Finding No.: 2022-017 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $770,427 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Gerladine Cruz, Procurement Services Director ...
Finding No.: 2022-017 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $770,427 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Gerladine Cruz, Procurement Services Director / Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1 (G. Cruz): The Procurement Services Division agrees with this finding. The Division will revise CNMI’s procurement regulations to ensure alignment with federal procurement standards as outlined in 2 CFR Part 200, particularly the small purchase threshold requirements and competitive procurement procedures. Proposed Completion Date: Policy updates drafted by December 31, 2025 and adopted by March 31, 2026. Condition 2 (G. Cruz): The Procurement Services Division agrees with this finding. To address the lack of consistent verification of vendor eligibility under federal debarment and suspension requirements (2 CFR §180.300), a policy will be implemented requiring all agencies to submit debarment verification documentation at the time of vendor selection. Acceptable documentation may include (1) a printout or screenshot from the SAM.gov Exclusions database, confirming that the vendor is not debarred or suspended, (2) a signed certification from the vendor attesting to their eligibility, or (3) a signed contract clause or provision that explicitly states the vendor is not excluded from federal transactions and complies with applicable debarment regulations. Procurement procedures and standard forms will be revised to include debarment verification as a mandatory step prior to any purchase approval involving federal funds. Procurement Services will ensure that debarment verification documents are maintained in the official procurement file for each transaction involving federal funds. Proposed Completion Date: June 30, 2026 Condition 3(a) (E. Cabrera): The Office of Grant Management (OGM) respectfully disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY22 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, OGM maintain all relevant supporting documentation and is prepared to provide it upon request from the Grantor. For Project Code 2701210042, a purchase order (PO 22202856) totaling $48,000 was executed in accordance with procurement requirements, supported by the solicitation and evaluation of three independent quotations to ensure competitiveness and compliance with applicable procurement regulations. For Project Code 1901210064, a purchase order (PO 22216403) totaling $22,881 was processed following the initial Invitation to Bid (ITB21-OGM/RDCCA-046). After the originally awarded contractor defaulted, procurement guidance was sought, resulting in direction to obtain and evaluate three independent quotations before issuing a purchase order. This approach ensured continued adherence to competitive procurement standards while addressing the unforeseen contractor default and maintaining project continuity. Proposed Completion Date: Ongoing Condition 3(b) (N. Karakaya): Capital Improvement Program agrees with this finding. CIP acknowledges the need to maintain sufficient and appropriate audit evidence demonstrating compliance with federal procurement standards. We recognize that our current recordkeeping for bid submissions and ITB publication can be improved to ensure that auditors can readily verify compliance. Corrective Actions: 1. Standardize Procurement Documentation Checklist • Develop a Bid Documentation Checklist that must be completed and signed for each procurement action. • Checklist will confirm inclusion of: - Copy of ITB and required documents - Copy of any addendums issued by Procurement Services - Proof of ITB publication (e.g., newspaper ad tear sheets, online postings with date/time stamps, screenshots). - Bid opening records (bid tabulation sheet, attendance log, time-stamped submissions). - Copies of all bids received, with date/time of receipt. - Documentation of evaluation committee scoring and award recommendation. 2. Centralized Digital Repository • Establish a secure electronic folder in the organization’s shared drive or document management system for every procurement project. • Require that all supporting documents—bid advertisements, bid submissions, evaluation forms, and award notifications—be uploaded within five business days after bid opening. 3. Policy and Procedure Update • Revise the Procurement Manual to incorporate the checklist and digital repository requirements. • Reference 2 CFR 200.508(d) explicitly, ensuring staff understand the federal mandate for “sufficient and appropriate audit evidence.” 4. Staff Training and Awareness • Conduct a mandatory training session for all staff involved in procurement on proper documentation and the use of the checklist and repository. • Provide annual refresher training to maintain compliance 5. Monitoring & Verification • The CIP staff will conduct a semi-annual review of procurement files to verify that all required evidence is consistently documented and readily accessible for future audits. Proposed Completion Date: December 31, 2025