The City of Tracy, California respectfully submits the following corrective action plan for the reported findings for the fiscal year ended June 30, 2023.
The findings are numbered consistently with numbers assigned in the June 30, 2023 Single Audit Report.
Finding 2023-001 Procurement Policy Crit...
The City of Tracy, California respectfully submits the following corrective action plan for the reported findings for the fiscal year ended June 30, 2023.
The findings are numbered consistently with numbers assigned in the June 30, 2023 Single Audit Report.
Finding 2023-001 Procurement Policy 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 sections 200.318 through 200.326. 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.
A non-federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements.
2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319.
3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $3,500 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)).
4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f).
Finding 2023-001 Procurement Policy (Continued) Criteria (Continued):
5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)).
6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section
200.326. These provisions are described in Appendix II to 2 CFR part 200, “Contract Provisions for Non- Federal Entity Contracts Under Federal Awards.”
Non-federal entities had a grace period of two full fiscal years after the effective date of the Uniform Guidance before they had to comply with the procurement requirements of 2 CFR section 200. For a non-federal entity with a fiscal year-end of June 30, its effective date for the procurement requirements was July 1, 2017. However, during this grace period, non-federal entities were required to clearly document whether they decided to comply with the previous version of the applicable procurement standards or the new standards contained in the Uniform Guidance.
Condition:
The City has not updated its purchasing policies and procedures to bring it into compliance with the requirements of Uniform Guidance. The City has also not formally documented whether it has decided to extend its applicable date of compliance with 2 CFR part 200 to be effective beginning July 1, 2018.
Context:
See condition above for context of the finding.
Cause:
The City has not evaluated its existing procurement policies for compliance with the requirements of the Uniform Guidance.
Effect:
The City is not in compliance with the procurement policy provisions of 2 CFR part 200 and the Uniform Guidance. Not updating the City’s procurement policy could lead to future findings and questioned costs related to federal awards. The current audit did not identify noncompliance with direct and material compliance requirements of the major federal award program.
Identification as a Repeat Finding:
Yes. 2022-001.
Recommendation:
The City should evaluate and update existing purchasing policies and procedures in order to bring the City into compliance with the procurement policy requirements of 2 CFR part 200 and the Uniform Guidance. The updated policy should include, among other things:
Finding 2023-001 Procurement Policy (Continued)
Recommendation (Continued):
1. Thresholds and appropriate approval procedures for allowable federal procurement methods.
2. Written standards for how conflicts of interest involving employees engaged to select, award, and administer contracts will be governed.
3. How to ensure that contracts and awards are made only to responsible and eligible contractors and how oversight of contractor performance will be monitored.
4. How records will be maintained in order to document the history of federal procurements.
Corrective Action Plan: The City is still in the process of working with an outside firm on a review of procurement and purchasing policies. The consultation includes compliance review of this standard.
Anticipated Completion date: July 1, 2023
Name of Contact Person: Sara Cowell, Finance Director