Audit 386132

2025-001 Lack of Documentation for Procurement, Suspension, and Debarment Testing Federal Department: Department of Health and Human Services, Administration for Children and Families Assistance Listing #: 93.496 Compliance and Internal Controls Significant Deficiency Category of Finding – Procurement, Suspension and Debarment Criteria – Per 2 CFR 200.318(i) Esperanza is required to maintain records sufficient to detail the history of each procurement transaction, which must include the rationale for the procurement method, contract type, selection, contractor selection or rejections, and the basis for the contract price. Additionally, 2 CFR 180 requires that Esperanza obtain verification that it does not contract with entities that are suspended or debarred by the federal government. Condition – Esperanza was unable to provide documentation related to the competitive bidding process performed for one of the contractors used for this grant. We were able to determine that multiple contractors were contacted, but not see the bids provided or any documentation related to why the specific contractor was selected. Esperanza was also unable to provide documentation showing they had performed the required suspension and debarment verification process for any of the contractor used for this grant. We were able to determine on sam.gov that none of the contractors were suspended or debarred, but not obtain evidence that this process was done at the time the contracts were entered into. Cause – The organization has gone through turnover of key staff during the past several fiscal years and many of the contractors they use for this grant when through the procurement process prior to that turnover. The individuals who were responsible for obtaining this documentation left the organization during that time. Effect – Failure to perform competitive bidding as required by Uniform Guidance and Esperanza’s procurement policy could result in the organization entering a procurement transaction in a manner that did not provide full and open competition. Not performing suspension and debarment verification processes prior to entering into a contract could also result in Esperanza contracting with an entity that is suspended or debarred. Recommendation – We recommend that management implement a formal process around maintaining procurement records, and suspension and debarment verification in a central location that is accessible by relevant management and not effected by staff turnover. Assigning responsibility of maintaining these records to a single individual rather than having each program director separately responsible for their records will also improve Esperanza’s ability to meet these requirements. Management’s Response and Corrective Action – Management is in agreement with the finding. Going forward, finance staff will be responsible for maintaining and safekeeping all procurement documentation for the requisite amount of time in an accessible location in an accounting folder explicitly marked on the Esperanza United secured drive for finance staff and executive team. Responsible party for corrective action – Vivian Huelgo, President and CEO Repeat finding – No