Audit 411811

2024-005 – LACK OF SUPPORT FOR PROCUREMENT – ALN 12.118 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2024-005 Federal Program: FAIN: NORTH DAKOTA ENVIRONMENTAL INFRASTRUCTURE (SECTION 594) - ARRA Unknown ALN: 12.118 Year(s): 2024 Federal Agency: U.S. Department of Defense Questioned Cost: Unknown Condition The City of Cando did not maintain support surrounding the selection process for the construction engineer for the 2022 Water and Improvements project. Therefore, we were unable to determine if the engineer selection was properly completed. In addition, the City of Cando did not have a procurement policy. Effect Without support for the selection of the construction engineer, the City of Cando is unable to demonstrate that contract was properly awarded. Cause The City of Cando does not have sufficient procedures in place to ensure procurement documentation is maintained to verify that the selection process was completed in accordance with NDCC. Criteria • N.D.C.C. §48-01.2-19 (selection process for construction management services) includes, but is not limited to, the following requirements: o The selection committee shall establish the content of the request for qualifications, which must include (but is not limited to); the identity of the governing body and a list of the members of the selection committee, description of the proposed public improvement, proposed budget limits of the public improvement, commencement and completion date of the proposed public improvement, and the description of the scope of services to be provided. • 2 CFR 200.318 states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." • Under 2 CFR 200.303(a), recipients and subrecipients must "establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Context The City of Cando entered into a contract for construction engineering services for the City’s 2022 Water & Sewer Improvements project with a contract value of $511,600. Repeat Finding No. Recommendation We recommend the City of Cando maintain support surrounding the selection process for engineering services. We also recommend that a procurement policy is established. City of Cando’s Response See the Corrective Action Plan.