(2025-051) Title: Internal control over CCDF procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster Assistance Listing Number: 93.489, 93.575, 93.596 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or noncompetitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. A Notice of Intent to Waive the Competitive Bidding Process (NOI) must be posted to the OSPS website for 7 calendar days prior to the start of a noncompetitively bid contract. Condition: The Child Care and Development Fund (CCDF) Cluster is administered by the Office of Child and Family Services (OCFS) and provides funding to increase the availability, affordability, and quality of childcare services in the State. OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJFs) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSPS must publicly post a NOI for all procurements over $10,000 entered into without a competitive process for a minimum of 7 calendar days prior to the start of the contract. The NOI includes the signed PJF provided to OSPS by DCM. The Office of the State Auditor (OSA) tested 13 contracts, 3 procured competitively and 10 procured noncompetitively, that accounted for $10.1 million of the $14.4 million in CCDF program procurement- related transactions in fiscal year 2025 and found: • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by OCFS were accurate. • For 11 contracts, DCM provided the PJF to OSPS for their review after the contract had commenced, between 7 and 198 days after the contract start date. For 12 contracts, OSPS approved the PJF after the contract commenced, between 12 and 200 days after the contract start date. • For 3 of the noncompetitive contracts, OSPS posted the NOI after contract performance had commenced, between 12 and 208 days after the contract start date. For all 3 contracts, services had been initiated and financial obligations incurred prior to the NOI. OSA utilized a risk-based approach to select 2 contracts issued by OCFS and a non-statistical random sample of all other contracts. Context: In fiscal year 2025, the Department expended $14.4 million in procurement-related transactions from CCDF funds of $45.1 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances • Noncompliance with Federal and State procurement requirements, including NOI posting requirements, could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and OCFS develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • DCM obtaining and reviewing documentation to support the assertions made by OCFS for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-26 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS does not authorize, encourage, or approve agencies allowing vendors to perform work at risk. However, OSPS also does not delay review and approval solely due to contract start-date issues, as doing so would increase the State’s risk exposure, potentially disrupt federally required programs, and hinder agencies’ compliance with federal period-of-performance requirements. To address these concerns, OSPS will formalize and issue policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This guidance will expand the agency-focused section to emphasize timely submission and processing, along with the risks and implications associated with contracting delays. In advance of fiscal year-end, OSPS will issue a separate policy document and companion guidance as a spotlight topic in the monthly newsletter and posted to the intranet for agency reference. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1114-06)
(2025-057) Title: Internal control over Foster Care procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E Assistance Listing Number: 93.658 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or noncompetitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. A Notice of Intent to Waive the Competitive Bidding Process (NOI) must be posted to the OSPS website for 7 calendar days prior to the start of a noncompetitively bid contract. Condition: The Foster Care – Title IV-E (Foster Care) program is designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Foster Care program is administered by the Office of Child and Family Services (OCFS). OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJFs) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSPS must publicly post a NOI for all procurements over $10,000 entered into without a competitive process for a minimum of 7 calendar days prior to the start of the contract. The NOI includes the signed PJF provided to OSPS by DCM. The Office of the State Auditor (OSA) tested 4 contracts, 1 procured competitively and 3 procured noncompetitively, that accounted for approximately $4 million of the $4.6 million in Foster Care program procurement-related transactions in fiscal year 2025 and found: • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by OCFS were accurate. • For 1 contract, DCM provided the PJF to OSPS for their review after the contract had commenced, 38 days after the contract start date. For all 4 contracts, OSPS approved the PJF after the contract commenced, between 25 and 60 days after the contract start date. • For 1 of the noncompetitive contracts, OSPS posted the NOI after contract performance had commenced, 40 days after the contract start date. For this contract, services had been initiated and financial obligations incurred prior to the NOI. OSA utilized a risk-based approach to select 2 contracts issued by OCFS and a non-statistical random sample of all other contracts. Context: In fiscal year 2025, the Department expended $4.6 million in procurement-related transactions from Foster Care funds of approximately $12 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances • Noncompliance with Federal and State procurement requirements, including NOI posting requirements, could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and OCFS develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • DCM obtaining and reviewing documentation to support the assertions made by OCFS for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-28 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS does not authorize, encourage, or approve agencies allowing vendors to perform work at risk. However, OSPS also does not delay review and approval solely due to contract start-date issues, as doing so would increase the State’s risk exposure, potentially disrupt federally required programs, and hinder agencies’ compliance with federal period-of-performance requirements. To address these concerns, OSPS will formalize and issue policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This guidance will expand the agency-focused section to emphasize timely submission and processing, along with the risks and implications associated with contracting delays. In advance of fiscal year-end, OSPS will issue a separate policy document and companion guidance as a spotlight topic in the monthly newsletter and posted to the intranet for agency reference. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1109-04)
(2025-065) Title: Internal control over Medicaid procurement needs improvement Prior Year Findings: None State Department: Administrative and Financial Services Health and Human Services State Bureau: Office of State Procurement Services Division of Contract Management Office of MaineCare Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Procurement and suspension and debarment Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.317; 5 MRSA 1825-B and D; Office of State Procurement Services (OSPS) policies The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must follow the same policies and procedures it uses for procurements with non-Federal funds. Awards shall be made to the best-value bidder, taking into consideration the best interest of the State. The requirement to competitively bid a contract may be waived if specific criteria is met, including the item or service can only be procured from one source or it is an emergency procurement. Each bid, with the name of the bidder, must be entered on record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract. The Department must justify the selection of vendor, either through competitive or noncompetitive process, and provide a detailed explanation of cost, demonstrating how the best value for the State is ensured. The Chief Procurement Officer shall make the public aware of contracts and grants for which bids are being requested and communicate the procedure used in reviewing bids. Contracts must be submitted to OSPS at least 14 days prior to the contract start date. A Notice of Intent to Waive the Competitive Bidding Process (NOI) must be posted to the OSPS website for 7 calendar days prior to the start of a noncompetitively bid contract. Condition: The Medicaid program is administered by the Office of MaineCare Services (OMS). OSPS is the central oversight agency for all State procurement. The Department of Health and Human Services (DHHS) Division of Contract Management (DCM) oversees the solicitation and contract implementation for all DHHS procurement. DCM coordinates with DHHS program personnel to evaluate and select vendors and subrecipients, determine contract terms, and provide required documentation to OSPS. OSPS is responsible for reviewing and approving Procurement Justification Forms (PJFs) submitted by DCM on behalf of program personnel prior to the award of contracts. The PJF represents program personnel’s assertion that the selected procurement method is appropriate under applicable State and Federal requirements, and that required evaluation procedures have been performed. OSPS must publicly post a NOI for all procurements over $10,000 entered into without a competitive process for a minimum of 7 calendar days prior to the start of the contract. The NOI includes the signed PJF provided to OSPS by DCM. The Office of the State Auditor (OSA) tested 26 contracts, 6 procured competitively and 20 procured noncompetitively, that accounted for $42.8 million of the $91.3 million in Medicaid procurement-related transactions in fiscal year 2025 and found: • PJFs were reviewed for reasonableness by DCM and OSPS, but DHHS could not provide documentation to support the assertions made by OMS were accurate. • For 18 contracts, DCM provided the PJF to OSPS for their review after the contract had commenced, between 5 and 152 days after the contract start date. For 18 contracts, OSPS approved the PJF after the contract commenced, between 7 and 182 days after the contract start date. For 2 contracts, documentary evidence of PJF approval by OSPS could not be provided. • For 9 noncompetitive contracts, OSPS posted the NOI after contract performance had commenced, between 7 and 169 days after the contract start date. For 7 of these contracts, services had been initiated and financial obligations incurred prior to the NOI. OSA utilized a risk-based approach to select 6 contracts issued by OMS and a non-statistical random sample of all other contracts. Context: In fiscal year 2025, the Department expended $91.3 million in procurement-related transactions from Medicaid funds of $3.4 billion. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Potential questioned costs and future disallowances • Noncompliance with Federal and State procurement requirements, including NOI posting requirements, could result in the need to void a contract or exposure to legal proceedings. Recommendation: We recommend that OSPS: • increase agency awareness of the procedures related to the timing of procurement contract documentation being submitted to OSPS for review prior to the contract start date; and • finalize and implement an updated procurement policy and procedure manual that identifies the parties responsible for key aspects of the procurement process. We also recommend that DCM and OMS develop policies and procedures and increase oversight to ensure all procurement transactions comply with Federal and State requirements, including: • DCM obtaining and reviewing documentation to support the assertions made by OMS for accuracy and reasonableness; and • ensuring PJFs are completed, reviewed, and submitted to OSPS prior to the contract start date. Corrective Action Plan: See F-32 Management’s Response: DAFS Response: The Department agrees with this finding. OSPS does not authorize, encourage, or approve agencies allowing vendors to perform work at risk. However, OSPS also does not delay review and approval solely due to contract start-date issues, as doing so would increase the State’s risk exposure, potentially disrupt federally required programs, and hinder agencies’ compliance with federal period-of-performance requirements. To address these concerns, OSPS will formalize and issue policy guidance that clearly defines agency and OSPS roles and responsibilities in the contracting process. This guidance will expand the agency-focused section to emphasize timely submission and processing, along with the risks and implications associated with contracting delays. In advance of fiscal year-end, OSPS will issue a separate policy document and companion guidance as a spotlight topic in the monthly newsletter and posted to the intranet for agency reference. DAFS Contact: David Morris, Acting Chief Procurement Officer, OSPS, 207-624-7335 DHHS Response: The Department partially agrees with this finding. There is not a requirement to provide documentation that the Department personnel’s assertions are accurate regarding Department personnel’s review of PJFs. The Department agrees that it can improve the timing of procurement documents in relation to the start dates of the contracts. Extenuating circumstances exist periodically that prevent the timeliness of these documents. In some cases, there are delays in the grant approval at the Federal level. Delays in Legislative approval of budgets can also lead to procurement documentation delays. DHHS Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.303 requires the Department to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Absent adequate documentation to support the veracity of the assertions made on the PJF by program personnel, the best value for the State cannot be ensured. The finding remains as stated. (State Number: 25-1106-06)
Reference Number: 2025-014 Prior Year Finding: No Federal Agency: U.S. Department of the Treasury State Department Name: Division of Libraries Federal Program: COVID-19 – Coronavirus Capital Projects Fund Assistance Listing Number: 21.029 Award Number and Year: CPFFN0144 (2/4/2022 – 12/31/2026) Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement Compliance: Per 2 CFR section 200.317 Procurements by states, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Per 29 Del C. Chapter 69, section 6981 Large professional service procurement process: (a) Any state contract for which an agency is a party with probable fees, including reimbursable expenses and amendments, greater than the threshold amount or amounts established by the Contracting and Purchasing Advisory Council pursuant to § 6913 of this title for the completed job will be subject to the provisions of this subchapter. (b) Each agency shall publicly announce, not less than once a week for two consecutive weeks in a newspaper published or circulated in each county of the State, when professional services are required (c) Each agency shall publicly announce each professional services contract subject to subsection (a) of this section by electronic publication accessible to the public in a manner prescribed pursuant to § 6902(9) of this title for two consecutive weeks. (d) Such announcement shall include: (1) The project identification; (2) General description and scope of the project; (3) Location; (4) Deadline for submission of brief letters of interest; (5) Criteria for selection of professionals including any special criteria required for any particular project; (6) Indication of how interested professionals can apply for consideration; (7) The agency's intention to award to more than one firm, if applicable; and (8) A description of the selection process to be used, as defined in § 6982 of this title. (f) Each agency shall establish written administrative procedures for the evaluation of applicants. These administrative procedures shall be adopted and made available to the public by each agency before publicly announcing an occasion when professional services are required. One or more of the following criteria may be utilized in ranking the applicants under consideration: (1) Experience and reputation; (2) Expertise (for the particular project under consideration); (3) Capacity to meet requirements (size, financial condition, etc.); (4) Location (geographical); (5) Demonstrated ability; (6) Familiarity with public work and its requirements; or (7) Distribution of work to individuals and firms or economic considerations. (g) In addition to the above, other criteria necessary for a quality, cost-effective project may be utilized. (h) Each project shall be given individual attention, and a weighted average may be applied to criteria according to its importance to each project. (i) For the selection process described in § 6982(b) of this title, price may be a criteria used to rank applicants under consideration. Per 29 Del C. Chapter 69, section 6982 Selection: (a) Agencies shall use the selection process described in paragraphs (b)(1) through (3) of this section. (1) Based upon the criteria established pursuant to § 6981(f) of this title, the agency shall determine all applicants that meet the minimum qualifications to perform the required services. (2) The agency shall then interview at least one of the qualified firms. The agency may negotiate with one firm without terminating negotiations with another firm and may negotiate with one or more firms during the same period. At any point in the negotiation process, the agency may, at its discretion, terminate negotiations with any or all firms. (3) The agency may require the firm with whom the agency is negotiating to execute a truth-in-negotiation certificate stating the wage rates and other factual unit costs supporting the compensation are accurate, complete and current at the time of contracting. All professional service contracts shall provide that the original contract price and any additions thereto shall be adjusted to exclude significant sums where the agency determines the contract price was increased due to inaccurate, incomplete or noncurrent wage rates and other factual unit costs. All such contract adjustments shall be made within one year following the end of the contract. Sole source procurement shall be avoided, except when no reasonable alternative sources exist. A written determination by the agency for the sole source procurement shall be included in the agency's contract file. (29 Del. C. §6904(i)) Control: Per 2 CFR Section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Division of Libraries (Division) was unable to provide evidence that it had procured a contract in accordance with the State’s procurement policies. Context For one of five contracts selected for testing, the Division was unable to provide supporting documentation that it had procured the contract in accordance with the State’s procurement policies. Questioned Costs Undetermined. Cause The Division’s internal controls were not sufficient to ensure that federal and statewide procurement policies were followed for purchases made for the program. Effect Failure to adhere to procurement policies and procedures may result in the contract being issued under terms and conditions that are not in the best interest of the federal program and/or the State. Recommendation The Division should review and enhance controls and procedures to ensure that it follows the State’s procurement policies for all contracts charged to the program. Views of Responsible Officials The Department of State, Division of Libraries disputes the audit finding of “significant deficiency in internal control over compliance, other matters” on the basis that Title 29, Chapter 69 of the Delaware Code is inapplicable and exempts the purchase of services by libraries from the State procurement process, including construction. Without admission to any deficiency in the Division’s “internal control over compliance, other matters,” the Division of Libraries will review all internal controls and procedures to ensure compliance with the State’s procurement process. Auditor Rejoinder Auditors acknowledge that Title 29, Chapter 69(d) of the Delaware Code includes exemptions related to libraries. Specifically, it states: “This chapter shall not apply to any purchase of library materials such as books, periodicals, subscriptions and software by libraries of any agency, nor shall this chapter apply to the purchase of services by libraries of any agency pursuant to Chapter 66 of this title.” Library services is further defined in Title 29, Chapter 66, §6602(a), Contracting for library services, which states the following: “In order to encourage the maintenance and development of proper standards, including personnel standards, hours of operation, library materials, collection standards and interlibrary resource sharing, and to provide for the development of statewide public library service, the Delaware Division of Libraries may contract with any public library, including privately incorporated public libraries or public library systems established pursuant to Chapter 8 of Title 9, which qualifies under standards established by the Division with the approval of the Delaware Council on Libraries, to provide library services.” Furthermore, Title 29, Chapter 66A, establishes requirements regarding library construction which includes a provision for proposal review and does not exempt such projects from following established procurement policies. The contract identified by auditors in this finding is a $22 million contract for “management and construction services for the North Wilmington Library Think Do (“Project”)”. Auditors believe the scope and nature of this agreement does not fall under the exemptions established for library services under Title 29, Chapter 69(d) of the Delaware Code. The Division was unable to provide auditors with documentation that it had followed established procurement procedures when it entered into this agreement.
Allowable Costs/Cost Principles – Consultant Payments Program Name: Federal-State Partnership for Intercity Passenger Rail (Assistance Listing 20.326) Federal Award Agency: Department of Transportation Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 69A36524520310FSPCT Background The Department of Transportation (DOT) Consultant Design Administration Manual defines extra work as work the department orders beyond the scope of the agreement when such work is not reflected in the fee payments specified in the agreement. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.317 requires that when conducting procurement transactions under a federal award, a state must follow the same policies and procedures it uses for procurements with non-federal funds. Title 2 CFR Part 200.403(c) and (g) provides that to be allowable under federal awards, costs must be consistent with established policies and procedures and adequately documented. The DOT Consultant Design Administration Manual requires consultants to obtain written authorization from the department before they begin any extra work; otherwise, DOT is not obligated to compensate the consultant for that work. Condition Our review of 11 transactions totaling $46,543,994 disclosed that DOT made a $47,870 payment for extra work performed by a consultant that it did not authorize before work began. Context During the fiscal year ended June 30, 2025, non-payroll expenditures totaled $105,024,824. We randomly selected ten payments to review, as well as one manual journal adjustment. The sample was not statistically valid. Questioned Costs $47,870 Effect Failure to comply with DOT’s policies regarding extra work performed by consultants may result in unauthorized costs. Cause A lack of management oversight contributed to this condition. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Transportation should strengthen internal controls over consultant payments for extra work. Views of Responsible Officials “We agree with this finding.”
Federal Agency: Department of Education Federal Program Name: Wisconsin Charter Schools Program Waiver Cohort Assistance Listing Number: 84.282 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025-138005-DPI-WCSPWC1-360 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance (Modified Opinion) Criteria: 2 CFR Sections 200.317 – 200.327 of the Uniform Guidance details procurement requirements for non-federal entities. Condition: One City Schools, Inc. did not document procurement methods, rationales, and decisions in accordance with the Uniform Guidance. Questioned costs: None Context: We sampled 6 procurement transactions, noting that 5 of them did not have documentation following the procurement policy. Cause: Policies and procedures were put in place but not consistently followed. Effect: This could result in noncompliance, disallowed costs, or discontinuance of federal funding. Repeat Finding: Yes (2024-002) Recommendation: We recommend that the Organization maintain effective internal controls over procurement requirements. Views of responsible officials: One City Schools, Inc. agrees with the finding and are working on implementing internal controls over procurement.
2025-001 - Procurement, Debarment and Suspension Federal Program Information: U.S. Department of the Treasury, passed through the Vermont Department of Public Safety CFDA - 21.027 - Coronavirus State and Local Fiscal Recovery Funds Criteria: The following CFRs apply to this finding: 2 CFR 200.214, 2 CFR section 200.317-200.327 Condition: During audit procedures it was identified that the Town did not check sam.gov to confirm that the contractor was not debarred or suspended from receiving federal funds nor did they request a Suspension and Debarment certification from the contractor. Cause: The Town does not have the necessary internal controls over compliance. Effect: Contracts may be awarded to contractors that are debarred or suspended from working on federally funded projects. Identification of Questioned Costs: None Identified. Context: Two contracts were reviewed out of three. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Town revise its procurement policy to fully incorporate all elements required by 2 CFR §200.317-200.327. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan.
Federal agency: U.S. Small Business Administration Federal program name: Congressional Grants Inclusive Ventures Small Business Program Assistance listing number: 59.059 Pass-through agency: Anne Arundel County, Maryland Pass-through number: SBAHQ23I0140 Award Period: September 1,2023 through August 31, 2028 Compliance Requirement: Procurement and Suspension and Debarment Type of Findings: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. 2 CFR section 200.318 states the grant recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327. Compliance: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal 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), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Corporation did not follow their written procurement procedures which reflect applicable State, local, and tribal laws and regulations which also conform to the applicable federal law and standards identified in the Uniform Guidance. The Corporation could not provide documentation that it ensured contractors were not suspended or debarred before executing contracts with the entities. Questioned Costs Amounts paid to the two contractors for the fiscal year ended June 30, 2025 was $175,000. Context Supporting documentation for the procurement, suspension and debarment status for two of the two contractors selected for testing was not documented. Cause The Corporation has not historically received federal funding so the procurement, suspension and debarment documentation was not deemed necessary. Effect A lack of documented procurement standards for the Corporation could increase the risk of goods and services being procured through a method which is not in accordance with applicable State, local, and tribal law as well as federal regulations including the Uniform Guidance. If the suspension and debarment status is not verified when entering into covered transactions, it is possible that a subaward could be issued to an ineligible entity. Repeat Finding No Recommendation We recommend that management follow their written procurement policies and controls to ensure it maintains documentation of procurement, suspension and debarments checks and that the documentation is available for audit. Views of Responsible Officials Management agrees with finding. See corrective action plan for additional information.
Finding 2025-001 Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 93.493: • Congressional Directives • U.S. Department of Health and Human Services • Federal award identification number – CE146487 • Federal award year – 7/1/2024 – 6/30/2025 • Pass-through entity – The Board of Regents of the University of Oklahoma Health Sciences Center • Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Criteria or specific requirement (including statutory, regulatory, or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303, Internal controls: The non-Federal entity must (a) 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319, Competition: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate –(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324, Contract cost and price: (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but, as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214, Suspension and debarment: Non-Federal entities are subject to the non-procurement debarment and suspension regulations that 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. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300: What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management did not have internal controls in place over procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not retain support for internal control documentation for all vendors, evidencing that the vendors were searched for suspension and debarment upon entering into a contract supported with federal funds. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $1,385,165 – Assistance Listing Number 93.493 Federal award identification number – CE146487 Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Questioned costs were computed as all procurements selected for testing. Questioned costs for each award are as follows: • CE146487: $60,874 • H79FG000747: $119,479 • H79FG001034: $1,204,812 Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we selected five vendors for testing with total expenditures of $1,385,165 from a population of procurements totaling $1,425,361, subject to formal procurement procedures. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed for any of the five procurements selected for testing. For suspension and debarment, we selected five vendors for testing totaling $1,385,165. Management was unable to provide documentation that internal controls were executed for any of the vendors selected for testing. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management should develop and implement internal controls over procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of awarding a contract supported by federal funding and retain evidence supporting such procedures. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, which includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award, and administer procurement contracts. This policy will include procedures to ensure proper procurement for purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Assistance Listing Number 84.181 Special Education Department of Education Passed Through Turtle Mountain Band of Chippewa Indians Procurement 2 CFR Part 200.317 through 200.327 Criteria Procurement Standards require for the District to maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR Part 200.317 through 200.327. Condition The District performed a procurement activity that did not follow District policies as well as standards found in 2 CFR Part 200.317 through 200.327. The District failed to obtain quotes or bids for a purchase exceeding $10,000. This condition was noted for the following expenditure: Check 240313 Dated 10/17/2024 for $10,219.00 Context Per discussion with the District staff and review of program expenditures, there were 2 expenditures incurred in which quotes or bids should have been obtained. Both transactions were tested and it was noted that 1 transaction did not have the necessary quotes or bids. Cause District’s internal controls in place failed to ensure all procurement policies are followed. Effect District is not in compliance with their internal procurement policies and procurement standards. Questioned Costs Undeterminable. Repeat Finding See prior year finding 2024-006 Recommendation Recommend the District to review internal controls to ensure all internal policies and compliance requirements are both being monitored and the District is remaining in compliance. Management’s Response See corrective action plan.
Finding 2025-001 – Material Weakness AL No: 20.205 Highway Planning and Construction Federal Grantor: U.S. Department of Transportation, Federal Highway Administration (FHWA) Passed-through: California Department of Transportation (Caltrans) and the Sacramento Area Council of Governments (SACOG) Passed-through Grantor’s No’s.: SPIL-6085 (091) for Caltrans and #240023 for SACOG. Compliance Requirement: Procurement, Suspension and Debarment Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.318(a) states that the “The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in Sections 200.317 through 200.327.” The contract should have conformed to the following sections in the Caltrans Local Assistance Procedures Manual (LAPM): - Section 10.1 provides requirements for federally funded architectural and engineering (A&E) contracts. - Section 10.3 provides requirements for non-A&E contracts. - Section 10.1.9 states that the local public agency (LPA) must “obtain Caltrans approval on the Exhibit 12- F: Cost Effectiveness/Public Interest Finding/A&E Noncompetitive and retain all documents in the project files” for procurements by noncompetitive proposals. - Section 9.7.2 states that the LPA must have a Disadvantaged Business Enterprise (DBE) goal set, and “must have an Exhibit 9-D: DBE Contract Goal Methodology submitted to the” District Local Assistance Engineer (DLAE). “LPAs may not advertise the contract before receiving DLAE feedback on the DBE goal.” Condition: Caltrans notified the Authority that two Next-Generation Facility Project (the Project) consulting contracts were procured in compliance the Federal Transit Administration’s (FTA’s) procurement guidelines but did not conform with the State of California LAPM. Caltrans indicated that the AECOM A&E consultant contract procurement did not comply with Sections 10.01 and 10.1.9 of the LAPM, including not including a Public Interest Finding for the sole source procurement of the agreement, and the LeFlore Group, LLC non-A&E consultant contract procurement did not comply with Section 10.3 of the LAPM. In addition, a Disadvantaged Business Enterprise goal was not requested nor completed as part of the advertisement for the project, which was required under Section 9.7.2 of the Caltrans LAPM. Effect: The Authority was not in compliance with the Caltrans LAPM and as a result, the Authority was required to halt work and repay Caltrans and SACOG for funds already reimbursed to the Project of $300,000 under AL 20.205. Cause: Caltrans and SACOG are both pass-through agencies for this grant, with the Authority being the final subrecipient. SACOG was not aware that the procurement requirements under this grant follow U.S. Department of Transportation, Federal Highway Administration requirements that differ from U.S. Department of Transportation, Federal Transit Administration requirements, which are administered by a different Caltrans department. As a result, the additional requirements in the LAPM were not communicated to the Authority and the Authority was not aware of the requirements and failed to comply with the LAPM. Context: The Authority submitted the procurement to the Caltrans Federal Transit Administration Programs Procurement Oversight Branch for approval prior to contracting with the consultants and the procurement was approved. However, the grant was provided through the Federal Highway Administration (FHWA) and Caltrans has a different oversight Branch for FHWA funded projects, which was not made clear to the Authority by either passthrough agency. AL 20.205 was originally reported on the SEFA and was selected for testing a major program as it was a high-risk Type B program under which the Authority incurred $300,000 of grant expenses and received the grant proceeds prior to June 30, 2025. Caltrans issued a sanction letter on December 9, 2025, which required the grant funds to be returned to Caltrans. As a result, the Authority removed the expenses from the SEFA, but the program is reported as a major program to report the procurement finding on the schedule of findings and questioned costs. - Questioned Costs: $300,000 Recommendation: We recommend the Authority add additional language to its Procurement Policy documenting the requirement to follow Section 10 of the LAPM and the criteria under which it applies when grants are received from the FHWA. Management’s Response: Management’s response is included in the attached Corrective Action Plan. Report on Internal Control over Compliance See finding 2025-001 above, which is also considered to be an internal control over compliance finding in the Major Federal Awards Program Audit.
Section III - Findings and Questioned Costs - Major Federal Award Program Audit Finding Reference Number: 2025-001 Title and Assistance Listing Number of Federal Program: Economic Development Initiative, Community_x0004_ Project Funding, and Miscellaneous Grants - 14.251 Type of Finding: Federal Award Finding Finding Resolution Status: In Process Information on Universe Population Size: N/A Sample Size Information: N/A Identification of Repeat Finding and Finding Reference Number: Not a repeat finding Criteria: Under 2 CFR 200.318(a), non-federal entities must establish and maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. As required under 2 CFR Subpart D (§§200.317–200.327), organizations must follow written procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards in the Uniform Guidance. Statement of Condition: United Playaz, Inc. and Subsidiary (the "Organization") does not have a documented procurement policy that complies with the procurement standards in 2 CFR 200.317–200.327. The Organization has purchasing policies, but no written procedures addressing required elements such as procurement methods, competition, conflicts of interest, domestic preferences, price/cost analysis, or contractor oversight. Cause: The absence of a compliant procurement policy appears to stem from insufficient familiarity with the detailed procurement requirements in the Uniform Guidance, as this was their first award and audit under these standards. Management utilized other local government procurement policies to perform their procurement procedures. Effect or Potential Effect: While no procurement errors were identified during the audit and no questioned costs resulted from this condition, the lack of required written procedures increases the risk of: -Noncompliance with Federal procurement standards -Inadequate competition and pricing documentation -Increased susceptibility to conflict of interest risks -Potential future questioned costs or disallowed expenditures Failure to maintain documented procedures also impairs the organization’s ability to demonstrate compliance to Federal agencies and pass through entities. Auditor Non-Compliance Code: S - Internal control deficiencies Questioned Costs: $- Reportable Views of Responsible Officials: While United Playaz did not have their own policy compliant with federal standards, the organization has historically used procurement guidelines as required by the San Francisco Mayor’s Office of Housing and Community Development (MOHCD) which complies to the Federal standards and guidelines administered and approved by HUD. In addition, the general contractor procurement process was completed prior to the initiation and receipt of the HUD award. _x0004__x0004_Management acknowledges that, while procurement activities were performed using established external guidelines, the Organization did not have a formally adopted written procurement policy that fully complies with the requirements of 2 CFR 200.317–200.327 at the time of the audit. Management has since identified this gap and is in the process of developing a compliant written procurement policy. Context: For procurement processes, the Organization has historically utilized procurement guidelines required by the San Francisco Mayor’s Office of Housing and Community Development and other applicable local government procurement frameworks. In addition, the general contractor procurement process was completed prior to the initiation and receipt of the federal award. Recommendations: 1. Develop and formally adopt a written procurement policy that complies with 2 CFR 200.317–200.327 addressing at minimum: -Procurement methods and applicable dollar thresholds -Full and open competition requirements -Standards of conduct and conflicts of interest -Price or cost analysis (200.324) -Domestic preference (200.322) -Use of small/minority owned businesses (200.321) -Required contract provisions (200.327) 2. Train staff involved in procurement to ensure consistent understanding and implementation. 3. Periodically review and update the policy to remain compliant as Federal requirements evolve Auditors’ Summary of the Auditee’s Comments on the Findings and Recommendations: Response Indicator: Agree Completion Date: 6/30/2026 Response: The Organization is in the process of developing, and will formally adopt and implement, a written procurement policy that complies with the requirements of 2 CFR 200.317–200.327. The policy will address, at a minimum, procurement methods, competition requirements, standards of conduct and conflicts of interest, price or cost analysis, domestic preference requirements, and required contract provisions. In addition, management will provide formal training to personnel involved in procurement to ensure consistent application of the policy and ongoing compliance with Federal procurement standards.
Finding Reference: 2025-003 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Health and Human Services Department of Justice Awards: Assistance Listing 93.078 – Strengthening Emergency Care Delivery in the United States Healthcare System through Health Information and Promotion Assistance Listing 16.753 – Congressionally Recommended Awards Award Periods: September 30, 2023 – September 29, 2025 July 1, 2024 – September 30, 2026 Description: Incomplete Federal Requirements within Procurement Policies Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “The Non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Part 200.320 Methods of procurement to be followed states the following: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for our major programs, we noted that the Corporation did not have a procurement policy that conforms to all applicable standards contained in the Uniform Guidance, when purchasing goods or services with the federal funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to their federal programs. Effect or potential effect Purchasing of goods and/or servicing with the major federal programs may not be in compliance with the Uniform Guidance. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2024-006. Context Management has not established a procurement policy in line with the applicable standards contained in the Uniform Guidance based on review of the existing policy and discussions with management, however, no other instances of noncompliance with procurement standards identified in 2 CFR part 200 were noted as the amount of purchases exceeding the micro-purchase threshold was not direct and material to these programs and therefore no further testing over procurement was performed. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials There is no disagreement with the audit finding.
(#2025-002) Policy Updates for Uniform Guidance – CFDA No. 10.766 – Community Facilities Loans and Grants Year Ended – May 31, 2025 Direct Program Federal Agency – U.S. Department of Agriculture Criteria – the Village’s procurement policy must incorporate federal award activity within the process and procedures followed by the Village in accordance with the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), sections 200.112, 200.317-200.326. Under the Uniform Guidance, the procurement requirements were required to be implemented by January 1, 2018 for federal award recipients. Condition – The Village’s code of ethics, conflict of interest and procurement policies have not been updated to comply with the requirements in the Uniform Guidance. Cause – The control environment related to the requirements of the Uniform Guidance has not be reviewed and incorporated into the Village’s control activities through the updating and documentation of the Village’s policies noted above. Effect – The Village was not in compliance with the requirements of the Uniform Guidance, Section 200.112, Conflict of Interest and Sections 200.317-200.326, Procurement Standards. Questioned Costs – There were no questioned costs noted related to this finding. Context – This finding was identified during inquiries of management in regards to the control environment over the requirements of the Uniform Guidance and through the review of the related policies noted above. Recommendation – We recommend the Village review their policies and establish/update such policies to ensure compliance with the Uniform Guidance. Village’s Response – The Village Mayor will provide an updated policy to be approved by the Village Board in 2026.
Finding 2025-003 Identification of the Federal Program: U.S. Department of Housing and Urban Development: AL 14.267 – Continuum of Care Program Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Significant deficiency in internal controls over compliance. Criteria 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Statement of condition and cause The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Effect Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with the Uniform Guidance. Questioned Costs N/A Repeat Finding No Recommendation We recommend that management develop a written procurement policy that conforms with the Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Management response See Corrective Action Plan
Finding 2025-003 Identification of the Federal Program: U.S. Department of Housing and Urban Development: AL 14.267 – Continuum of Care Program Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Significant deficiency in internal controls over compliance. Criteria 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Statement of condition and cause The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Effect Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with the Uniform Guidance. Questioned Costs N/A Repeat Finding No Recommendation We recommend that management develop a written procurement policy that conforms with the Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Management response See Corrective Action Plan
2024-005 Assistance Listing Number 66.468 Drinking Water State Revolving Fund United States Environmental Protection Agency North Dakota Public Finance Authority Procurement Suspension & Debarment 2 CFR Part 200.318 Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition District does not have a written procurement policy in place. Cause The District has not approved a written procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs Not Applicable Repeat Finding See 2023-005. Recommendation We recommend for the board of the District to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials and Planned Corrective Actions The District will create and approve a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
2024-001 Procurement Policies and Procedures Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: ISA-ARPA-ADWR-123022-01 - 2023 Pass-Through Agency: State of Arizona Governor’s Office Pass-Through Number(s): ERMT-20-002 Award Period: January 1, 2023 through January 1, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Under the U.S. Code of Federal Regulations Title 2, Part 200, Uniform Administrative requires certain elements to be part of the District’s procurement standards. The general procurement standards require the District to have and use documented procurement procedures that conform to the procurement standards identified in § 200.317 through 200.327 of the Uniform Guidance. The details of this requirements can be found in Title 2, Part 200, CFR Section 318(a). Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure procurement procedures that conform to Uniform Guidance were followed, or designed to ensure vendors were not suspended or debarred. Questioned costs: None Context: During our testing, it was noted that the District was not following their federal procurement policy #2023-05 to ensure compliance with CFR, Subtitle A Chapter II, Part 200, Subparts D and E when entering into vendor contracts. Also noted the District was not reviewing vendors prior to entering into a contract to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. Cause: The District does not have effective internal controls in place to ensure compliance with the Uniform Guidance procurement rules and procedures. Effect: The lack of internal controls over the provisions of procurement, suspension, and debarment compliance requirements provides an opportunity for noncompliance. Repeat Finding: Repeat of prior year finding 2023-001. Recommendation: We recommend the District design controls to ensure an adequate review process is in place to review potential contractors to determine compliance with the Uniform Guidance procurement rules and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding, and as reported in the corrective action plan, District policies will be updated and approved to conform to federal guidance.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Program: Continuation of the National Evaluations System for Health Technology Coordinating Center Assistance listing number: 93.103 Federal award identification number and year: • 2U01FD006292-06 2024 • 3U01FD006292-06S1 2023 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. 2 CFR 200.214 states non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Order 12549 and 12689, 2 CFR Part 180. 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. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and context: The Organization established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. The policies and procedures for suspension and debarment were being followed however the evidence of the search on sam.gov was not retained. A sample of five vendors with a total contract value of $8,528,526 was selected from a population of twelve. Cause: The Organization’s management did not retain evidence of compliance with the above criteria regarding suspension and debarment due to oversight. Effect: The Organization’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat finding: No Recommendation: We recommend management updates its policies and procedures to ensure adequate supporting documentation of suspension and debarment verification is maintained. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Program: Continuation of the National Evaluations System for Health Technology Coordinating Center Assistance listing number: 93.103 Federal award identification number and year: • 2U01FD006292-06 2024 • 3U01FD006292-06S1 2023 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. 2 CFR 200.214 states non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Order 12549 and 12689, 2 CFR Part 180. 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. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and context: The Organization established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. The policies and procedures for suspension and debarment were being followed however the evidence of the search on sam.gov was not retained. A sample of five vendors with a total contract value of $8,528,526 was selected from a population of twelve. Cause: The Organization’s management did not retain evidence of compliance with the above criteria regarding suspension and debarment due to oversight. Effect: The Organization’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat finding: No Recommendation: We recommend management updates its policies and procedures to ensure adequate supporting documentation of suspension and debarment verification is maintained. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Compliance Requirement: Procurement, Suspension, and Debarment Criteria: Procurement In accordance with 2 CFR Part 200 for Procurement, small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price reasonable and maintains documents to support its conclusion. Further, in accordance with the Laboratory’s procurement policy, documentation is required, using the Laboratory’s vendor justification/price verification form, for purchases to support the price checking and vendor selection for the items being charged directly to a federal award. Condition: 30 procurement transactions were selected from all procurement transactions over $10,000 under federal awards. Of the 30 items selected, we noted 1 item did not follow the requirement to obtain and maintain documentation in accordance with the Laboratory’s policy over soliciting competitive quotations for procurements over $10,000. Possible Asserted Cause and Effect: The Laboratory did not comply with their procurement policy or the 2 CFR Part 200, Appendix XI. The review controls in place to identify such required documentation was not executed as designed and as a result an invoice was charged to a federal award without the requisite documentation. However, we note the Laboratory did identify the error in documentation after the fact, during a monitoring review conducted by internal audit in 2025. Identification of Questioned Costs: $33,940 Whether Sampling was Statistically Valid: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Findings: This is not a repeat finding. Recommendation: We recommend that the Laboratory review its current policies and procedures to ensure procurement transactions are reviewed and substantiated with formal documentation prior to approval of the transaction. Views of Responsible Officials: Management agrees with finding 2024-001. In fiscal year 2024 the Laboratory charged a federal sponsored award for a procurement item, which exceeded the Laboratory’s micro-purchase threshold, without maintaining the proper documentation as required by Laboratory procurement policy. In fiscal 2025 this item was identified by the Laboratory’s Internal Audit and Sponsored Programs Accounting Offices as part of their routine review program. The transaction cost was removed by Laboratory Management from the federal award within 90 days of the item’s discovery; however, because the item was identified and adjusted in 2025, the fiscal year 2024 Schedule of Expenditures of Federal Awards (SEFA) was overstated. To ensure compliance with the Laboratory’s procurement policies, the Laboratory has implemented corrective actions as detailed below, in line with the recommendation: Corrective Actions Previously Implemented: 1. The Laboratory’s Internal Audit and Sponsored Program Accounting Offices will continue to conduct regular reviews of procurement items to ensure that documentation complies with Laboratory Procurement Methods Policy and Procedure, to ensure compliance with Laboratory policy, designed to ensure compliance with 2 CFR Sections 200.317 through 200.327. The audit focus will continue to be on 100% of sponsored award procurement transactions in the small purchase threshold. 2. The Laboratory Information Technology department, in collaboration with the Laboratory’s Procurement Office Director, enhanced certain system-generated reporting to allow for easier identification by Procurement Office personnel of charges to sponsored awards. Corrective Actions to be Implemented: 1. The Laboratory’s Sponsored Programs Accounting Office, in collaboration with its Procurement Office, will provide an annual re-education to Laboratory administrative research personnel concerning Laboratory Procurement Policies, designed to ensure compliance with 2 CFR Sections 200.317 through 200.327. 2. The Sponsored Programs Accounting Office will provide re-training for administrative staff to reinforce the Laboratory Procurement Method Policies and Procedure. 3. The Director of Procurement will streamline access and visibility of the Procurement Methods Policy and Procedure on the Laboratory’s internal website. Management intends for the re-education of administrative research personnel and re-training for administrative staff to be concluded by the end of the third quarter and/or early fourth quarter of 2025. Management intends to provide for streamlined access and visibility of Laboratory Procurement Methods Policy and Procedure on its internal website prior to the end of 2025.
2024-003: Lack of Procurement Policy – Significant Deficiency AL 66.468 Base Capitalization Grants for Drinking Water State Revolving Funds Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition The City does not have a written procurement policy in place. Cause The City has not written and approved a procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs $0 Recommendation We recommend for the City to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials A procurement policy will be developed and approved by the City Council. Repeat Finding This is a new finding.
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Significant Deficiency/Noncompliance 2 CFR sections 200.317 - 200.327 set the procurement standards to be followed when expending federal monies. During the testing of compliance with the procurement standards, it was noted that five out of nineteen of the vendors/contracts tested were not properly procured in accordance with the procurement standards. Not following the procurement standards may result in not receiving the best prices and result in underutilizing federal monies due to paying higher prices than needed. We recommend the City review the procurement standards and establish policies and procedures in order ensure the procurement standards are followed when expending federal monies. Officials Response: See Corrective Action Plan
Finding – Procurement, Suspension and Debarment; Special Education – Special Olympics Education Programs; Assistance Listing Number 84.380, 2023-2024 and 2024-2025 Award Years, U.S. Department of Education, passed through Special Olympics, Inc. Criteria or Specific Requirement The recipient must maintain and use documented (written) procedures for procurement transactions under a Federal Award or subaward, including for acquisition of property or services. These documented procedures must be consistent with applicable State, and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in the Uniform Guidance (2 CFR 200.317-200.327) Condition and Context The Organization has a written (documented) purchasing policy in place, but it does not include all required elements for a procurement policy in accordance with Federal statutes. Cause The Organization has not created and developed a written procurement policy in accordance with Federal procurement statutes.Effect The purchase of goods, property or services may not be in accordance with Federal procurement requirements. Identification as a Repeat Finding Not a repeat finding. Questioned Costs None. Recommendation We recommend that management develop a written procurement procedures policy in accordance with the requirements at 2 CFR 200.317-200.327 and ensure that procurement procedures follow this policy when procurement transactions are conducted using federal awards. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Contract #65851 Pass-Through Entity: Schneck Medical Center Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $148,800. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded until November 25, 2024. One of the two vendors selected for testing, with covered transactions totaling $148,800, was not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. The lack of internal controls and noncompliance were systemic issues until the City implemented new policies and procedures in November 2024. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not have a procurement policy in place that contained the requirements of the procurement standards as outlined in the Code of Federal Regulations prior to entering into an agreement with the vendor. Due to the timing of the adoption of the City's Procurement and Suspension and Debarment Policy, which defines procedures to ensure they are properly procuring services and verifying suspension and debarment status for covered transactions, not all of the items selected for testing were in compliance. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that goods and services are appropriately procured and that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended adhering to the newly implemented procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the City adhere to its newly approved policy of internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
SECTION III - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS Finding 2024-001: Procurement and Suspension and Debarment (Significant Deficiency) Federal Agency: U.S. Department of the Treasury Assistance Listing Number and Title: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal award year: 2024 Criteria: Per 2 CFR §200.318, General procurement Standards, a recipient or subrecipient of Federal awards must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327, as appropriate. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. In addition, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. 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 is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking SAM.gov Exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition/Context: From a sample of five (5) procurement transactions, there was no evidence that management performed simplified acquisition procedures relating to obtaining price and rate quotations from an adequate number of qualified sources for three (3) of the transactions tested. Further, for these three (3) transactions, there was no evidence that management completed procedures to verify whether the vendors were suspended or debarred. Cause: The USGA has significant prior history and experience in conducting competitive procurement processes for projects relating to improvements made to golf courses. Based on the USGA’s familiarity with vendors that perform such services, including knowledge of vendor pricing, qualifications, and other relevant factors, simplified acquisition procedures and suspension and debarment verification were not consistently performed. Effect: Procurement transactions could be conducted in a manner that does not provide full and open competition. Further, covered transactions could be entered into with an entity that is suspended or debarred. Questioned Costs: None identified Identified as a Repeat Finding: No Recommendations: We recommend that the USGA strengthen its policies and procedures relating to documentation of procurement decisions and suspension and debarment verifications. Vies of Responsible Officials: Refer to Corrective Action Plan.
Federal Agency: Department of the Treasury Pass Through Entity: Child Care Aware of Kansas Program Name: Coronavirus State and Local Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Award Period: March 12, 2020 – June 30, 2023 Criteria: According to 2 CFR 200.403, costs must be necessary and reasonable for the performance of the Federal award in order to be allowable. 2 CFR 200.317 states that procurement procedures must avoid the acquisition of unnecessary items. Condition: The Organization acquired a noncancelable software license for a term of ten years with federal funds in 2023. The software was utilized briefly in 2023 then abandoned and subsequently written off in 2024. Cause: As discussed at Finding 2024-001, the Organization’s policies and procedures do not ensure expenditures related to significant long-term commitments are reasonable and necessary and therefore allowable. Effect: Software was purchased without proper due diligence to determine whether it was necessary for the Organization leading to waste of federal funds. Questioned Costs: The cost of the 10-year license was $158,751, all of which was expended in 2023.Perspective: The expenditure occurred in 2023. The write-off of the software license occurred in 2024 and we became aware of it during the 2024 audit although this program was not currently audited as a major program. We do not consider the condition to be pervasive. Recommendation: Policies and procedures should be implemented for expenditures related to significant long-term commitments to undergo proper vetting to ensure the expense is necessary prior to purchase. Views of Responsible Officials: Management believes the expenditure was reasonable and necessary at the time the license was acquired. Subsequent staffing changes resulted in the software no longer benefitting the Organization to the extent originally intended without significant further investment for customization. Management notes that the questioned cost represents 3% of the federal award.
Finding 2024-001 Procurement, Suspension, and Debarment Agency and Award: Federal Agency: U.S. Department of Housing and Urban Development Program: Economic Development Imitative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Federal Award Identification Number: B-23-CP-CA-0141 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. They must use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and procurement requirements identified in 2 CFR Part 200. These standards require non-federal entities to maintain written procedures for procurement transactions to ensure full and open competition, proper cost analysis, and avoidance of conflicts of interest. Condition and context: ASMYCA does not have an internal procurement policy established. Without a formal procurement policy, ASYMCA lacks a consistent framework for vendor selection, contract negotiation, and cost justification. Cause: ASYMCA’s management did not retain evidence in compliance with the above criteria regarding procurement. Effect: ASYMCA’s documentation was lacking evidence of an internal procurement policy. This may lead to inconsistent procurement practices, potential favoritism, increased risk of unallowable costs, or overpayment for goods and services. Questioned costs: None Repeat finding: No Recommendation: ASYMCA develop and implement a formal procurement policy as soon as possible. Views of Responsible Officials: Management concurs with this finding and a response is included in the corrective action plan.
Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. Condition: The cooperative’s procurement policy had not identified the dollar thresholds of procurement within the methods of procurement. In addition, one contract selected for testing was missing one of the required contract provisions. Cause: The cooperative’s procurement policy is very thorough and identifies the methods of procurement, however, management had not identified the thresholds of procurement included within the policy. Effect: The Cooperative’s policy was missing required information Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 7 transactions out of 29 transactions were selected for testing, which accounted for $1,134,758 of $3,548,469 federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review their procurement policy to ensure it includes the dollar thresholds for each of the procurement methods. In addition, we suggest the Cooperative review their contracts to ensure it includes all the required contract provisions. Views of Responsible Officials: Management agrees with the finding.
Department of Treasury, State of Iowa Department of Management, Federal Financial Assistance Listing 21.029, 526659 Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Cooperative’s formally documented procurement policy was missing one required element as it relates to the methods of procurement. • One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. • One instance where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. • Two instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this are of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative update their procurement policy to ensure it includes the required elements as it relates to the methods of procurement. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed as it relates to covered transactions and those contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-002 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds, micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Procurement - Simplified Acquisition During the audit period, the City had two vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Both vendors were tested. For one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total amount spent with this vendor was $2,391,895. Procurement - Policy The City provided its purchasing policy for review, but it did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of four covered transactions for goods or services were paid from USDA award funds during the audit period. A sample of two vendors were selected for testing. Of the two vendors tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were isolated to the same single vendor for both the simplified acquisition and the suspension and debarment issues as noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The vendor in question was an engineering firm that the City originally hired to do a study at $40,000 in 2018 related to the wastewater treatment plant project. Through the years, the City did amendments to the contract to include more engineering services and did not advertise for bids or verify that the engineering firm was not suspended or debarred from receiving federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context An effective internal control system was not in place at the County to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. INDIANA STATE BOARD OF ACCOUNTS 20 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have internal controls in place to ensure compliance with the suspension and debarment compliance requirement. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County stated that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were identified. Each transaction was examined to determine whether the County verified the suspension and debarment status of either vendor prior to payment. The two covered transactions, totaling $95,122, did not include the appropriate provisions in the contracts nor did the County require a certification or check the EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." INDIANA STATE BOARD OF ACCOUNTS 21 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Additionally, we recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediate prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $40,458. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing the City to claim $10,000,000 of its total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $16,549,045 as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to contracts. The City's policies related to SLFRF suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. There were 13 covered transactions identified that equaled or exceeded $25,000, and 2 covered transactions, totaling $251,334, were selected for testing. For both of the transactions tested, the City did not verify the suspension or debarment status prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow the City's established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW222046 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The grant covered one project with one vendor that fell within the simplified acquisition threshold. Payments to the vendor for the project totaled $189,741 with $120,452 of that amount was grant funds. As such, the formal bid process should have been followed. The City did not perform bid procedures or provide the rationale for the method of procurement, the selection of vendor, or the basis for price. Additionally, the City did not obtain a written contract for the services. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. The City's policies related to COVID-19 - Coronavirus State and Local Fiscal Recovery Funds suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. As noted above, the grant covered one project with one vendor utilized and the City did not verify the suspension or debarment status prior to payment for this vendor. The lack of internal controls and noncompliance was isolated to the instance noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow its established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-005 Assistance Listing Number 66.468 Drinking Water State Revolving Fund United States Environmental Protection Agency North Dakota Public Finance Authority Procurement Suspension & Debarment 2 CFR Part 200.318 Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition District does not have a written procurement policy in place. Cause The District has not approved a written procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs Not Applicable Repeat Finding See 2023-005. Recommendation We recommend for the board of the District to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials and Planned Corrective Actions The District will create and approve a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
Finding 2024-002 – AL 21.027 – Significant Deficiency/Non-compliance – Procurement, Suspension and Debarment Criteria: The District should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The District does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The District’s purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The District is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the District adopt a written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: North Nelson Water District has made every effort to comply with purchasing requirements. In addition to these efforts, North Nelson Water District will be adopting a formal procurement policy.
2024-001 Procurement Policies and Procedures Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: ISA-ARPA-ADWR-123022-01 - 2023 Pass-Through Agency: State of Arizona Governor’s Office Pass-Through Number(s): ERMT-20-002 Award Period: January 1, 2023 through January 1, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Under the U.S. Code of Federal Regulations Title 2, Part 200, Uniform Administrative requires certain elements to be part of the District’s procurement standards. The general procurement standards require the District to have and use documented procurement procedures that conform to the procurement standards identified in § 200.317 through 200.327 of the Uniform Guidance. The details of this requirements can be found in Title 2, Part 200, CFR Section 318(a). Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure procurement procedures that conform to Uniform Guidance were followed, or designed to ensure vendors were not suspended or debarred. Questioned costs: None Context: During our testing, it was noted that the District was not following their federal procurement policy #2023-05 to ensure compliance with CFR, Subtitle A Chapter II, Part 200, Subparts D and E when entering into vendor contracts. Also noted the District was not reviewing vendors prior to entering into a contract to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. Cause: The District does not have effective internal controls in place to ensure compliance with the Uniform Guidance procurement rules and procedures. Effect: The lack of internal controls over the provisions of procurement, suspension, and debarment compliance requirements provides an opportunity for noncompliance. Repeat Finding: Repeat of prior year finding 2023-001. Recommendation: We recommend the District design controls to ensure an adequate review process is in place to review potential contractors to determine compliance with the Uniform Guidance procurement rules and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding, and as reported in the corrective action plan, District policies will be updated and approved to conform to federal guidance.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.