Finding 2025-001 Procurement Controls (Significant Deficiency) Federal Programs Assistance Listing and Program Title* U.S. Agency For International Development 98.001 USAID Foreign Assistance for Programs Overseas Prime Contract #AID-391-A-17-00002 Award Year: Fiscal Year Ended September 30, 2025 Repeat Finding - No Criteria: Under 2 CFR 200.303, non-federal entities are required to establish and maintain effective internal controls over federal awards to provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and award terms and conditions. Such controls should include appropriate vendor due diligence, procurement oversight, monitoring of high-risk transactions, verification of vendor representations, and review controls over advance payments and procurement documentation. Condition: The Organization identified procurement irregularities and fraudulent representations by a vendor associated with the acquisition of mobile X-ray equipment under a federally funded program in Pakistan. Subsequent investigation determined that: • procurement advertisements had not been properly published, • falsified procurement support documentation had been submitted, • vendor representations regarding geographic code compliance were inaccurate, • and procurement controls did not timely identify irregularities associated with vendor selection and advance payment processing. The investigation further identified deficiencies in procurement oversight, vendor verification procedures, and monitoring controls, including insufficient review of supporting procurement documentation and inadequate safeguards surrounding an advance payment to the vendor. Upon identification of the matter, the Organization conducted internal and external investigations, terminated the procurement arrangement, and reduced the amount charged to the contract by approximately $2.2 million. Cause: Procurement oversight and vendor monitoring controls within the affected program location were not sufficiently designed and/or operating effectively to verify vendor representations, assess procurement risk indicators, validate procurement support documentation, and monitor compliance with procurement requirements on a timely basis. Effect: Improper procurement-related charges were incurred by the Organization. Questioned Costs: None. Recommendations: We recommend the Organization continue strengthening procurement oversight and compliance monitoring controls, particularly for high-risk and international procurements, including: • enhanced vendor due diligence procedures, • verification of critical procurement documentation, • strengthened review and approval controls over advance payments, • additional monitoring of vendor certifications and compliance representations, • escalation procedures for procurement irregularities, • and increased centralized oversight of significant procurement activities. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and has implemented corrective actions, including enhanced procurement oversight procedures, additional monitoring controls, and remediation activities within the affected country operations.