Finding Number: 2024-003 AL Number and Title: Federal Transit Cluster Federal Award Identification Number / Year: OH-2020-048-00, OH-2021-014-00, OH-2021-033-00, OH-2022-021-00, OH-2023-034-00, OH-2022-003-00, OH-2022-021-00 Federal Agency: U.S. Department of Transportation Compliance Requirement: Procurement, Suspension, and Debarment Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Material Weakness and Noncompliance 2 CFR § 1200.10 states, in part, this part adopts the Office of Management and Budget (OMB) guidance in subparts A through I of 2 CFR part 180, as supplemented by this part, as the Department of Transportation policies and procedures for nonprocurement suspension and debarment. It thereby gives regulatory effect for the Department of Transportation to the OMB guidance as supplemented by this part. In addition, 2 CFR § 1201.1 indicates except as otherwise provided in this 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). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 and part 19). 2 CFR § 180.305 states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR § 180.200 identifies “covered transactions” as nonprocurement or procurement transactions 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. Procurement contracts for goods and services awarded under a nonprocurement 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 outlined in 2 CFR § 180.220 and 2 CFR § 1200.220. All nonprocurement transactions as defined in 2 CFR § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. 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 is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. In addition, the Medina County Transit Purchasing Policies and Procedures Manual III-5 Responsible Bidder section requires documentation of an excluded parties list search for contractors and subcontractors whose contract exceeds $25,000. 2 CFR § 200.318 requires the non-Federal entity to maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, the Medina County Transit Purchasing Policies and Procedures Manual I-14 Source Selection requires the Transit Director to maintain records detailing the listing of procurement, including the selection of type of contract type, reasons for selection, basis for contract price, and rationale for method of procurement. The County did not have proper internal controls in place to verify that all entities, with whom the County had entered covered transactions, had not been suspended or debarred. There were three instances in which the Federal Transit Cluster grant made total payments to vendors of more than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transactions with the vendors. In addition, for 24 of 27 procurement transactions, the County did not maintain adequate documentation to detail the full history of procurement. Failure to have appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred, and noncompliance with federal procurement requirements. The County should verify vendors are 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 prior to contracting with vendors that will be paid with federal funds. In addition, the County should maintain documentation of the history of procurements.