2025-003 Under 2 CFR §200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restr...
2025-003 Under 2 CFR §200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restrict competition (2 CFR §200.319(a)). - Documentation of Procurement History: Entities must maintain records that detail the procurement history, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR §200.318(i)). - Use of Non-Competitive Procurement: Non-competitive procurement is only allowed under limited circumstances, such as when the item is available from a single source, there is a public emergency, or after solicitation of multiple sources, competition is deemed inadequate (2 CFR §200.320(c)). Recommendation: Implement comprehensive procurement policies and procedures that comply with federal regulations under 2 CFR §200.318-326. Ensure all procurement transactions are documented, including evidence of competitive bidding or justification for noncompetitive procurement under 2 CFR §200.320(c). Conduct staff training on procurement standards for federal awards, focusing on documentation, competition, and conflict of interest requirements. Perform periodic internal reviews to confirm compliance with procurement policies. Consult with California’s HCD regarding their expectations of contractor selection policies for the HomeKey program. Management Response: Management concurs with the recommendation and recognizes that procurement compliance requires both appropriate competition and sufficient contemporaneous documentation demonstrating how the procurement decision was made. HTM will strengthen its procurement framework to ensure applicable procurement requirements are identified before purchases are initiated and that the procurement file demonstrates the method used, competition obtained, selection rationale, required approvals, conflicts review, price or cost considerations where applicable, and justification for exceptions. Corrective Action Status and Plan: Management adopted a procurement policy July 2026 and plans to implement supporting procedures designed to comply with applicable federal, state, local, and award-specific requirements. By December 31, 2026, the Mission plans to issue detailed procedures and standardized procurement-file templates covering procurement method selection, applicable thresholds, independent cost or price analysis, full and open competition, solicitation and bid documentation, conflict-of-interest disclosures, contractor selection or rejection, contract type, price basis, required approvals, and permitted noncompetitive procurement justifications. Vendor onboarding will require documented suspension and debarment verification for each applicable vendor and contractor before commitment of funds, with evidence retained in the procurement file. Staff with purchasing, program, grant, and accounts-payable responsibilities will complete rolebased training, and completion records will be retained. Management plans to consult with California HCD regarding contractor-selection expectations for the HomeKey program and incorporate applicable requirements into the policy, procedures, and contract summaries. The Chief Financial Officer or designee will conduct and document periodic samplebased compliance reviews, track exceptions to resolution, and report material or recurring issues to executive management. Management plans to complete an operating-effectiveness review of procurement transactions and address identified deficiencies before year-end. Management also plans to implement a broader grant and contract compliance framework, as described in Finding 2025- 002, to establish responsibility for identifying, communicating, and monitoring compliance requirements associated with government funding agreements. Although a procurement policy was adopted in 2026, it was not fully operational during the audit period. Procedures to verify and document compliance with suspension and debarment requirements were also not consistently performed. As a result, compliance requirements associated with government-funded programs were not fully executed and documented during the year. These corrective actions will strengthen compliance with procurement regulations and suspension and debarment requirements, improve documentation and monitoring controls, and reduce the risk of future noncompliance with government funding requirements. Name of responsible persons: Emily Falappino, VP of Business Affairs, Ivet Samvelyan, VP of Mission and Impact and Tisha Lazare, Chief Financial Officer Anticipated completion date. December 31, 2026