Audit 407040

2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR Part 200. Effective on December 26, 2014, 2 CFR §200.320 outlined the methods of procurement to be followed by state subrecipients non-Federal entities when expending certain types of Federal funds, including those received through Grant Agreements. However, 2 CFR §200.110(a), created a "grace period" for compliance with 2 CFR §200.320, by permitting non-Federal entities to comply with previously issued Office of Management and Budget procurement guidance for all fiscal years beginning prior to December 26, 2017. Ohio Rev. Code §§ 3313.843 and 3313.845 allow traditional schools to contract with Educational Service Centers (ESCs) to provide services as outlined in the agreement between the two parties. Ohio Rev. Code §3313.843(C) requires these agreements to be filed with the Ohio Department of Education and Workforce (DEW) by the first day of July of the school year for which the agreement is in effect. During fiscal year 2024, the District contracted with Wood County Educational Service Center (ESC) to provide purchased services. These services included expenditures of $175,808, which were paid for out of the Special Education Cluster Grants and subject to the Federal procurement laws. Under 2 CFR §200.320 the District should have competitively bid the services needed or obtained price quotes from qualified sources. Due to a lack of controls over the procurement process related to Federal contracts, these services were not competitively bid and price quotes were not obtained. In January 2020, DEW published a form that allows schools to request DEW authorize a noncompetitive proposal for their ESC Services. This form is available on DEW's website and should be completed and maintained by schools moving forward. The District should develop and implement control and procedures to verify that established procurement procedures are followed when entering into contracts using Federal monies. The DEW form that allows schools to request DEW authorize a noncompetitive proposal for their ESC Services should be utilized for any ESC contract in the future. Failure to follow proper procurement procedures could result in contracts awarded to entities which do not meet all the needs of the District or have a cost significantly higher than their competitors, as well as a loss in future federal funding and possible questioned costs in future audits.