2025-001 Procurement Suspension and Debarment U.S. Department of Education: Innovative Approaches to Literacy, Promise Neighborhoods, Full-Service Community Schools, And Congressionally Directed Spending for Elementary and Secondary Education Community Projects (ALN 84.215K) Grant Number and Award Year: S215K240115 (09/06/2024 – 03/21/2025) Statistically Valid Sample: No, and it was not intended to be Prior Year Finding: Not a repeat finding Finding Type: Material Weakness and Noncompliance Criteria: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Covered transactions include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search Exclusions) (Note: The OMB guidance at 2 CFR Part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, in accordance with 2 CFR section 200.303, the Organization shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Effective internal controls should include procedures to ensure when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition and Context: The Organization received federal grant funds from the U.S. Department of Education and a portion of these funds were contracted to a third-party vendor through a sole-source procurement transaction, given the specialized nature of the services to be procured, in which management of the Organization adequately documented its rationale for the sole-source procurement in accordance with federal rules and regulations Because of the dollar value of the funds provided, the Organization entered into a covered transaction with this third-party vendor. The Organization did not verify that the third-party vendor was not suspended or debarred prior to entering into the covered transaction. However, it was determined that the third-party vendor was not suspended or debarred at the time the Organization entered into the covered transaction upon checking the third-party vendor’s status on the SAM Exclusions maintained by the GSA on the SAM.gov website. Cause: The Organization did not have a formal process in place to include a suspension and debarment check prior to entering into covered transactions and therefore a check was not performed. Effect: Funds could have been provided to an entity who was suspended or debarred. Questioned Costs: No questioned costs were noted as the third-party vendor was ultimately determined not to be suspended or debarred at the time the covered transaction was entered into by the Organization. Recommendation: We recommend the Organization review its current policies and procedures to ensure that a suspension and debarment check is performed for all covered transactions prior to entering into the covered transaction. Views of Responsible Officials: Management agrees with the finding as the Organization did not perform a suspension and debarment check on the vendor prior to entering into a covered transaction. The Organization will ensure that a suspension and debarment check is performed for all covered transactions prior to entering into the covered transaction.