Audit 395956

Finding 2025-001 Federal Program: Congressional Directives Assistance Listing Number: 93.493 Compliance Requirement: Procurement Criteria or Specific Requirement: Title 2 CFR §200.318 through §200.326 requires non-Federal entities to use documented procurement procedures that provide for full and open competition and are consistent with applicable Federal standards. Specifically, 2 CFR §200.320 requires procurement transactions for construction in excess of the simplified acquisition threshold to be conducted using competitive proposals or sealed bids, unless conditions exist to justify noncompetitive procurement. Additionally, the Agency’s internal procurement policy requires competitive bidding for construction projects exceeding established dollar thresholds unless an approved exception is documented. Condition: During our audit of procurement transactions charged to the Federal program, we noted that the Agency did not obtain competitive bids for a construction project funded in part with Federal award funds. The project was awarded to a contractor without evidence that competitive proposals were solicited, evaluated, or documented. Furthermore, the Agency did not maintain documentation supporting a noncompetitive procurement justification or evidence of advance written approval as required by Uniform Guidance and internal policy. Cause: The condition appears to have resulted from inadequate internal controls over procurement compliance, including insufficient review of procurement documentation prior to contract execution and limited understanding of Uniform Guidance procurement requirements by personnel responsible for project oversight. Additionally, there has been turnover in senior leadership positions since receipt of the award and since the project began. Effect and Questioned Costs: The failure to follow Uniform Guidance procurement requirements increases the risk that Federal funds may not be used in a manner that ensures full and open competition, reasonableness of cost, and compliance with federal regulations. This condition exposes the Agency to potential disallowance of costs, repayment of federal funds, and increased scrutiny from the Federal awarding agency or pass-through entity. No questioned costs were identified as a result of this finding. Was the finding a repeat of a finding in the immediately prior year? No Recommendation: We recommend that the Agency strengthen internal controls over procurement by: 1. Ensuring all construction procurements funded by Federal awards comply with the competitive procurement requirements of 2 CFR Part 200. 2. Requiring documented evidence of bid solicitation, evaluation, and selection prior to contract award. 3. Establishing procedures to ensure noncompetitive procurements are supported by written justification and receive required approvals in advance. 4. Providing periodic training to personnel involved in procurement and project management on Uniform Guidance requirements. Management Response: The procurement of construction services funded through this award was done in early 2023 and preceded Dimock’s updated procurement policy which calls for competitive bidding. It also preceded changes in procurement leadership. Subsequent procurement for services have since been subject to competitive bidding by Dimock consistent with CFR 200.318-200.326.