2023-002 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing Number: 21.027
Federal Grantor: U.S. Department of Treasury
Award No. and Year: 2021
Compliance Requirements: Procurement and Suspension and Debarment
Type of Finding: Significant Defici...
2023-002 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing Number: 21.027
Federal Grantor: U.S. Department of Treasury
Award No. and Year: 2021
Compliance Requirements: Procurement and Suspension and Debarment
Type of Finding: Significant Deficiency in Internal Control Over Compliance and Instance of Noncompliance
Criteria:
2 CFR section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Title 2 CFR Section 200.214 of the Uniform Guidance states that the County must comply with 2 CFR part 180, which implements Executive Orders 12549 and 12689. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.
Per 2 CFR Section 180.300, 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 section 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 https://www.sam.gov/SAM/, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity.
2 CFR section Appendix II to Part 200, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards states that in addition to other provisions required by the Federal agency or non- Federal entity, all contracts made by the non-Federal entity under the Federal award must contain certain provisions, as applicable.
Condition:
During our testing of the Orange County Public Works (OCPW), Orange County Community Resources (OCCR) and the Social Services Agency’s (SSA) provisions for procurement requirements under the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, we noted the following instances where there was no evidence that the OCPW, OCCR or SSA departments verified the entity was not suspended or debarred or otherwise excluded from participating in the transaction, prior to entering the contract, in accordance with County policy:
• Four (4) of four (4) contracts through the OCPW department selected for testing.
• Three (3) of eight (8) contracts through the OCCR department selected for testing.
• One (1) of one (1) contract through the SSA department selected for testing.
The following information was not provided at the time of the contract award for four (4) of four (4) contracts selected for testing within the OCPW department, one (1) of one (1) contract selected within SSA, and five (5) of eight (8) contracts selected for testing within the OCCR department:
• Byrd Anti-Lobbying Amendment
• Clean Air Act and Federal Pollution Control Act provision
The following information was not provided at the time of the contract award for two (2) of four (4) contracts selected for testing within the OCPW department and one (1) of one (1) contract selected for testing within SSA:
• Contract Work Hours and Safety Standards Act provision
The following information was not provided at the time of the contract award for one (1) of one contract selected for testing within SSA:
• Davis-Bacon Act provision
• Equal Employment Opportunity provision
Cause:
The OCPW, OCCR and SSA departments did not follow their policy to verify the information described in the condition prior to entering the transactions and did not consistently ensure that the applicable required provisions were communicated to contractors.
Effect:
The County’s control and compliance were not consistently followed, which required verification of suspension or debarment prior to entering the contract. EB reviewed the vendor’s status on SAM.gov and verified the vendors selected for testing were not suspended and debarred at the date of the audit. Additionally, the OCPW, SSA and OCCR departments did not identify the applicable required provisions of the contract to the contractors at the time of the contract award.
Questioned Costs:
No questioned costs were identified as a result of our procedures.
Context/Sampling:
A nonstatistical sample of four (4) out of twelve (12) procurement contracts were sampled from OCPW and eight (8) out of nineteen (19) procurement contracts were sampled from OCCR for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds. The entire population of 1 (contract) was tested from SSA for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds.
Repeat Finding from Prior Years:
Yes, Finding 2022-003 and 2022-009.
Recommendation:
We recommend that the OCPW, OCCR and SSA departments adhere to their procurement procedures requiring the suspension or debarment verification is performed prior to entering into a covered transaction. Additionally, we recommend the OCPW, SSA and OCCR departments modify and strengthen its current policies and procedures to ensure that all applicable required provisions are communicated to contractors in accordance with 2 CFR Appendix II to Part 200.
Management Response and Corrective Action:
Orange County Community Resources:
1. Person Responsible: Isela Martinez, OCCR Procurement Manager
2. Corrective Action Plan:
The contracts in question were originally funded by the County General Fund. OCCR Procurement team was not aware that the funding source changed to Coronavirus funds during the contract period. OCCR will update internal procedures to ensure procurement is notified when the contract funding source changes to federal funding, triggering the additional federal provisions mentioned above.
3. Anticipated Implementation Date: September 30, 2024
Orange County Public Works:
1. Person Responsible: Joseph Sly, OCPW Procurement Manager
2. Corrective Action Plan:
The contracts in question were originally funded by the County. OCPW Procurement was not aware that the funding source changed during the contract period. OCPW will update internal procedures to ensure funding agency provisions are met.
3. Anticipated Implementation Date: September 30, 2024
Social Services Agency:
1. Person Responsible: Alin Buna, SSA Procurement Manager
2. Corrective Action Plan:
SSA Procurement did not execute the specified contracts. When executing the specified contracts, OCPW, on behalf of SSA, was not aware of federal funding being included. SSA will ensure that agencies executing contracts on behalf of SSA will be notified if federal funding is included for specific projects to ensure proper procedures have been followed when the contracts have been executed.
3. Anticipated Implementation Date: September 30, 2024