Audit 404172

Federal Agency: US Department of Health and Human Services Federal Program: Congressionally Delegated Spending for Construction Projects AL Number: 93.493 Award Period: 1/1/25 – 12/31/25 Type of Finding: Significant deficiency in Internal Control Over Compliance and Compliance Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions. Condition and Context During our testing over Suspension and Debarment, noted one instance in which the Organization was unable to locate documentation that a suspension and debarment check was performed prior to entering into a transaction with a vendor. Effect Noncompliance results in possible Federal funds provided to ineligible vendors. Questioned Costs None identified. Cause The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation We recommend the Organization implement a process to ensure that procurement and suspension and debarment documentation is retained. Views of Responsible Officials The Organization acknowledges that, in one instance, documentation evidencing that a suspension and debarment check was performed prior to engaging a vendor could not be located. While this appears to be an isolated occurrence, we recognize the importance of maintaining complete and auditable documentation to demonstrate compliance with 2 CFR Part 200 requirements. In response, the Organization has strengthened its internal controls to ensure that all vendors are properly screened and that such screenings are consistently documented. We have implemented the use of a compliance monitoring system (Compliatric), which maintains a centralized vendor registry and performs monthly screenings against federal exclusion and debarment databases, including SAM.gov and OIG exclusion lists. This system provides an auditable log of all screening activity. These enhanced controls were implemented effective June 9, 2025. Additionally, the Organization has completed a retrospective review of all active vendors to confirm that appropriate suspension and debarment screenings have been performed and documented. Going forward, any potential matches identified through the screening process will be escalated to the Risk and Compliance Manager and/or CFO for review and validation. If a match is confirmed, the Organization will immediately discontinue use of the vendor and terminate the relationship in accordance with federal requirements.

Federal Agency: US Department of Health and Human Services Federal Program: Congressionally Delegated Spending for Construction Projects Pass-Through Agency: N/A AL Number: 93.493 Award Period: 1/1/25 – 12/31/25 Type of Finding: Significant deficiency in Internal Control Over Compliance and Compliance Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions. Condition and Context During our testing over Procurement noted two instances in which the Organization was unable to locate documentation that agreements with vendors related to the infrastructure project included the Buy America domestic preference provisions in each agreement, or obtained a BABA (Build America, Buy America) waiver. Effect Noncompliance results in possible federal funds provided to ineligible vendors. Questioned Costs None identified. Cause The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation We recommend the Organization implement a process to ensure that procurement agreements with vendors related to infrastructure projects include the Buy America domestic preference provisions in each agreement, or a process to obtain a BABA (Build America, Buy America) waiver. Views of Responsible Officials The Organization was unable to locate documentation demonstrating that procurement agreements included the required Buy America (BABA) provisions or evidence of an approved waiver. In response, the Organization has implemented enhanced internal controls to ensure compliance going forward, including updates to the Procurement Policy to require inclusion of Buy America provisions or documented waivers in all applicable contracts, standardized contract templates with all required federal clauses, and a mandatory pre-award compliance checklist to verify inclusion of these elements. Additionally, procurement documentation is now maintained in a centralized system to ensure proper retention and accessibility, staff have been trained on these requirements, and ongoing compliance is monitored through quarterly reviews and required pre-execution approval for all federally funded contracts. These corrective actions have been implemented and are currently in effect.