FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): H027A190084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context 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 non-Federal 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. There were 27 vendors exceeding the small purchase threshold during the audit period. Of those, 5 vendors were selected for testing. For all 5 vendors tested, totaling $299,889, the School Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to for vendors that fell within the small purchase threshold. INDIANA STATE BOARD OF ACCOUNTS 25 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are adequate and appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-004 - Procurement, Suspension & Debarment Federal Program Information: ALN - 10.760 - Water and Waste Disposal Systems for Rural Communities Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317-200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population. Repeat Finding: This is a repeat finding of 2022-004. Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-007- Procurement, Suspension & Debarment Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317 - 200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population Repeat Finding: This is not a repeat finding Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-007- Procurement, Suspension & Debarment Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317 - 200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population Repeat Finding: This is not a repeat finding Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-007- Procurement, Suspension & Debarment Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317 - 200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population Repeat Finding: This is not a repeat finding Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-007- Procurement, Suspension & Debarment Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR 200.317 - 200.326. Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population Repeat Finding: This is not a repeat finding Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Finding: Procurement Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of The Treasury pass through from Jefferson County and Signal Behavioral Health Network Award Year: 2023 Award Number: Not Provided Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local 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 2 CFR 200.317 through 200.327. The Organizations procurement policy requires for Small purchases between $10,000 and $250,000. Competitive price quotes must be obtained to allow for full and open competition. a. A written solicitation including specs will be prepared and prices (might also include quality, delivery, geographical preference) obtained from multiple sources (preferably three or more) either by providing specs to the vendors or researching vendor prices (ex. internet search, vendor pricing list, verbal quotes). b. The price quotes will remain confidential before the award. c. Quotes will be evaluated by the business office and awarded based on price and the factors identified in the original request for quotes. d. Ensure all vendors receive the same information about the products or services and any special need that could affect the price. e. Check vendors for federal disbarment or suspension. Condition: During our procurement testing, we identified that the Organization did not obtain price quotes related to the purchase of $193,378 which fell within the small purchases threshold. Questioned Costs: $193,378 Context: We tested the Organizations one small purchase procurement which occurred during fiscal year 2023 in the amount of $193,978 and noted the above issue. A nonstatistical sampling methodology was used to select the sample. Effect: The Organization was not in compliance with its procurement policies and the Uniform Guidance. Cause: The Organization did not have adequate documentation to support the Organizations procurement decisions. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization follow its procurement procedures for the acquisition of property or services as required under a Federal award or sub-award. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.
Finding: Procurement Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of The Treasury pass through from Jefferson County and Signal Behavioral Health Network Award Year: 2023 Award Number: Not Provided Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local 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 2 CFR 200.317 through 200.327. The Organizations procurement policy requires for Small purchases between $10,000 and $250,000. Competitive price quotes must be obtained to allow for full and open competition. a. A written solicitation including specs will be prepared and prices (might also include quality, delivery, geographical preference) obtained from multiple sources (preferably three or more) either by providing specs to the vendors or researching vendor prices (ex. internet search, vendor pricing list, verbal quotes). b. The price quotes will remain confidential before the award. c. Quotes will be evaluated by the business office and awarded based on price and the factors identified in the original request for quotes. d. Ensure all vendors receive the same information about the products or services and any special need that could affect the price. e. Check vendors for federal disbarment or suspension. Condition: During our procurement testing, we identified that the Organization did not obtain price quotes related to the purchase of $193,378 which fell within the small purchases threshold. Questioned Costs: $193,378 Context: We tested the Organizations one small purchase procurement which occurred during fiscal year 2023 in the amount of $193,978 and noted the above issue. A nonstatistical sampling methodology was used to select the sample. Effect: The Organization was not in compliance with its procurement policies and the Uniform Guidance. Cause: The Organization did not have adequate documentation to support the Organizations procurement decisions. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization follow its procurement procedures for the acquisition of property or services as required under a Federal award or sub-award. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
U.S. Department of Treasury Federal Financial Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance Criteria – The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. As described in the 2023 compliance supplement, Part 3 includes the requirements of uniform guidance and 2 CFR sections 200.317 through 200.326. We consider factors such as the County’s internal controls and the internal controls over compliance requirements and tests as prescribed in 2 CFR section 200.317 through 200.326. Condition – We selected 4 procurements during our review of overall grant activity for the year ended June 30, 2023. We noted the following in our testing: 1 of the 4 procurements tested was not purchased prior to publishing bids within the local newspaper as required by the County’s Procurement Policy. Cause – Due to insufficient controls over the procurement review process (documentation) the controls are not operating as designed (or not properly implemented to prevent, detect and correct errors timely). Effect – Failure to document the required procurement procedures of the grant may result in noncompliance with the County’s policy. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 4 out of 18 expenditures subject to procurement requirements were selected for testing, which accounted for $320,725 of $1,131,449 total expenditures subject to procurement requirements. Repeat Finding from Prior Years – No. Recommendation – We recommend that the County review the procurement approval process to determine why the controls failed and to design and implement controls that will prevent, detect and correct this from occurring in the future. View of Responsible Officials – The County will be more diligent in following their procurement policy. The Finance Department and Grants Team will provide training and guidance to ensure all the other County Departments/Offices are aware of the requirements. Additionally, the upcoming move to a new financial system will lend itself to policy updates and business process updates to ensure this will be less likely to happen.
U.S. Department of Treasury Federal Financial Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance Criteria – The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. As described in the 2023 compliance supplement, Part 3 includes the requirements of uniform guidance and 2 CFR sections 200.317 through 200.326. We consider factors such as the County’s internal controls and the internal controls over compliance requirements and tests as prescribed in 2 CFR section 200.317 through 200.326. Condition – We selected 4 procurements during our review of overall grant activity for the year ended June 30, 2023. We noted the following in our testing: 1 of the 4 procurements tested was not purchased prior to publishing bids within the local newspaper as required by the County’s Procurement Policy. Cause – Due to insufficient controls over the procurement review process (documentation) the controls are not operating as designed (or not properly implemented to prevent, detect and correct errors timely). Effect – Failure to document the required procurement procedures of the grant may result in noncompliance with the County’s policy. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 4 out of 18 expenditures subject to procurement requirements were selected for testing, which accounted for $320,725 of $1,131,449 total expenditures subject to procurement requirements. Repeat Finding from Prior Years – No. Recommendation – We recommend that the County review the procurement approval process to determine why the controls failed and to design and implement controls that will prevent, detect and correct this from occurring in the future. View of Responsible Officials – The County will be more diligent in following their procurement policy. The Finance Department and Grants Team will provide training and guidance to ensure all the other County Departments/Offices are aware of the requirements. Additionally, the upcoming move to a new financial system will lend itself to policy updates and business process updates to ensure this will be less likely to happen.
U.S. Department of Treasury Federal Financial Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance Criteria – The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. As described in the 2023 compliance supplement, Part 3 includes the requirements of uniform guidance and 2 CFR sections 200.317 through 200.326. We consider factors such as the County’s internal controls and the internal controls over compliance requirements and tests as prescribed in 2 CFR section 200.317 through 200.326. Condition – We selected 4 procurements during our review of overall grant activity for the year ended June 30, 2023. We noted the following in our testing: 1 of the 4 procurements tested was not purchased prior to publishing bids within the local newspaper as required by the County’s Procurement Policy. Cause – Due to insufficient controls over the procurement review process (documentation) the controls are not operating as designed (or not properly implemented to prevent, detect and correct errors timely). Effect – Failure to document the required procurement procedures of the grant may result in noncompliance with the County’s policy. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 4 out of 18 expenditures subject to procurement requirements were selected for testing, which accounted for $320,725 of $1,131,449 total expenditures subject to procurement requirements. Repeat Finding from Prior Years – No. Recommendation – We recommend that the County review the procurement approval process to determine why the controls failed and to design and implement controls that will prevent, detect and correct this from occurring in the future. View of Responsible Officials – The County will be more diligent in following their procurement policy. The Finance Department and Grants Team will provide training and guidance to ensure all the other County Departments/Offices are aware of the requirements. Additionally, the upcoming move to a new financial system will lend itself to policy updates and business process updates to ensure this will be less likely to happen.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "The non-Federal entity must have and use document 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "The non-Federal entity must have and use document 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "The non-Federal entity must have and use document 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "The non-Federal entity must have and use document 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "The non-Federal entity must have and use document 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 A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-007: Significant Deficiency, Procurement and Noncompliance Finding – Procurement – Internal Control over Procurement Assistance Listing Program Title and Number: Special Education Cluster (IDEA) 84.027 Federal Agency: Department of Education Pass-through Entity: N/A Award year: 2022 and 2023 Criteria or specific requirement: The City must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Condition: SPED/Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases-Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. The DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, the City did not follow their own procurement policy requiring two quotes for a micro-purchase expenditure, three quotes for a small purchase expenditure and advertising for bids publicly for the large >$5,000 purchase expenditures. They only obtained one quote for each expenditure for micro and small purchases, and they did not use a public bid process for expenditures over $5,000. Cause: While the City has a formal policy around required bids, the thresholds had not been updated in several years and there was a lack of controls that ensured the City DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Effect: Possible effects on the performance is centered around potentially not awarding the purchase to the lowest qualified bidder. Prevalence: Systemic in nature. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls that require review of each expenditure to ensure the City obtained the adequate number of bids for each expenditure. Additionally, we recommend that the City update their procurement thresholds to be more consistent with the compliance thresholds. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-007: Significant Deficiency, Procurement and Noncompliance Finding – Procurement – Internal Control over Procurement Assistance Listing Program Title and Number: Special Education Cluster (IDEA) 84.027 Federal Agency: Department of Education Pass-through Entity: N/A Award year: 2022 and 2023 Criteria or specific requirement: The City must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Condition: SPED/Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases-Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. The DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, the City did not follow their own procurement policy requiring two quotes for a micro-purchase expenditure, three quotes for a small purchase expenditure and advertising for bids publicly for the large >$5,000 purchase expenditures. They only obtained one quote for each expenditure for micro and small purchases, and they did not use a public bid process for expenditures over $5,000. Cause: While the City has a formal policy around required bids, the thresholds had not been updated in several years and there was a lack of controls that ensured the City DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Effect: Possible effects on the performance is centered around potentially not awarding the purchase to the lowest qualified bidder. Prevalence: Systemic in nature. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls that require review of each expenditure to ensure the City obtained the adequate number of bids for each expenditure. Additionally, we recommend that the City update their procurement thresholds to be more consistent with the compliance thresholds. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-007: Significant Deficiency, Procurement and Noncompliance Finding – Procurement – Internal Control over Procurement Assistance Listing Program Title and Number: Special Education Cluster (IDEA) 84.027 Federal Agency: Department of Education Pass-through Entity: N/A Award year: 2022 and 2023 Criteria or specific requirement: The City must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Condition: SPED/Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases-Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. The DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, the City did not follow their own procurement policy requiring two quotes for a micro-purchase expenditure, three quotes for a small purchase expenditure and advertising for bids publicly for the large >$5,000 purchase expenditures. They only obtained one quote for each expenditure for micro and small purchases, and they did not use a public bid process for expenditures over $5,000. Cause: While the City has a formal policy around required bids, the thresholds had not been updated in several years and there was a lack of controls that ensured the City DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Effect: Possible effects on the performance is centered around potentially not awarding the purchase to the lowest qualified bidder. Prevalence: Systemic in nature. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls that require review of each expenditure to ensure the City obtained the adequate number of bids for each expenditure. Additionally, we recommend that the City update their procurement thresholds to be more consistent with the compliance thresholds. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-007: Significant Deficiency, Procurement and Noncompliance Finding – Procurement – Internal Control over Procurement Assistance Listing Program Title and Number: Special Education Cluster (IDEA) 84.027 Federal Agency: Department of Education Pass-through Entity: N/A Award year: 2022 and 2023 Criteria or specific requirement: The City must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Condition: SPED/Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases-Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. The DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, the City did not follow their own procurement policy requiring two quotes for a micro-purchase expenditure, three quotes for a small purchase expenditure and advertising for bids publicly for the large >$5,000 purchase expenditures. They only obtained one quote for each expenditure for micro and small purchases, and they did not use a public bid process for expenditures over $5,000. Cause: While the City has a formal policy around required bids, the thresholds had not been updated in several years and there was a lack of controls that ensured the City DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Effect: Possible effects on the performance is centered around potentially not awarding the purchase to the lowest qualified bidder. Prevalence: Systemic in nature. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls that require review of each expenditure to ensure the City obtained the adequate number of bids for each expenditure. Additionally, we recommend that the City update their procurement thresholds to be more consistent with the compliance thresholds. Views of Responsible Officials: Management agrees with the finding.
2023-003 Documented Procurement Policy Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Procurement, Suspension, and Debarment Criteria - Per 2 C.F.R. § 200.318(a), non-federal entities must use documented procurement procedures that reflect applicable state and local laws and regulations and conform to applicable federal laws and the procurement standards identified in the Uniform Guidance, including those set forth in §§ 200.317 through 200.327. Condition - During our audit, we noted that the Organization did not have a documented procurement policy in place that complies with the Uniform Guidance. Cause - The Organization has historically had a low volume of procurement activity and has not formalized written procurement procedures. Effect - Without a documented procurement policy, there is an increased risk that future procurements may not comply with applicable federal requirements, which could result in unallowable costs or other compliance issues. Questioned Costs - None noted. Context - This condition was identified during our testing of internal controls over compliance for the Procurement, Suspension, and Debarment requirement. Although the Organization did not enter into any contracts or purchases during the audit period that exceeded the micro-purchase threshold, the absence of a required policy represents a significant deficiency in internal control over compliance. Recommendation - We recommend that the Organization develop and implement a written procurement policy that complies with 2 C.F.R. §§ 200.318–.327 and ensure that staff are trained on its provisions. View of Responsible Officials - We agree with the finding. The organization lacked a formal procurement policy.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “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. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.