Corrective Action Plans

Condition: The School District's internal controls did not effectively identify the required formal solicitation. The School District did not utilize the appropriate competitive procurement methods and did not retain suspended or debarred verification documentation. Planned Corrective Action: The School District will ensure that the proper procurement methods are adhered to, prior to executing future contracts. This includes also reviewing to ensure that vendors are not suspended or debarred, prior to awarding the contract. To accomplish this, the School District will use their grant budget process as a control for identifying the population of applicable expenditures that will be subject to procurement compliance requirements for federal programs. Contact person responsible for corrective action: Kyle Jen, Chief Financial and Operations Officer Anticipated Completion Date: 6/30/2026

Condition: The School District's internal controls did not effectively identify all of the required components necessary in formal solicitation documents for food service/cost reimbursable contracts and when using a third party entity (e.g., consortium) and did not utilize competitive procurement methods. Planned Corrective Action: The School District is revising its food service procurement documents to explicitly include all required contract provisions under the Uniform Guidance. The School District is also incorporating recent interpretations and guidance from the U.S. Department of Agriculture (USDA), as communicated through MDE, particularly regarding cooperative purchasing and pricing structures for federal compliance. These actions are intended to strengthen the procurement controls to ensure all future food service contracts meet the compliance requirements of the Uniform Guidance and USDA regulations. Contact person responsible for corrective action: Danielle Jacobs, Director of Business Services Anticipated Completion Date: 8/15/2025

We acknowledge the audit finding and agree that, for the two vendors identified, documentation of suspension and debarment verification was not completed or retained in accordance with proper internal controls for our federal programs. This was an oversight in our procurement documentation process and not an intentional omission. Neither vendor had any exclusions based on the SAM.gov database record. Since becoming aware of this issue, the organization is in the midst of implementing the following corrective actions to strengthen compliance with suspension and debarment requirements: (1) Revised Procurement Procedures- We will update our written procurement policies and procedures to explicitly require and document suspension and debarment checks prior to the execution of any contract using federal funds. This includes checking the federal SAM.gov database or obtaining a signed certification from the vendor, as permitted. (2) Standardized Documentation- We will create a standardized checklist that must be completed and filed in the procurement record for each vendor before payment of federal funds. This form documents the date, verification method, and staff member responsible. (3) Staff Training- All staff involved in procurement and accounts payable will complete training on federal procurement requirements, including suspension and debarment verification. This training will be repeated annually and upon onboarding of new staff. (4) Internal Control Review- A secondary review step has been added. Before any payment of federal funds is processed, our finance team will verify that the suspension and debarment check is on file. This dual review adds an additional layer of assurance.

ESSER III – Grant Coding Condition: 2 CFR 200.327 of the Uniform Guidance as well as the Michigan Department of Education (MDE) Audit Manual requires proper financial reporting, which would include the Final Expenditure Report (FER) to be an accurate and true representations of the expenditures for each project. During the current year testing, while total expenditures by funding source code matched the Final Expenditure Report (FER), we found multiple areas where function and/or object codes in the trial balance did not match up with those reported in the FER. Corrective Action: The District understands the issue and has contracted with a third party to help ensure that all activity is properly classified prior to draws being made and prior to the FER being submitted. Contact Person Responsible for Corrective Action: Piper Bognar, Superintendent Completion Date: This situation will be corrected moving forward.

We agree with auditor's comments, and the following actions have or will be taken to ensure the procurement of goods and services for the nutrition services department follows all applicable steps according to Title 2, Code of Federal Regulations (2 CFR) sections 200.317 -200.327; Title 7, Code of Federal Regulations (7 CFR), parts 210 and 220; and all applicable state and local rules: 1. During the school year 2024/2025, changes were made to staff to allow for additional oversight. A Procurement Specialist reporting directly to the Director of Purchasing was added to staff in lieu of a Buyer that had previously reported to the Director of Nutrition Services. This move allowed for an additional step to ensure proper procurement is happening. 2. All purchasing methods, including Micropurchase, Simplified Acquisition, and Formal, will be followed in accordance with all applicable regulations, in line with RUSD's written procurement procedures. 3. Any noncompetitive procurement will only occur if the conditions outlined in applicable regulations are met and sufficient evidence and documentation is received and retained, including participating in performing due diligence to ascertain whether a single source document is accurate from any given vendor. 4. In addition documented annual training will take place for all staff involved in the procurement process. This procedure includes a review and annual update of procurement procedures, if applicable, and an acknowledgement of the nutrition services code of conduct in regards to purchasing. Please reach out to us with any questions.

Finding 2025-001: Procurement Finding: The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. Cause: The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Corrective Actions Taken or Planned: The Business Office will review all applicable state and local laws and federal regulations and enhance the College’s procurement policy. As part of the review and enhancement, the policy on the website will be updated, and additional training will be held with PI’s currently with grants and those receiving grants in the future. A more robust procurement process will be implemented which will involve multiple departments. By October 31, 2025, the Business Office will communicate with all current PI’s an interim policy including the need for competitive bids, vendor screening, and more detailed descriptions. Contact Person Responsible: Doug MacKay, Controller Lake Forest College Completion Date: January 31, 2026

2025-003 – Lack of Written Findings and Questioned Costs. Auditor Description of Condition and Effect. Although the Village has processes in place to cover these areas, and drafts of formal written policies covering the above items that address all of the area required by the Uniform Guidance have been developed, these policies have not yet been formally approved and adopted by the Village. As a result of this condition, the Village did not fully comply with the Uniform Guidance applicable to the above noted grants. Auditor Recommendation. We recommend that the Village review and approve the draft policies as soon as practical, but no later than the end of fiscal year 2026. Corrective Action. The Village has prepared a policies and procedures manual for the federal grant programs, which will be approved by the Village Council before the end of fiscal year 2026. Responsible Person. Ross Wilson, Village Clerk/Treasurer. Anticipated Completion Date: February 2026.

Management will update written procurement policy that conforms with the Uniform Guidance and implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Our HUD program currently checks certificates of occupancy through the City of Rochester and Towns to ensure that the properties do not have violations. Moving forward, we will also check new landlords and or contractors through the central contractor registry to be following federal requirements regarding suspension and debarment.

Corrective Action Plan – Finding 2024-002 – Reporting Town of Van Buren – CFDA 21.027 – Coronavirus State and Local Fiscal Recovery Funds Audit Period: Fiscal Year Ended June 30, 2024 Views of Responsible Officials: The Town of Van Buren acknowledges the auditor’s finding regarding the lack of documentation for quarterly performance reports required under 2 CFR 200.329. However, it is important to clarify that, during the grant period, the Town communicated with Efficiency Maine Trust regarding these expectations. Efficiency Maine Trust, as the pass-through entity, confirmed that such federal performance reporting was not required to be submitted back to them by the Town as part of their grant process. Additionally, upon review of the contract provided to the Town, it was noted that the Town was inaccurately listed as a "co-recipient" of the SLFRF (State and Local Fiscal Recovery Funds). After multiple discussions with representatives from the U.S. Department of the Treasury – SLFRF team, it was confirmed that this designation was erroneous. The Town of Van Buren was not a co-recipient but rather a beneficiary of the ARPA funds administered by Efficiency Maine Trust. As a beneficiary, the Town was not responsible for direct federal reporting to Treasury, and this misclassification contributed to the confusion regarding reporting responsibilities. Corrective Action Plan: To prevent similar issues in the future and ensure full compliance with all federal award terms and conditions, the Town will implement the following measures: 1. Clarification of Role: All future grant agreements will be reviewed to confirm whether the Town is operating as a recipient, subrecipient, or beneficiary, and appropriate obligations will be documented. 2. Federal Reporting Procedures: For grants that include federal reporting obligations, the Town will establish an internal checklist outlining the specific reporting requirements and due dates upon award acceptance. 3. Training and Compliance: Staff responsible for grant administration will receive annual training on 2 CFR Part 200 requirements, including those relating to reporting and roles under federal awards. 4. Documentation and Recordkeeping: All communications with pass-through entities and federal agencies relating to grant requirements will be documented and retained as part of the grant file. By implementing these internal control enhancements, the Town aims to prevent future findings and ensure clarity in grant compliance responsibilities.

Corrective Action Plan – Finding 2024-002 – Reporting Town of Van Buren – CFDA 21.027 – Coronavirus State and Local Fiscal Recovery Funds Audit Period: Fiscal Year Ended June 30, 2024 Views of Responsible Officials: The Town of Van Buren acknowledges the auditor’s finding regarding the lack of documentation for quarterly performance reports required under 2 CFR 200.329. However, it is important to clarify that, during the grant period, the Town communicated with Efficiency Maine Trust regarding these expectations. Efficiency Maine Trust, as the pass-through entity, confirmed that such federal performance reporting was not required to be submitted back to them by the Town as part of their grant process. Additionally, upon review of the contract provided to the Town, it was noted that the Town was inaccurately listed as a "co-recipient" of the SLFRF (State and Local Fiscal Recovery Funds). After multiple discussions with representatives from the U.S. Department of the Treasury – SLFRF team, it was confirmed that this designation was erroneous. The Town of Van Buren was not a co-recipient but rather a beneficiary of the ARPA funds administered by Efficiency Maine Trust. As a beneficiary, the Town was not responsible for direct federal reporting to Treasury, and this misclassification contributed to the confusion regarding reporting responsibilities. Corrective Action Plan: To prevent similar issues in the future and ensure full compliance with all federal award terms and conditions, the Town will implement the following measures: 1. Clarification of Role: All future grant agreements will be reviewed to confirm whether the Town is operating as a recipient, subrecipient, or beneficiary, and appropriate obligations will be documented. 2. Federal Reporting Procedures: For grants that include federal reporting obligations, the Town will establish an internal checklist outlining the specific reporting requirements and due dates upon award acceptance. 3. Training and Compliance: Staff responsible for grant administration will receive annual training on 2 CFR Part 200 requirements, including those relating to reporting and roles under federal awards. 4. Documentation and Recordkeeping: All communications with pass-through entities and federal agencies relating to grant requirements will be documented and retained as part of the grant file. By implementing these internal control enhancements, the Town aims to prevent future findings and ensure clarity in grant compliance responsibilities.

Finding #SA2024-004 Compliance with Procurement Requirements Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: A-00216-01 • Name(s) of the contact person: Melissa Munoz, Interim Assistant Finance Director • Corrective Action Plan: Staff recognize that importance of following the current purchasing policy and retaining the proper records. Finance staff are working with the departments to ensure the documentation is being attached to all purchases and retained electronically. Critical positions that were vacant within the department have been filled, which has helped alleviate some of these issues. The City is in the development phase of the purchasing policy and is actively working with a consultant on the policy. This policy will be partially implemented in Fiscal Year 2026. • Anticipated Completion Date: 6/30/2026

In our audit findings there was noted $555,000 in bids awarded were not properly advertised. There was an advertisement for a pre-bid meeting for the projects. The projects were the removal of blockages on Rough River with money received from NRCS for that purpose. The intention was for the ad to say the projects were open and that bids were to be received by a certain date. The ad was improperly ran but not intentionally. We will double check all items going to bid. If an item is sent by any department it will be double checked at the Judge Executive's office. If it originates here it will be double checked by the treasurer's office.

CHA currently has a general procurement plan in place to guide its purchasing and contracting activities. However, to ensure full compliance with federal regulations, CHA will be updating its existing procurement policy to align with the Uniform Guidance requirements. This update will formalize procedures related to vendor selection, competitive bidding, and documentation to maintain transparency, accountability, and consistency across all procurement processes.

NONCOMPLIANCE WITH PROCUREMENT AND SUSPENSION AND DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS, ASSISTANCE LISTING No. 21.027, DIRECT ALLOCATION, GRANT No. AM-23-0295, YEAR ENDED JUNE 30, 2024 Name of contact person: Mayor and City Council Corrective Action: The city procurement policy will be updated to include references to all federal procurement standards and requirements. All directors and relevant individuals will be trained on the updated policies. Proposed Completion Date: December 31, 2025

Management accepts the recommendation and will ensure compliance with the procurement standards in 2 CFR §§ 200.318–200.327 for all federally funded purchases by either conducting a competitive bidding process or documenting and obtaining approval for a sole source procurement as allowed under 2CFR §200.320(c)

The Village will ensure that proposals be submitted for architectural and engineering professional services, and that documentation will be maintained for the proposals obtained as well as the Village’s determination of the most qualified vendor.

FINDING 2024-001 Finding Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Contact Person Responsible for Corrective Action: K. Rochelle Seneff Contact Phone Number and Email Address: (812)649-2242 ct@rockportin.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: Procurement As Clerk-Treasurer, I will educate all parties involved on the requirements that were found to be unfulfilled through this Federal Audit. For the duration of any federally funded projects, a discussion will be held during a public board meeting, detailing the rationale behind the City's decision to work with the vendors selected for small purchases and simplified acquisitions. This will be done to verify that all vendors, even when bids are not required, were retained through appropriate methods. A procurement policy that outlines the City's procedures and conforms to applicable federal, state, and local laws will be developed and taken to the Common Council for approval. Suspension and Debarment All vendors who participate in the project will receive a Suspension and Debarment Certificate provided by the City that must be signed by a representative of the vendor and filed with the vendor's contract or in the project folder. Anticipated Completion Date: December 23, 2025

Condition and Context: During our audit of the Public Safety Partnership and Community Policing Grant (CFDA 16.710), we were unable to obtain a copy of the required SF-425 (Federal Financial Report) submitted by the County. Recommendation: We recommend that the County implement procedures to ensure that copies of all required federal reports are retained in accordance with federal record retention requirements and made available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and will establish procedures to ensure that all required federal reports are retained and readily available for future monitoring and audits.

VIEWS OF RESPONSIBLE OFFICIALS Management agrees with the audit finding. The Puerto Rico Department of Education (PRDE) acknowledges that the requested procurement documentation was not fully available at the time of the auditors’ review. However, management made every effort to gather and reconstruct the information for all the selected transactions, and the complete documentation will be available. Furthermore, the PRDE is taking actions to improve the accessibility and organization of procurement files to ensure that all documentation is readily available for review in a timely manner. Internal controls over document retention and filing procedures are being reinforced to prevent recurrence of this situation. It is important to note that the procurement processes followed by the PRDE comply with the applicable requirements established under the Code of Federal Regulations (2 CFR Part 200 – Uniform Guidance). Management remains committed to strengthening its internal controls, ensuring full compliance with federal and state requirements, and maintaining complete and timely documentation to support all procurement activities. IMPLEMENTATION DATE Current Fiscal Year. RESPONSIBLE PERSON María de los A. Lizardi Valdés Office of Federal Affairs Director Edgar Delgado Serrano Office of Federal Affairs Associate Director

Finding Number 2024-002: Uniform Guidance Compliant Procurement Policy (Significant Deficiency, Instance of Noncompliance – Procurement and Suspension and Debarment) Program: Continuum of Care Program Assistance Listing Number: 14.267 Response and Corrective Action Plan: Management agrees with the finding that the agency did not have policies for Procurement or Suspension and Debarment. The agency intends to adopt a procurement policy and procedures that meets the general procurement standards in 2 CFR section 200.318(a) and the State of California. The agency is also creating policies and procedures to ensure vendors are not suspended or debarred from work on federally funded projects. Anticipated Completion Date: by October 31, 2025 Responsible Person: Wanda Lassiter, Controller

Outdoor Recreation Acquisition, Development, and Planning Assistance Listing No. 15.916 Recommendation: City personnel should familiarize themselves with the documentation requirements of the CFR related to procurement. City policies and procedures should be modified to help ensure documentation is maintained on all compliance requirements. The written policies should be expanded to clearly address all five procurement methods allowed under Uniform Guidance. The city should also adopt a written conflict of interest policy. We also recommend that the City review and update policies and procedures to help ensure that all federal grants with covered transactions have vendors reviewed for suspension and debarment status prior to entering into the transaction and that documentation of the status is maintained with the procurement history of each transaction that it is required for. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The City will adopt a formal conflict of interest policy. The City contracted for bidding and construction management, we will do better in familiarizing ourselves with policies and procedures for federal grants. Name(s) of the contact person(s) responsible for corrective action: Amanda L. Bartz, Clerk/Treasurer 715-453-4040, abartz@tomahawkwi.gov Planned completion date for corrective action plan: 12/31/2026

We have changed the process so all contracts are collected at the SAU central office to ensure completeness.

Finding No.: 2024-002 For procurements using federal funds, GMHA is permitted to use a Simplified Acquisition Threshold up to the federal limit, which is currently set at $250,000 or $7.5 million for commercial goods. The Code of Federal Regulations (CFR) permits a non-federal entity to use a SAT up to the federal limits, without having to follow threshold limitations imposed by state or local law. The set of criteria employed by the Ernst & Young is incomplete, and fails to give proper deference to the legal opinions of licensed attorneys. In determining to follow the federal SAT, GMHA considered the guidance of a memorandum from the Office of the Attorney General indicating substantively the same legal analysis as follows. See Memorandum from Deputy Attorney General, Solicitor Division to Chief Deputy Attorney General, Federal Simplified Acquisition Threshold and Micro-purchase Threshold, Ref: AG 22-0410 (Sept. 14, 2022). When presented with this memorandum, the auditors refused to accept its instructions stating: “We were unable to follow why the Attorney General considered the definition of a non-Federal entity in applying the requirements of §§ 200.318 through 200.327. In reviewing the aforementioned sections, there was no reference to non-Federal entities.” This statement evidences the auditors’ fundamental misunderstanding of the law. The auditors based their analysis on an amended version of the CFR, which became effective only January 2025. According the definitions in the Code of Federal Regulations in effect during the relevant 2023-2024 audit period, Guam is both a “State” and a “Non-Federal entity.” Guam Memorial Hospital Authority also falls within the definition of “Hospital” and “subrecipient.” As relevant here, 2 CFR 200.1 states: State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any agency or instrumentality thereof exclusive of local governments. Non-Federal entity (NFE) means a State, local government, Indian Tribe, Institution of Higher Education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient. Hospital means a facility licensed as a hospital under the law of any State or a facility operated as a hospital by the United States, a State, or a subdivision of a State. Subrecipient means an entity, usually but not limited to non-Federal entities, that receives a subaward from a pass-through entity to carry out part of a Federal award; but does not include an individual that is a beneficiary of such award. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency. As a Non-Federal entity, GMHA also is required to abide by the definition of “simplified acquisition threshold.” According to 2 CFR 200.1: Simplified acquisition threshold means the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods (see § 200.320). Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items at or below the simplified acquisition threshold. The simplified acquisition threshold for procurement activities administered under Federal awards is set by the FAR at 48 CFR part 2, subpart 2.1. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. However, in no circumstances can this threshold exceed the dollar value established in the FAR (48 CFR part 2, subpart 2.1) for the simplified acquisition threshold. Recipients should determine if local government laws on purchasing apply. (emphasis added). This definition applies to purchasing by all non-federal entities—including GMHA. Title 2 CFR 200.317 provides: When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with §§ 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by § 200.327. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§ 200.318 through 200.327. (emphasis added). As a subrecipient of Guam, GMHA would also be required to follow 2 CFR 200.320(a)(2)(ii), which reiterates that: “The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR.” The CFR treats the requirement that a state or local entity follow (1) its own “policies and procedures” and (2) its own small purchase “threshold” as separate requirements. The CFR applicable to most federal funds—including ARPA—only requires the hospital to follow the local “policies and procedures.” 2 CFR 200.317. The CFR requires GMHA—as a non-federal entity—to separately make a determination of an appropriate small purchase threshold based on a number of factors specific to GMHA, provided it does not exceed the federal SAT. 2 CFR 200.1; 2 CFR 200.320(a)(2)(ii). Procurement method selection is essentially a two-step process: (1) Make a substantive determination about the monetary cost of a proposed procurement and determine whether it is below or above an applicable threshold. Which side of a threshold a procurement falls on (and some other factors) will determine the method—sole source, RFQ, RFP, IFB—that will be used. (2) After the method is determined, an entity is then pointed to specific policies and procedures applicable to that type of procurement. The relevant factors for determining a recipient-specific SAT include an entity’s “internal controls, an evaluation of risk, and its documented procurement procedures.” 2 CFR 200.1; 2 CFR 200.320(a)(2)(ii). For a portion of the relevant procurement period, the CFR also stated: “When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations.” This section was amended effective approximately October 1, 2024. Now, it no longer requires the recipient or sub-recipient to ascertain whether this entity-specific threshold is “authorized or not prohibited under State, local, or tribal laws or regulations.” But even under the prior version, the entity only needed to consider the authorization or lack of prohibition under state or local law if it was adopting a “lower simplified acquisition threshold” than the federal SAT. 2 CFR 200.320(a)(2)(ii) (effective until Sept. 30, 2024) (emphasis added). GMHA determined that the federal SAT levels were appropriate, and—in any event—local law does not prohibit GMHA from adopting the federal SAT when using federal funds. GMHA’s use of the federal SAT for procurements using federal funds has been a decades long practice of our materials management, so a suggestion that it is unauthorized would be a finding quite inconsistent with GMHA’s internal controls. Highlighting the distinctness or difference between the “policies and procedures” and “threshold” requirements, is the fact that “simplified acquisition procedures” and “simplified acquisition threshold” are defined separately. See 48 CFR 2.101. And the two requirements are discussed separately in the section of the CFR discussing “informal procurement methods.” 2 CFR 200.320. Additionally, the small purchase “procedures” applicable to federal agencies, FAR Part 13, are contemplated in an entire section that is separate from the rules about the controlling SAT or other threshold. Finally, in other portions of the CFR—such as federal highway funds—the government has specifically instructed state entities to follow both the state or local “procedures” and the state or local “threshold. 23 CFR 172.7(a)(2). When the CFR wants the state government to follow state SATs, it will specifically do so. It has not put that instruction in 2 CFR 200.320. Guam law also specifically directs all persons within the Government of Guam to comply with the applicable federal law and regulations that are in conflict with or are not reflected in the Procurement Code. 5 GCA § 5501. In other words: Guam law requires GMHA to follow the federal rules. Specifically, here, the federal requirement that GMHA determine an appropriate SAT is not reflected in the local laws. GMHA, thus, must comply with the federal requirement that GMHA make a recipient-specific determination of an appropriate SAT. Even the Guam Legislature understands that the law operates in the same manner as the Attorney General’s memorandum. During a legislative hearing on June 25, 2024, Senator Sabina Perez recited the same analysis, recognizing that Guam agencies can use the federal simplified acquisition threshold when expending federal funds. See Guam Legislature, Public Hearing Bill No. 134-39 (COR) at *1:46:00-1:46:31 (June 25, 2025), available at https://www.youtube.com/live/ciXo1EEXJZI. In deciding the federal SAT applies, GMHA was also guided by precedent and guidance issued to other government entities. In 2015, when the Guam Department of Education was under a federal third-party fiduciary, it was still employing the lower local small purchase threshold. GDOE was instructed that this was inappropriate because federal law supersedes Guam law on the SAT. The federal fiduciary—consistent with USDOE instructions—required GDOE to follow the federal SAT. See Letter from John E. Hampford, Alvarez & Marsal, to Jon J.P. Fernandez, Superintendent of Guam Department of Education (Dec. 30, 2015); see also Letter from Jon J.P. Fernandez, Superintendent of Guam Department of Education to Attorney General Leevin T. Camacho and Public Auditor Benjamin J.F. Cruz (July 20, 2020). Thus, other Guam agencies have been instructed by the federal government to use the federal SAT. This is also bolstered by the case law. The Guam Supreme Court has ruled that the CARES Act funding was a federal appropriation for a specific purpose, “outside the control of the Guam Legislature.” See Story-Bernardo v. Gov’t of Guam, 2023 Guam 27 ¶ 46. ARPA funding is substantively similar to CARES Act funds, simply with additional permitted uses. Local law cannot dictate how these federal funds are spent. GMHA also considered case law from Texas federal court where a self-styled “whistleblower” sued the City of Burleson, Texas for allegedly spending in excess of their own SAT. Under Burleson’s own regulations, the local SAT was $10,000, see Rule 5.1, City Council Policy 36, City of Burleson Purchasing Policy (adopted July 2, 2018, revised Oct. 16, 2023). However, the lawsuit alleged that the city was spending in excess of this $10,000 SAT. The federal judge in that court stated: “In addition, the regulations show that “formal purchasing methods are not required” for purchases that are less than the “simplified acquisition threshold.” 2 C.F.R. § 200.1(2021). The simplified acquisition threshold is set at $250,000. 48 C.F.R. § 2.101(2021). However, Mr. Eder's complaint incorrectly alleges “upon information and belief” that the simplified acquisition threshold is $10,000. Doc. No. 37 at 12, ¶27(b). Mr. Eder's apparent misreading of the threshold for formal purchasing is central to his claim under the FCA, and it appears this concern may have arisen from simply misreading the rules, rather than any reasonable dispute under the law.” Eder v. City of Burleson, Civil No. 3:23-CV-00948-K, 2024 WL 4771408 at *5 (N.D. Tex., Nov. 13, 2024). Thus, the federal court recognized that the lower local SAT did not control. The only relevant SAT was the federal one. GMHA’s determination to use the maximum SAT allowed by the federal CFR is thus appropriate. The federal CFR rule requiring a recipient-specific SAT determination supersedes the local thresholds. If the procurement is under the federally-allowed $250,000 SAT, GMHA must still follow the local small purchase procedures. See in part 5 GCA § 5213. The auditors’ view of Guam law appears to be a clear outlier, inconsistent with a plain reading of both federal and Guam law, the opinions of both federal and local courts, the memorandum from the Attorney General’s Office, the understanding of the Guam Legislature, and the reasoned opinion of Hospital Legal Counsel. The auditors’ finding is also inconsistent with decades of GMHA procurement practice. The questioned costs based on this finding should be removed. The auditors’ (1) inability to even reference the relevant definitions from the CFR in effect at the time of the relevant audit period and (2) unwillingness to accept the legal opinions from licensed attorneys, should be a finding on the auditors’ peer review.

Personnel Responsible for Corrective Action: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City, Kansas Anticipated Completion Date: July 1, 2025 Views of Responsible Officials and Planned Corrective Action: Unfortunately, due to the late completion of the 2023 Single Audit and the hiring of the grants position in early 2025, many previous findings and contracts were not yet corrected in 2024. In the event of this finding, there were two vendors which had minimal expenditures in 2024 (under $5,000 which does not require competitive bids but in aggregate they exceeded that amount). The procurement department had not been consulted, and debarment checks were not completed when the work began in 2023, and final payments were issued in 2024. In the Grants Manual and training departments have been instructed that these procedures must be complied with for all grants.

The County is aware that its policy on procurement was not followed in this situation and has taken steps to correct the situation for future purchases related to this program.