related to the Terms and Conditions of the grant agreement. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are unqualified to receive the funding. The Village should ensure that it checks the Ohio Auditor of State’s website for any Findings for Recovery related to the potential vendors prior to entering into a contract.
23 CFR §637.201 prescribes policies, procedures, and guidelines to assure the quality of materials and construction in all Federal-aid highway projects on the National Highway System. 23 CFR §637.205 states each [LPA] shall develop a quality assurance program which will assure that the materials and workmanship incorporated into each Federal-aid highway construction project on the national highway system are in conformity with the requirements of the approved plans and specifications, including approved changes. The program must meet the criteria in § 637.207 and be approved by the FHWA. The Village’s Highway Planning and Construction program required the Village to have a Quality Assurance Program approved by FHWA. The Village did not have a Quality Assurance Program in place. In addition, due to not being able to provide the Quality Assurance Program, we could not verify quality assurance testing was completed in accordance with program requirements. The error was caused by a failure in controls related to the Quality Assurance requirements of the grant agreement. Failing to have the appropriate controls in place may result in projects being completed by unapproved qualified personnel and failure to monitor materials and workmanship. The Village should ensure a Quality Assurance Program is approved by FHWA and implemented to ensure testing was completed in accordance with the program requirements.
The Ohio Department of Transportation (ODOT) Local-let Manual of Procedures: Construction Contract Administration, section 7.3, states at the pre-con, the Local Public Agency (LPA) must provide to Ohio Department of Transportation (ODOT) a testing and inspection implementation plan listing the individuals responsible for testing and inspection, their certifications, and an independent testing laboratory to be utilized. The LPA shall adhere to the requirements of the LPA Materials Management Process which outlines the processes for materials management. This process will assist LPAs in setting up controls to ensure materials meet ODOT specifications during construction management. The Village had one grant for which it was required to submit a testing and inspection implementation plan to ODOT. The Village was not able to provide a copy of the Implementation Test Plan. Therefore, we could not verify the Village complied with the requirement of the Highway Planning and Construction grant. This error was caused by a failure in controls related to the requirements of the ODOT Local-Let Manual of Procedures. Failing to have the appropriate controls in place may result in testing and inspections not being completed as required or being completed by unqualified personnel. The Village should ensure that requirements of the ODOT Local-Let Manual of Procedures are fulfilled to remain in compliance with the grant agreement.