Finding 2024-02 Failure to Follow Procurement Policy Condition: The Organization maintains a procurement policy that establishes spending thresholds and outlines the requirements for obtaining rate quotations at each of these levels. During audit procedures, it was noted that the Organization did no...
Finding 2024-02 Failure to Follow Procurement Policy Condition: The Organization maintains a procurement policy that establishes spending thresholds and outlines the requirements for obtaining rate quotations at each of these levels. During audit procedures, it was noted that the Organization did not follow the policy’s requirements for obtaining and documenting rate quotations for two of the transactions reviewed. The Organization explained that the vendor was considered a unique partner, and competition was intentionally limited based on the specialized nature of the services provided. However, no documentation was retained to justify this decision to limit competition, as required by federal procurement standards. The absence of such documentation resulted in questioned costs for these transactions. Corrective Actions Taken or Planned: Prior to the award of ARPA grant funding in 2023, The Organization did not have a formal procurement policy in place. Implementation of such a policy was required to receive the award. At the time of implementation, however, partnerships had already been established and were identified in the original grant proposal. With respect to legal services, the Organization engaged the two primary organizations in Indianapolis that provide expungement assistance. Indiana Legal Services (“ILS”) was the first entity contacted, but after multiple attempts, no response was received from the designated point of contact. Subsequently, the Organization engaged another nonprofit organization, which responded promptly and agreed to serve as a partner under the grant. For grant compliance services, the Organization engaged a third party. This decision was based on recommendations from community partners, as well as her demonstrated work quality, professional reliability, and commitment to serving the target population. The Organization plans to execute the following: 1. Immediate Remediation - For the two transactions in question, the Organization will prepare and retain retroactive documentation outlining the rationale for limiting competition, citing the vendor’s unique qualifications and specialized services. This documentation will be added to the procurement files to ensure transparency and compliance. 2. Procurement Policy Enforcement - The Organization will reinforce its procurement policy with staff responsible for purchasing, emphasizing the following requirements: - Obtain and document at least three rate quotations when required. - When limiting competition, prepare a written justification memo explaining the rationale (e.g., sole source, specialized expertise, emergency procurement). - Retain all procurement documentation in a centralized file accessible for future audits. 3. Documentation Standardization - A Procurement Justification Form will be developed for instances where competition is intentionally limited. This form will include: + Vendor name and description of services + Reason competition is limited (sole source, unique expertise, etc.) + Approval signatures from both the requesting program lead and the Co-Executive Director - This form will be required for all procurements exceeding the competitive threshold where quotations are not obtained. 4. Staff Training - The Organization will provide refresher training to all staff involved in procurement to ensure they fully understand documentation requirements under both organizational policy and federal standards. - Training will specifically address scenarios involving sole source or unique vendor selections. 5. Oversight & Monitoring - All procurements exceeding $5,000 will require review and approval by the Board. - Quarterly internal audits will be performed by the Finance Manager to ensure procurement files include proper quotations or justification forms. The Board will receive quarterly procurement compliance reports from the Finance Manager. Any deviations will be documented and addressed immediately. Progress will be tracked as part of the Organization’s annual internal control review.