Audit 394159

Program Name: Highway Planning and Construction ALN No.: 20.205 Federal Grantor: U.S. Department of Transportation Passed-Though: California Department of Transportation Award No. and Year: 74A0822/74A1619, 2024 & 2025 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control, Instance of Non-Compliance Criteria: 2 CFR section Appendix II to Part 200, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards states that in addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain certain provisions, as applicable. Condition: During our testing of SCAG’s provisions for procurement requirements, we noted that not all required provisions were provided at the time of the contract award for two (2) of the four (4) contracts selected for testing. Of the applicable provisions for these two (2) contracts, based on the type and value of the contract, we noted the following missing provisions: 1. Legal remedies for breach of contract (Provision A) (1 instance) 2. Termination for cause and convenience (Provision B) (2 instances) 3. Clean Air Act and Federal Water Pollution Control Act (Provision G) (1 instance) 4. Suspension and Debarment (Provision H) (1 instance) 5. Byrd Anti-Lobbying (Provision I) (2 instances) Cause: SCAG did not consistently ensure that the applicable required provisions were communicated to contractors. Effect: SCAG did not include the applicable required provisions of the contract to the contractors at the time of the contract award. By failing to include all required provisions, contracts may not know the requirements they need to comply with. Questions Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 4 out of 9 procurement contracts were selected for procurement and suspension and debarment testing. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that SCAG modify and strengthen the current policies and procedures to ensure that all applicable required provisions are communicated to contractors in accordance with 2CFR Appendix II to Part 200. Views of Responsible Officials and Planned Corrective Action Management agrees. See separate corrective action plan.