Criteria: The Uniform Guidance requires written policies and procedures documenting how the organization determines the allowable costs eligible for reimbursement with federal funds as well as written policies and procedures documenting how the organization complies with the federal procurement standards. Condition: BREC does not currently maintain written policies and procedures for determining allowable costs and compliance with procurement requirements in accordance with 2 CFR 200.318-326. Questioned Costs: Not applicable. Cause: Written policies and procedures over allowable costs and procurement have not been developed. Effect: Written policies and procedures over allowable costs and procurement are not available to guide staff responsible for federal expenditures. Recommendation: We recommend that BREC develop written policies and procedures for determining allowable costs and for procurement under the Uniform Guidance. Management’s Response & Corrective Plan: (Unaudited) • While BREC currently does not have any federal expenses identified as unallowable costs applicable to this finding, a written SOP will be developed for determining allowable costs and procurement requirements in accordance with the applicable CFR to guide key finance staff with responsibility for federally eligible expenditures. o Anticipated Completion Date: July 31, 2024 o Responsable Contact Person: Rhonda Williams
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2021 through December 31, 2021 2021-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-002 Description of Condition As of the end of fiscal year 2021, the Town had spent $2,379,378 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest with the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform to Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023/24 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2021 through December 31, 2021 2021-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-002 Description of Condition As of the end of fiscal year 2021, the Town had spent $2,379,378 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest with the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform to Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023/24 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2021 through December 31, 2021 2021-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-002 Description of Condition As of the end of fiscal year 2021, the Town had spent $2,379,378 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest with the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform to Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023/24 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirement identified in 2 CFR Part 200. The procurement procedures must include the following: - Using the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). - For acquisitions exceeding the simplified acquisition threshold, using one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of the circumstances are met, in accordance with 2 CFR section 200.320(c)). - Using Noncompetitive procurement only if one or more of the following circumstances apply: · The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; · The item is available only from a single source; · The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; - The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or ∙ After solicitation of a number of sources, competition is determined inadequate PDA’s procurement policy also requires a verification that vendors and sub-recipient are not suspended or debarred by checking the website of the System for Award Management and documentation of such verification maintained by the Finance Office. Condition/Context While PDA has established a procurement policy, it does not fully conform to Federal law and the Uniform Guidance for the following reasons: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $5,000. - The policy does not clear provisions for maintaining detailed procurement records. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. During our testing of 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected the necessary documentation evidencing compliance with PDA’s procurement standards was not retained. All the transactions tested were noncompetitive and thus single sourced. The total misstatement from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three vendors, which represented a 100% sample, we found no evidence of documentation for suspension and debarment verification. Although discussions with management suggested that all these transactions were properly conceived and evaluated at the time, there was no contemporaneous documentation to support this. Cause PDA’s procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Internal controls over maintaining sufficient records to detail the history of procurement including noncompetitive justification and suspension and debarment verification were found to be insufficient. Effect The policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. Recommendation We recommend PDA implement measures to ensure that its procurement policy reflect applicable state and local laws and regulations conforming to applicable federal statutes and requirement in 2 CFR part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirement identified in 2 CFR Part 200. The procurement procedures must include the following: - Using the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). - For acquisitions exceeding the simplified acquisition threshold, using one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of the circumstances are met, in accordance with 2 CFR section 200.320(c)). - Using Noncompetitive procurement only if one or more of the following circumstances apply: · The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; · The item is available only from a single source; · The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; - The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or ∙ After solicitation of a number of sources, competition is determined inadequate PDA’s procurement policy also requires a verification that vendors and sub-recipient are not suspended or debarred by checking the website of the System for Award Management and documentation of such verification maintained by the Finance Office. Condition/Context While PDA has established a procurement policy, it does not fully conform to Federal law and the Uniform Guidance for the following reasons: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $5,000. - The policy does not clear provisions for maintaining detailed procurement records. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. During our testing of 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected the necessary documentation evidencing compliance with PDA’s procurement standards was not retained. All the transactions tested were noncompetitive and thus single sourced. The total misstatement from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three vendors, which represented a 100% sample, we found no evidence of documentation for suspension and debarment verification. Although discussions with management suggested that all these transactions were properly conceived and evaluated at the time, there was no contemporaneous documentation to support this. Cause PDA’s procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Internal controls over maintaining sufficient records to detail the history of procurement including noncompetitive justification and suspension and debarment verification were found to be insufficient. Effect The policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. Recommendation We recommend PDA implement measures to ensure that its procurement policy reflect applicable state and local laws and regulations conforming to applicable federal statutes and requirement in 2 CFR part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment.
2 CFR § 1000.1 gives regulatory effect to the Department of Treasury for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when entering into procurement transactions using Federal funds. 2 CFR § 200.318(a) indicates a non-Federal entity must have and use its own documented procurement procedures, consistent with State and local laws and regulations and the standards of 2 CFR § 200.318 through 200.327, for the acquisition of property or services required under a Federal award or subaward. 2 CFR § 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the non-Federal entity’s micro-purchase dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, which requires public solicitation of bids and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price; (d) Procurement by competitive proposals, which is generally used when conditions are not appropriate for the use of sealed bids and is a procurement method in which either a fixed price or cost-reimbursement type contract is awarded; or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a single source, the non-competitive procurement is specifically authorized by the Federal awarding agency or pass-through entity, competition is deemed adequate after solicitation through competitive means, the aggregate amount of procurement does not exceed the micro-purchase threshold, and/or the public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation. 2 CFR § 200.318(i) indicates 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. 31 CFR § 19.300 indicates before entering into a covered transaction as defined in 31 CFR § 19 Subpart B, the non-Federal entity must ensure the expenditure is not made to an individual or business that is excluded or disqualified from receiving Federal funds by checking the Excluded Party List System (EPLS), collecting a certification from the individual or business, or adding a clause or condition to the contract. The City did not establish the necessary controls or policies to ensure proper compliance with Procurement requirements. For five of five procurements in excess of the City’s micro-purchase threshold which were entered into using Coronavirus State and Local Fiscal Recovery Funds (SLRF), the City did not maintain records sufficient to detail the history of the procurement. It was not evident if the City obtained quotes or bids for the items purchased or if a cost-price analysis was performed. Additionally, the City did not have written procurement procedures that conform to applicable laws noted above. Finally, the City did not ensure the vendors paid under covered transactions using SLRF funds were not excluded or disqualified from receiving Federal funds. The City should review the procurement requirements contained in 2 CFR § 200.318 through 200.327 and develop policies and procedures to ensure compliance. The City should maintain sufficient documentation to detail the history of the procurement, which may vary depending on the procurement method used. As a part of the procurement process, the City should include procedures for ensuring a vendor is not excluded or disqualified from receiving Federal funds and maintain documentation the procedure was followed.
CONDITION: The City of McKeesport contracted with Applied Concepts, Inc. for police trailers, and A&H Equipment for the purchase of a vactor truck. These contracts individually exceeded the Uniform Guidance micro purchase threshold of $10,000, but did not exceed the Simplified Acquisition Threshold of $250,000. Both of these purchases were procured through a cooperative purchasing group (COSTARS). The City was unable to 1) provide records sufficient to detail the history of procurement for these two contracts and 2) provide documentation to verify that price or rate quotations were obtained from an adequate number of qualified sources. CRITERIA: Section 2 CFR 200.320(a)(2)(i) of the Uniform Guidance prescribes the bidding requirements for equipment, supplies, and work of any nature made by a non-federal entity whereby the cost exceeds certain dollar thresholds as adjusted periodically. In instances where the cost incurred exceeds the Uniform Guidance micro purchase threshold of $10,000 but does not exceed the Simplified Acquisition Threshold of $250,000, price or rate quotations must be obtained from an adequate number of qualified sources. In addition, as specified in 2 CFR 200. 318(i) of the Uniform Guidance, the City must maintain sufficient records to detail the history of procurement. CAUSE: City personnel directly responsible for the oversight and execution of these procurements were not fully familiar with the procurement requirements as prescribed by Sections 2 CFR 200.320(a)(2)(i) and 2 CFR 200.318(i) of the Uniform Guidance. EFFECT: The City of McKeesport did not comply with the requirements of Sections 2 CFR 200.320(a)(2)(i) and 2 CFR 200.318(i) of the Uniform Guidance with regard to maintaining sufficient records to detail the history of procurement and conducting a cost or price analysis for a procurement in instances where the procurement cost incurred for goods and/or services exceeds the Uniform Guidance micro purchase threshold of $10,000 but does not exceed the Simplified Acquisition Threshold of $250,000. QUESTIONED COST: $246,867 RECOMMENDATION: I am recommending that City management implement, review and update annually as necessary, City federal financial policies and procedures, similar to those developed for use in the City’s Community Development Program to ensure In instances where the procurement cost incurred for goods and/or services exceeds the Uniform Guidance micro purchase threshold of $10,000 but does not exceed the Simplified Acquisition Threshold of $250,000, that 1) price or rate quotations are obtained from an adequate number of qualified sources, and 2) sufficient records are maintained to detail the history of procurement. These measures will enable the City to comply with the procurement requirements as prescribed Sections 2 CFR 200.320(a)(2)(i) and 2 CFR 200.318(i) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Stevens County January 1, 2021 through December 31, 2021 2021-001 The County’s internal controls were inadequate for ensuring compliance with federal procurement requirements. CFDA Number and Title: 20.205 – Highway Planning and Construction; 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration; U.S. Department of the Treasury Federal Award/Contract Number: STPR-E331 (005), BRS-F334(002), BHS-Z933 (003), BHOS-10BA (001), HSIP-000S (577), STPR-G333 (004) Pass-through Entity Name: Washington State Department of Transportation (WSDOT) Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition Highway Planning and Construction Cluster The objectives of the Highway Planning and Construction Cluster are to: (1) assist states in the planning and development of an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System (NHS), including interstate highways and most other public roads; (2) provide aid for the repair of federal-aid highways following disasters; (3) foster safe highway design, and replace or rehabilitate structurally deficient or functionally obsolete bridges; and (4) to provide for other special purposes. During fiscal year 2021, the County spent $4,372,038 in federal funding for road improvement projects. Coronavirus State and Local Fiscal Recovery Funds The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to support state, local and tribal governments’ response to and recovery from the COVID-19 public health emergency. During fiscal year 2021, the County spent $1,378,893 in SLFRF funding for public safety vehicles, radio and medical equipment, computers, and building safety remodel supplies. Procurement procedures Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations also require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Although the County had a written procurement policy at the time of procurement, it did not conform to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. Additionally, the County’s policy did not include procedures for procuring transactions, such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements, and more. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition County employees and officials misunderstood the federal procurement standards. They thought that the County’s current procurement policy met the standards required under Uniform Guidance, as the policy states that “all employees shall follow the most restrictive, local, state or federal procurement policy when using Federal Grant Funds to be in compliance with the Code of Federal Requirements (CFR part 200).” Additionally, for procurement performed for the Highway Planning and Construction Cluster, County employees thought that following WSDOT’s Local Agency Guidelines Manual (LAG Manual) and guidance from the Municipal Research and Services Center (MRSC) were sufficient for complying with federal procurement standards. Effect of Condition Although the County’s policy did not conform to Uniform Guidance, our testing found the County complied with federal requirements for competitive solicitation of public works contractors and purchases of goods and services. However, without updated written procurement procedures, the County is at greater risk of noncompliance with the most restrictive procedures when procuring contractors and goods and services with federal funds. Recommendation We recommend the County review and update its written procurement policy to conform to Uniform Guidance requirements (2 CFR § 200.318-327) for all procurement activities. County’s Response Stevens County will review and update the County's procurement policies to be compliance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Auditor’s Remarks We appreciate the county’s response and commitment to resolving this finding. We thank it for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-032 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. Condition: Of fifty-one nonpayroll expenditures tested, aggregating $3.1M of a total population of $6.7M expenditures subject to procurement, the following were noted: 1. For thirty-four (or 67%), no procurement documents were provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: Condition 1, continued: 2. For one (or 2%) (document no. 1718052 dated 08/10/21 amounting to $26,100), the contract and underlying procurement files were not provided, for which the amount is questioned. 3. For four (or 8%), vendor quotations were not provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: 4. For one (or 2%) (document no. 1719396 dated 08/17/21 amounting $764,345), the procurement method used was not specified and the P&S Director’s written determination were not provided, for which the amount is questioned. Cause: CNMI did not enforce compliance with established procurement regulations. Effect: CNMI is in noncompliance with established procurement regulations and questioned costs of $2,775,965 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement regulations, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 2, 3 for Doc No. 263066 and 4 – The CNMI Corrective Action Plan states agreement. Condition 1 – The Department of Finance – Procurement Services disagrees with this finding. No procurement documents were provided because these thirty-four transactions were for payments made out for Travel, Medical Referral Patients, etc. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Views of responsible officials: Condition 3 - The Department of Finance – Procurement Services disagrees with these findings. For 732176-000 OP $13,440 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). For 724870-000 OP $8,789 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). The Emergency Declaration suspended the procurement regulations and authorized the Expenditure Authority to procure any items/procure services exceeding the threshold without obtaining any price quotes. For PO #732176 & 728470, these are not part of the Gov’s Executive Order #2022-04. The Division of Procurement Services will accept the findings as noncompliance with the CNMI Procurement Regulations. Auditor Response: Condition 1 – No supporting documentation were provided to substantiate that the transactions pertain to travel and medical referral patients. In addition, based on the general ledger descriptions, Document Nos. 921922, 1727770, 1727772, 1735047, 1721009, 1717349, 261094, 1722328, 1722338, 261528, 1666323, 1665777 and 1732183 pertain to legal professional fees, Tourism Resumption Investment Plan (TRIP) program, professional services, postage meter, lease rental, air condition service, fuel, office supplies, Pelican LED rechargeable, project improvements, tents and picnic tables rental and vacuum purchases. Further, we were not able to determine the type of expenditure for document no. 1674103 as the only description stated was "JUN 2021". Condition 3 – Pursuant to § 70-30.3-220, if fewer than three vendors submit quotations, the expenditure authority shall certify, in writing, to the Director that fewer than three vendors responded and shall provide written proof of the request. If fewer than three of the solicited vendors submit quotes, the Director may either approve the request or instruct the expenditure authority to solicit additional quotes.
Finding No. 2021-037 Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding; (b) Competitive sealed proposals; (c) Architect-engineer services; and (d) Competitive selection procedures for professional services. • Emergency Procurement. o Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances. o A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority. o If the Procurement and Supply (P&S) Director is satisfied, he shall state his approval in writing. Condition: Of fourteen expenditures tested, aggregating $18.4M of a total population of $20.2M in nonpayroll expenditures subject to procurement, the following were noted: 1. For eleven (or 79%, either the procurement files, written justifications, and the P&S Director’s written approvals of the Emergency Procurement method used were not provided. In addition, the contracts for Document Nos. 904160, 912446, 922508 and 907725 indicated procurement methods used were for competitive sealed proposals; however, the procurement files support emergency procurement. Further, the procurement information page that specifies the procurement method used for Document Nos. 912931 and 913016 were left blank but were initialed by the Legal reviewer. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Condition, continued: Condition 1, continued: 2. For three (or 21%), purchase orders do not specify the procurement methods used. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Cause: CNMI did not enforce compliance with applicable procurement requirements. Effect: CNMI is in noncompliance with applicable procurement requirements and questioned costs of $18,353,963 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 1 – The CNMI Corrective Action Plan states agreement. Condition 2 - The Department of Finance – Procurement Services disagrees with this finding. For 715112-000 OP / 727492-000 OP / 730942-000 OP. These three purchase orders were provided in the list for ALN 97.030 and were available for testing during auditor’s fieldwork. Auditors failed to perform the required testing. Auditor Response: Condition 2 – Purchase orders do not demonstrate compliance with procurement regulations.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
Missing documentation for procurement, suspension and debarment Audit Results: Information on Federal Programs: Assistance Listing #: 16.582 Crime Victim Assistance/Discretionary Grants and 93.591 Family Violence Prevention and Services/State Domestic Violence Coalitions Grant Award Numbers: VOCA-2018-003, 2001MDSDVC, 2101MDSDVC21, 2001MDSDC3 Federal Agency: United States Department of Justice, United States Department of Health and Human Services. Pass-through Entity (VOCA-2018-003): State of Maryland - Governor's Office of Crime Control and Prevention. Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for one contracts and in addition, for that contract, there was no documentation of the verification that the contractor was not suspended or debarred. We consider this to be an instance of non-compliance and a significant deficiency in internal control over compliance for the reporting requirement. Context: It is important to determine that contractors used are eligible for work and that they have not been suspended or debarred from performing work on projects supported by federal funds It is also important to have full and open competition on contract work that is federally funded. Questioned Costs: None Effect: As a result, the Organization is not in compliance with the requirements for procurement, suspension and debarment. Cause: This resulted from human error and turnover at the accounting and management level. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Management should also establish procedures for verifying that contractors are not suspended or debarred and a system for maintaining this verification should be established. It is critical to maintain detailed documentation to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The contract highlighted as part of this audit was a contract that predated FY21 and both the current Executive Director and Finance Manager. As this was not a new contract, no bid or verification that the contractor was not suspended or debarred was conducted during FY21. However, it is understood that this should have been completed in prior years and the fact that there was no documentation to support the completion of this activity is problematic. In order to ensure that proper sole source documentation is in place, MNADV will review all sole source contracts over $10,000 and verify that a bid process is in place and all vendors are properly vetted for suspension or debarment. This will be completed by May 31, 2024.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-032 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. Condition: Of fifty-one nonpayroll expenditures tested, aggregating $3.1M of a total population of $6.7M expenditures subject to procurement, the following were noted: 1. For thirty-four (or 67%), no procurement documents were provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: Condition 1, continued: 2. For one (or 2%) (document no. 1718052 dated 08/10/21 amounting to $26,100), the contract and underlying procurement files were not provided, for which the amount is questioned. 3. For four (or 8%), vendor quotations were not provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: 4. For one (or 2%) (document no. 1719396 dated 08/17/21 amounting $764,345), the procurement method used was not specified and the P&S Director’s written determination were not provided, for which the amount is questioned. Cause: CNMI did not enforce compliance with established procurement regulations. Effect: CNMI is in noncompliance with established procurement regulations and questioned costs of $2,775,965 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement regulations, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 2, 3 for Doc No. 263066 and 4 – The CNMI Corrective Action Plan states agreement. Condition 1 – The Department of Finance – Procurement Services disagrees with this finding. No procurement documents were provided because these thirty-four transactions were for payments made out for Travel, Medical Referral Patients, etc. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Views of responsible officials: Condition 3 - The Department of Finance – Procurement Services disagrees with these findings. For 732176-000 OP $13,440 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). For 724870-000 OP $8,789 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). The Emergency Declaration suspended the procurement regulations and authorized the Expenditure Authority to procure any items/procure services exceeding the threshold without obtaining any price quotes. For PO #732176 & 728470, these are not part of the Gov’s Executive Order #2022-04. The Division of Procurement Services will accept the findings as noncompliance with the CNMI Procurement Regulations. Auditor Response: Condition 1 – No supporting documentation were provided to substantiate that the transactions pertain to travel and medical referral patients. In addition, based on the general ledger descriptions, Document Nos. 921922, 1727770, 1727772, 1735047, 1721009, 1717349, 261094, 1722328, 1722338, 261528, 1666323, 1665777 and 1732183 pertain to legal professional fees, Tourism Resumption Investment Plan (TRIP) program, professional services, postage meter, lease rental, air condition service, fuel, office supplies, Pelican LED rechargeable, project improvements, tents and picnic tables rental and vacuum purchases. Further, we were not able to determine the type of expenditure for document no. 1674103 as the only description stated was "JUN 2021". Condition 3 – Pursuant to § 70-30.3-220, if fewer than three vendors submit quotations, the expenditure authority shall certify, in writing, to the Director that fewer than three vendors responded and shall provide written proof of the request. If fewer than three of the solicited vendors submit quotes, the Director may either approve the request or instruct the expenditure authority to solicit additional quotes.
Finding No. 2021-037 Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding; (b) Competitive sealed proposals; (c) Architect-engineer services; and (d) Competitive selection procedures for professional services. • Emergency Procurement. o Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances. o A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority. o If the Procurement and Supply (P&S) Director is satisfied, he shall state his approval in writing. Condition: Of fourteen expenditures tested, aggregating $18.4M of a total population of $20.2M in nonpayroll expenditures subject to procurement, the following were noted: 1. For eleven (or 79%, either the procurement files, written justifications, and the P&S Director’s written approvals of the Emergency Procurement method used were not provided. In addition, the contracts for Document Nos. 904160, 912446, 922508 and 907725 indicated procurement methods used were for competitive sealed proposals; however, the procurement files support emergency procurement. Further, the procurement information page that specifies the procurement method used for Document Nos. 912931 and 913016 were left blank but were initialed by the Legal reviewer. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Condition, continued: Condition 1, continued: 2. For three (or 21%), purchase orders do not specify the procurement methods used. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Cause: CNMI did not enforce compliance with applicable procurement requirements. Effect: CNMI is in noncompliance with applicable procurement requirements and questioned costs of $18,353,963 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 1 – The CNMI Corrective Action Plan states agreement. Condition 2 - The Department of Finance – Procurement Services disagrees with this finding. For 715112-000 OP / 727492-000 OP / 730942-000 OP. These three purchase orders were provided in the list for ALN 97.030 and were available for testing during auditor’s fieldwork. Auditors failed to perform the required testing. Auditor Response: Condition 2 – Purchase orders do not demonstrate compliance with procurement regulations.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards 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. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards 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. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
Finding 2021-009 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; and Special Tests and Provisions – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR-4438 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $105,935 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of five (5) out of seventeen (17) project worksheets, the following weaknesses were noted: Project Worksheet 365 (D3) Questioned Cost – $1,257: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the district. Total unsupported county equipment costs $402. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $855. Project Worksheet 872 (D2) Questioned Cost – $15,152: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $939. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $9,946. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported did not exceed the total County documentation. • Unallowed management costs were included in total project expenditures totaling $4,267. Project Worksheet 888 (D2) Questioned Cost – $19,885: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $2,298. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $10,551. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $640. • Unallowed management costs were included in total project expenditures totaling $6,396. Project Worksheet 967 (D2) Questioned Cost – $4,137: • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $940. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $2,408. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $180. • Unallowed management costs were included in total project expenditures totaling $609. Further, upon additional inquiry of staff and review of documentation over 100% of federal expenditures the following was noted: Project Worksheet 365 (D3): • One (1) Quarterly Report was not submitted within 30 days of the end of a calendar quarter. Project Worksheet 756 (D2) Questioned Cost – $41,417: • Project expenditures totaling $41,417 occurred after the period of performance deadline. Project Worksheet 986 (D3) Questioned Cost – $24,087: • Project expenditures totaling $24,087 occurred after the period of performance deadline. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to federal grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend all documentation be properly maintained for inspection. Management Response: County Commissioner District 2: I was not in office at this time, but I will discuss with my Administrative Assistant and determine the best way to track all project costs. County Commissioners District 3: I will have my Administrative Assistant double check her numbers and I also will review the documentation. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a) General procurement standards reads as follows: The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District 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. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District 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. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District 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. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.