Audit 404301

2025-001 Procurement, Suspension and Debarment – Significant Deficiency in Internal Control over Compliance Identification of federal programs: 20.205 Highway Planning and Construction Grand award numbers: 693JJ22440000Y176AK307502400199900 693JJ22440000Y602AK307502400199900 693JJ22540000Y177AK307502500299900 693JJ22540000Y271AK307502500199900 693JJ22540000Y602AK307502500199900 Criteria: Per 2 CFR §200.318(i), non-Federal entities must maintain records sufficient to detail the history of procurement transactions, including the rationale for the method of procurement, contractor selection, and the basis for contract price. Additionally, 2 CFR §200.214 prohibits awards, subawards, and contracts with parties that are suspended or debarred, requiring entities to verify contractor eligibility prior to award. Effective internal controls over procurement activities should ensure required documentation is obtained, reviewed, and retained in procurement files. Condition: During testing of procurement transactions, we noted three instances in which adequate supporting documentation was not retained internally to support that the vendors were not suspended or debarred. We also noted one sole source procurement transaction in which documentation supporting the noncompetitive procurement justification and approval was not maintained at the time of purchase. Cause: Management indicated procurement documentation procedures were not consistently followed, and existing review controls did not detect the missing documentation prior to purchase approval and payment processing. Effect or potential effect: Failure to maintain required procurement documentation increases the risk of noncompliance with federal procurement requirements and may result in unsupported procurement actions or questioned costs. Questioned Costs: None. Identification of Repeat Finding: N/A Recommendation: We recommend management strengthen internal controls over procurement activities by implementing procedures to ensure sole source procurements are properly supported with written justification and suspension and debarment checks are performed and documented timely. Views of Responsible Officials: Management concurs with this finding. See corrective action plan below.