Audit 411883

2025-002: Procurement and Suspension and Debarment (Significant Deficiency Over Internal Control) Program: Coronavirus State and Local Fiscal Recovery Funds-American Rescue Plan Act (ARP) ALN 21.027; Passed through Oregon Department of Administrative Services; grant award numbers 22-072N and 33500. Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). Condition: The Organization did not appropriately monitor expenditures for the vendor tested to trigger verification of the vendor status of suspension or debarment prior to the expenditures reaching the $25,000 covered transaction threshold. Additionally, the Organization's procurement policy does not fully comply with federal procurement standards outlined in the Uniform Guidance. Specifically, the policy lacks required elements such as documented competitive procurement thresholds, cost or price analysis requirements, and provisions addressing conflicts of interest and contract oversight. Cause: The noncompliance was caused by the absence of documentation to evidence that suspension and debarment checks had been completed prior to contracting or issuing subawards and lack of formal monitoring process to ensure policies remain current and compliant with Uniform Guidance requirements. Effect: The absence of maintaining a procurement policy that aligns with federal requirements increases the risk of noncompliant purchasing practices, which could lead to questioned costs, disallowed expenditures, and potential repayment of federal funds. Questioned Costs: No questioned costs were identified. Recommendation: We recommend the Organization update the language in their procurement policy to fully align with federal procurement requirements as outlined in the Uniform Guidance and to reflect current requirements surrounding covered transactions and suspension and debarment requirements. Additionally, we recommend they strengthen their processes and internal controls to ensure appropriate review of vendors periodically to ensure compliance with procurement, suspension and debarment requirements. View of Responsible Officials and Planned Corrective Action: The Organization agrees with the finding outlined and is working to update their procurement policy, and implement additional vendor review procedures to strengthen internal controls necessary to ensure compliance requirements are met.