Subject: Hennepin County’s 2023 Corrective Action Plan
Finding# 2023-012 Procurement
Program:
Congressional Directives (ALN 93.493)
Type of Finding:
Material Weakness in Internal Control over Compliance; Material Noncompliance Finding
Condition:
The county hospital does not have effective int...
Subject: Hennepin County’s 2023 Corrective Action Plan
Finding# 2023-012 Procurement
Program:
Congressional Directives (ALN 93.493)
Type of Finding:
Material Weakness in Internal Control over Compliance; Material Noncompliance Finding
Condition:
The county hospital does not have effective internal controls over the procurement
requirement of the Congressional Directives program, which resulted in two instances of noncompliance. During our testing we noted:
Small Purchases: In our sample of six small purchases we found the following exceptions for five of the selections:
• The county hospital purchased lab equipment with a total cost of $118,000 but did not seek more than a single quote when two distributors were available, which resulted in noncompliance with the procurement requirements. The price of the equipment is set by the manufacturer. The county hospital cited sole source as the procurement method but the circumstances cited by the county hospital , an established relationship with the vendor, did not meet one of the allowable criteria under the regulations. The county hospital was unable to provide support that it maintained records documenting the history of the procurement.
• The county hospital obtained architectural services with a total cost of $31,259 using noncompetitive negotiation but none of the criteria allowing for noncompetitive procurements were met, which resulted in noncompliance with the procurement requirements. The county hospital was unable to provide support that it maintained records documenting the history of the procurement, including the selection of the architect for this procurement or the initial selection.
• The county hospital obtained fluid management equipment with a total cost of $39,756 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization.
• The county hospital purchased infant care equipment with a total cost of $83,676 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization.
• The county hospital purchased imaging equipment with a total cost of $170,370 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization.
Formal Methods: In our sample of two procurements requiring formal methods we found the following exceptions:
• The county hospital purchased infant care equipment with a total cost of $345,923 by seeking quotes from two different vendors, but based on the size of the procurement the county hospital should have utilized one of the formal procurement methods such as sealed bids or competitive proposals. The county hospital later decided to use the pricing available through a Group Purchasing Organization but was unable to provide support that it maintained records documenting the history of the procurement.
• The county hospital selected ultrasound equipment with a total cost of $600,000 by seeking product demonstrations from three different vendors. The county hospital did not maintain records to demonstrate that the responses were the result of public solicitation. The county hospital was unable to provide documentation to support that it maintained records documenting the history of the procurement, including a cost/price analysis and decision to use a contract through a Group Purchasing Organization.
During 2023 the county hospital did not have written procurement policies that conformed to the requirements of the Uniform Guidance, including the requirement to maintain records of the history of the procurement. State law specifically exempts the county hospital from the State's own laws related to local government procurement, but this has not been replaced by local laws or policies and procedures specific to procurement.
Hennepin County’s Corrective Action Planned in Response to Finding:
Hennepin Healthcare System, Inc. (HHS) implemented procedures in its Peoplesoft system to document sole source or competitive pricing prior to vendor approval. The process will be reviewed with all new grants with the individuals involved in the grants. Additionally, Hennepin Healthcare System, Inc. implemented policies around federal procurement procedures, which was posted online to the policy communication and storage site for employees.
Hennepin County Employee Responsible for the CAP:
Mark Willmert
Planned Completion Date for CAP:
December 31, 2024