Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001 Federal Program: Formula Grants for Rural Areas and Tribal Transit Assistance Listing Number: 20.509 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Per 2 CFR §200.318(i), non-Federal entities must maintain records sufficient to detail the history of procurement, including the rationale for the method of procurement and the basis for contractor selection. For sole source procurements, 2 CFR §200.320(c) outlines specific conditions under which noncompetitive procurement is allowable and requires written justification. Additionally, 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: During our review of procurement procedures, we noted that the entity selected a sole source vendor but did not maintain documentation supporting the justification for the noncompetitive procurement. While the procurement itself did not violate Uniform Guidance requirements, the absence of supporting documentation indicates a weakness in internal controls over procurement recordkeeping. Cause: Although the entity has established procedures for documenting sole source procurement decisions, those procedures were not followed in this instance. This appears to have been an isolated oversight rather than a systemic issue. Effect: Although the procurement may have met the criteria for a sole source, the lack of documentation limits transparency and may hinder the entity’s ability to demonstrate compliance in future audits. Repeat Finding from Prior Year: No Recommendation: We recommend that management strengthen internal controls over procurement documentation by implementing procedures to ensure that all sole source procurements are supported by written justifications and retained in accordance with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.
Department of the Treasury, Passed through the State of Michigan Federal Financial Assistance Listing 21.029, CPFFN0190, 2024 COVID-19 – Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition – In our testing of procurement, suspension, and debarment it was identified that the Cooperative’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.326. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs – None reported. Context/Sampling – Overall procurement policy. Repeat Finding from Prior Years – No. Recommendation – We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the audit finding.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Public Utility District No. 1 of Franklin County January 1, 2024 through December 31, 2024 2024-001 The District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 21.029, COVID-19 Coronavirus Capital Projects Fund Federal Grantor Name: Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 23-96810-020 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the District spent $925,587 in federal Coronavirus Capital Projects program funds awarded from the Department of Treasury and passed through the Washington State Department of Commerce. During 2024, the District used program funding on one project to install fiber cable to provide broadband services. 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 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 federal, state or local procurement thresholds and methods when using federal funds. Description of Condition Our audit found the District’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the District did not include any of the federal procurement standards (2 CFR 200.318-327) in its purchasing policy. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The District does not regularly manage federal funds and as a result, staff did not know about the requirement to have written standards of conduct and procurement policies or procedures. Effect of Condition Without written policies and procedures, the District is at an increased risk of not complying with following the most restrictive of federal, state, or local procurement requirements when using federal funds to procure contractors. Although the District does not have policies in place, it followed the procurement requirements in the Washington State Broadband Office’s Infrastructure Acceleration Grants Handbook and complied with federal procurement requirements for the contracts we tested. Recommendation We recommend the District update its policies and procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327). District’s Response The District followed the federal procurement requirements for the grant award as found and upheld in the audit. Staff also communicated these requirements to the District’s Board of Commissioners on multiple occasions and held weekly internal meetings to discuss grant requirements. Additionally, staff consulted with the granting agency to ensure the procedures undertaken complied with federal requirements. The District has a long-standing history of demonstrated legal compliance and implementation of audit recommendations. For this reason, the District maintains that a simple policy change does not support the issuance of a finding. The District will revise the language in its Purchasing Policy to reflect more specific federal requirements. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our 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. 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.
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Assistance Listing, Federal Agency, and Program Name - 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAIN not available, 2024 Pass through Entity - Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 184.4(b), the Buy America Preference, which is to ensure none of the funds made available for a Federal award for an infrastructure project may be obligated unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States, must be included in all subawards, contracts, and purchase orders for the work performed under the Federal award. Per 2 CFR 200.318 (b), nonfederal entities "must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders." Condition - The City did not have controls in place surrounding the review of contracts and bid documents and omitted the Build America Buy America clause. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The City entered into one vendor contract during the year related to this federal award. The contract was for an infrastructure project, but the required Build America Buy America clauses were excluded from the contract. Cause and Effect - The City did not have a process in place to review the contract to ensure it was in compliance with Uniform Guidance; therefore, the CIty omitted the required clauses and was not in compliance with 2 CFR 200.318(b). Recommendation - We recommend the City review all contract and bid documents to ensure they are in compliance with all federal laws and regulations. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. The City did have internal policies in place to ensure compliance with federal procurement requirements. However, the project was bid and awarded prior to receipt of any grant funding, so the Buy America Preference was not included in the contracts. While unintentional, the contract requirement was not followed. The City will require an amendment to the contract to include the Build America, Buy America clause. See the corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Criteria: 2 CFR sections 200.212 and 200.318(h); 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not retain the documentation of verification of vendors not suppressed or debarred prior to entering into a contract with the vendor. Cause: The Organization does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Recommendation: The Organization should retain formal documentation with regard to its procurement decisions. View of Responsible Officials: The Organization agrees with the finding, see corrective action plan.
Significant Deficiency and Material Instance of Non-Compliance: Finding 2024-001: Written Procurement Policy This finding impacts the procurement and suspension and debarment compliance requirement for the major program, Assistance Listing Number 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds funded by U.S. Department of the Treasury and passed through Massachusetts Technology Park Corporation. Criteria: According to 2 CFR 200.318–200.326, non-federal entities receiving Federal awards must establish and maintain written procurement policies and procedures. These policies must be consistent with Federal standards, including requirements for competitive bidding, documentation, and conflict-of-interest provisions. Condition: TGH did not have a written Federal procurement policy in place during 2024. Therefore, TGH did not adhere to Federal procurement requirements that ensure competitive, fair, and transparent procurement practices, nor did it implement the necessary documentation procedures to support procurement transactions. Cause: TGH’s internal control over procurement was inadequate and did not meet the specific requirements under 2 CFR 200.318. Effect: As a result of this noncompliance, there is an increased risk of improper procurement practices and the potential for misuse of Federal funds. While no improper procurements were identified during the audit, the lack of a procurement policy exposes TGH to risks of noncompliant procurement actions, such as non-competitive contracts, conflicts of interest, and insufficient documentation of procurement decisions. Was the finding a repeat of a findings in the immediate prior year?: No Questioned Costs: None Recommendation: We recommend that TGH develop and implement a written procurement policy in accordance with 2 CFR 200.318 to ensure compliance with Federal procurement requirements. The policy should include provisions for competitive bidding, applicable purchasing, procurement threshold, conflict-of-interest disclosure, and proper documentation of procurement actions. Additionally, TGH should provide training for procurement staff to ensure they understand and follow Federal procurement standards. Management Response: Management acknowledges the finding and concurs with the recommendation. TGH is in the process of developing and formalizing a comprehensive procurement policy that complies with the procurement standards outlined in 2 CFR 200.318–200.326 of the Uniform Guidance. The policy will address key areas such as allowable procurement methods, competition requirements, contract oversight, and verification against the Federal suspension and debarment list. Management anticipates that the procurement policy will be reviewed and approved by the appropriate oversight body by June 30, 2025, and staff will receive training on its implementation shortly thereafter. TGH is committed to strengthening internal controls over procurement to ensure continued compliance with Federal requirements.
Procurement, Suspension and Debarment Questioned Costs 14.218: $248,920 14.239: $1,172 Department of Housing and Urban Development 14.218 Community Development Block Grant 14.239 HOME Investment Partnership Program Grant No(s): B-21-MC-22-002,B-22-MC-22-002,B-23-MC-22-002,M-23-MC-22-0204 Criteria: Purchases made from federal grants must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 (the Uniform Guidance or UG). Purchases of services in excess of $250,000 should be made using one of two formal methods that are competitive and require public notice. Condition: The City-Parish paid for program management services in 2020 in the amount of $250,632 under a contract that has not recently undergone formal procurement methods. The purchases were made through amendment of an existing contract initially awarded using formal methods in 2019. Universe/ Population: These programs were not selected for audit as major programs. The contract relating to the costs were selected for audit in our general procurement compliance testing for all contracts, including those paid with federal and non-federal sources. Effect: The City-Parish may be non-compliant with the purchasing requirements of the Uniform Guidance with respect to this contract. Cause: Improper execution of established internal controls and a lack of adherence to policies. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. Views of Responsible Officials: The amendment in question did not constitute a material change in the scope, nature, or intent of the original procurement. The additional funding awarded was consistent with the original services solicited and did not involve new activities or substantially alter the deliverables or performance standards initially procured. As such, the amendment fell within the bounds of the original competitive process and was not required to be procured. The City-Parish procurement policy allows for amendments when they do not exceed the original scope of work or introduce fundamentally different services. The amendment was processed with full documentation of cost reasonableness, continued eligibility under the applicable grant program and internal approval. Therefore, we assert that the contract amendment was executed in accordance with both HUD and local procurement requirements and no formal procurement was necessary. To strengthen internal controls and ensure full alignment with federal procurement requirements, the OCD will document and reinforce internal procedures outlining when procurement is or is not required for amendments within the original scope. Procurement training is ongoing. The OCD staff will conduct refresher training with procurement and program personnel on contract amendment procedures and documentation requirements. Final Auditor Comments: It is acknowledged that similar services required under the initial contract are also to be provided under the amendments to the contract (grants management services). The original contract had a term of May 1, 2019 to April 30, 2022, at an amount not-to exceed $70,000, to perform grants management services for established HUD programs such as CDBG and HOME. However, amendments to this contract, made without being competitively bid (RFP), added administration services for the Emergency Rental Assistance Program undertaken in response to the COVID-19 pandemic. These amendments brought the total not-to exceed amount to $9,054,261 for all grant management services. While the Emergency Rental Assistance Program may have qualified for emergency procurement treatment, thereby not requiring competitive procurement, the HOME and CDBG program administration services may have been required to be competitively procured after the initial contract period ending April 30, 2022.
Procurement, Suspension and Debarment Questioned Costs 14.218: $248,920 14.239: $1,172 Department of Housing and Urban Development 14.218 Community Development Block Grant 14.239 HOME Investment Partnership Program Grant No(s): B-21-MC-22-002,B-22-MC-22-002,B-23-MC-22-002,M-23-MC-22-0204 Criteria: Purchases made from federal grants must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 (the Uniform Guidance or UG). Purchases of services in excess of $250,000 should be made using one of two formal methods that are competitive and require public notice. Condition: The City-Parish paid for program management services in 2020 in the amount of $250,632 under a contract that has not recently undergone formal procurement methods. The purchases were made through amendment of an existing contract initially awarded using formal methods in 2019. Universe/ Population: These programs were not selected for audit as major programs. The contract relating to the costs were selected for audit in our general procurement compliance testing for all contracts, including those paid with federal and non-federal sources. Effect: The City-Parish may be non-compliant with the purchasing requirements of the Uniform Guidance with respect to this contract. Cause: Improper execution of established internal controls and a lack of adherence to policies. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. Views of Responsible Officials: The amendment in question did not constitute a material change in the scope, nature, or intent of the original procurement. The additional funding awarded was consistent with the original services solicited and did not involve new activities or substantially alter the deliverables or performance standards initially procured. As such, the amendment fell within the bounds of the original competitive process and was not required to be procured. The City-Parish procurement policy allows for amendments when they do not exceed the original scope of work or introduce fundamentally different services. The amendment was processed with full documentation of cost reasonableness, continued eligibility under the applicable grant program and internal approval. Therefore, we assert that the contract amendment was executed in accordance with both HUD and local procurement requirements and no formal procurement was necessary. To strengthen internal controls and ensure full alignment with federal procurement requirements, the OCD will document and reinforce internal procedures outlining when procurement is or is not required for amendments within the original scope. Procurement training is ongoing. The OCD staff will conduct refresher training with procurement and program personnel on contract amendment procedures and documentation requirements. Final Auditor Comments: It is acknowledged that similar services required under the initial contract are also to be provided under the amendments to the contract (grants management services). The original contract had a term of May 1, 2019 to April 30, 2022, at an amount not-to exceed $70,000, to perform grants management services for established HUD programs such as CDBG and HOME. However, amendments to this contract, made without being competitively bid (RFP), added administration services for the Emergency Rental Assistance Program undertaken in response to the COVID-19 pandemic. These amendments brought the total not-to exceed amount to $9,054,261 for all grant management services. While the Emergency Rental Assistance Program may have qualified for emergency procurement treatment, thereby not requiring competitive procurement, the HOME and CDBG program administration services may have been required to be competitively procured after the initial contract period ending April 30, 2022.
Procurement, Suspension and Debarment Questioned Costs: $1,071,477 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) (COVID-19) Grant No(s): N/A Criteria: Purchases made from federal grants must follow the procurement standards of Title 2 CFR sections 200.318 through 200.326 (the Uniform Guidance or UG). The Louisiana State public bid law must also be followed, which requires purchases of equipment greater than $60,000 should be made using the sealed bid method. Condition: The City-Parish purchased police vehicles in the amount $1,071,477 without undergoing the bid process. Universe/ Population: Seventeen contracts totaling $13,644,485 were subjected to compliance testing. Two contracts totaling $1,071,477 were found to be noncompliant. Effect: The City-Parish may be non-compliant with the purchasing requirements of the Uniform Guidance and the Louisiana State public bid law with respect to this purchase. Cause: Improper execution of established internal controls and a lack of adherence to policies. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Officials: The Purchasing Director for the City-Parish has the authority as provided by the Code of Ordinances to approve emergency purchases upon review of the certification of the emergency by the user department. At the beginning of 2024, the Baton Rouge Police Department noted its patrol units were in less than standard conditions and a recent Police Academy graduating class of sworn officers compounded the need for viable units. At the same time, a nationwide supply chain crisis limited the availability of vehicles for purchase. Multiple quote requests from vendors across Louisiana confirmed a lack of available inventory including the Louisiana State Contract vendor as well as a piggyback contract for the Jefferson Parish Sheriff’s Office. After an exhaustive search, a single vendor was located who had an inventory of matching vehicles on hand for offer within a limited time frame. In an effort to not compromise public safety, an emergency purchase was utilized which was signed by both the Police Chief and the Purchasing Director. As required, notice was given by publishing in the newspaper. Final Auditor Comments: While the views above cite local ordinances, state statutes still apply and give definition to situations that qualify as an emergency. The conditions under which the purchase was made may not qualify as an emergency, as defined by La R.S. 38:2211. Furthermore, La R.S. 38:2212 requires the emergency to be certified by the public entity. Louisiana Legislative Auditor’s published legal guidance indicates that this certification is to be taken through a public meeting. There was no certification of the emergency in a public meeting.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Contract #65851 Pass-Through Entity: Schneck Medical Center Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $148,800. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded until November 25, 2024. One of the two vendors selected for testing, with covered transactions totaling $148,800, was not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. The lack of internal controls and noncompliance were systemic issues until the City implemented new policies and procedures in November 2024. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not have a procurement policy in place that contained the requirements of the procurement standards as outlined in the Code of Federal Regulations prior to entering into an agreement with the vendor. Due to the timing of the adoption of the City's Procurement and Suspension and Debarment Policy, which defines procedures to ensure they are properly procuring services and verifying suspension and debarment status for covered transactions, not all of the items selected for testing were in compliance. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that goods and services are appropriately procured and that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended adhering to the newly implemented procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the City adhere to its newly approved policy of internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). UG §200.318 General Procurement Standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (a) Informal Procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed Bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). UG §200.318 General Procurement Standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (a) Informal Procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed Bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). UG §200.318 General Procurement Standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (a) Informal Procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed Bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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). UG §200.318 General Procurement Standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (a) Informal Procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed Bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
SECTION III - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS Finding 2024-001: Procurement and Suspension and Debarment (Significant Deficiency) Federal Agency: U.S. Department of the Treasury Assistance Listing Number and Title: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal award year: 2024 Criteria: Per 2 CFR §200.318, General procurement Standards, a recipient or subrecipient of Federal awards must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327, as appropriate. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. In addition, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking SAM.gov Exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition/Context: From a sample of five (5) procurement transactions, there was no evidence that management performed simplified acquisition procedures relating to obtaining price and rate quotations from an adequate number of qualified sources for three (3) of the transactions tested. Further, for these three (3) transactions, there was no evidence that management completed procedures to verify whether the vendors were suspended or debarred. Cause: The USGA has significant prior history and experience in conducting competitive procurement processes for projects relating to improvements made to golf courses. Based on the USGA’s familiarity with vendors that perform such services, including knowledge of vendor pricing, qualifications, and other relevant factors, simplified acquisition procedures and suspension and debarment verification were not consistently performed. Effect: Procurement transactions could be conducted in a manner that does not provide full and open competition. Further, covered transactions could be entered into with an entity that is suspended or debarred. Questioned Costs: None identified Identified as a Repeat Finding: No Recommendations: We recommend that the USGA strengthen its policies and procedures relating to documentation of procurement decisions and suspension and debarment verifications. Vies of Responsible Officials: Refer to Corrective Action Plan.
Federal Program Name: Research and Development Cluster: Uniformed Services University Medical Research Projects Federal Agency: U.S. Department of Defense Federal Assistance Listing Number: 12.750 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The Organization’s policies do not contain adequate documentation to demonstrate compliance with federal procurement, and suspension and debarment regulations. Effect: Without adequate procurement policies and documentation of suspension and debarment checks, the auditee may inadvertently award contracts to ineligible vendors. Questioned Costs: None Context: The Organization’s documented procurement policies do not contain all of the specific requirements of 2 CFR sections 200.318 through 200.326. Additionally, the Organization’s policies do not contain all the specific requirements of 2 CFR sections 180 and 200.14 regarding suspension and debarment. Cause: The writing of the policy did not take into account the federal procurement, suspension and debarment regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: No Recommendation: We recommend that the Organization revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the comment and will revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations.
Federal Program Name: Research and Development Cluster: Uniformed Services University Medical Research Projects Federal Agency: U.S. Department of Defense Federal Assistance Listing Number: 12.750 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The Organization’s policies do not contain adequate documentation to demonstrate compliance with federal procurement, and suspension and debarment regulations. Effect: Without adequate procurement policies and documentation of suspension and debarment checks, the auditee may inadvertently award contracts to ineligible vendors. Questioned Costs: None Context: The Organization’s documented procurement policies do not contain all of the specific requirements of 2 CFR sections 200.318 through 200.326. Additionally, the Organization’s policies do not contain all the specific requirements of 2 CFR sections 180 and 200.14 regarding suspension and debarment. Cause: The writing of the policy did not take into account the federal procurement, suspension and debarment regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: No Recommendation: We recommend that the Organization revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the comment and will revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations.
Federal Program Name: Research and Development Cluster: Uniformed Services University Medical Research Projects Federal Agency: U.S. Department of Defense Federal Assistance Listing Number: 12.750 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The Organization’s policies do not contain adequate documentation to demonstrate compliance with federal procurement, and suspension and debarment regulations. Effect: Without adequate procurement policies and documentation of suspension and debarment checks, the auditee may inadvertently award contracts to ineligible vendors. Questioned Costs: None Context: The Organization’s documented procurement policies do not contain all of the specific requirements of 2 CFR sections 200.318 through 200.326. Additionally, the Organization’s policies do not contain all the specific requirements of 2 CFR sections 180 and 200.14 regarding suspension and debarment. Cause: The writing of the policy did not take into account the federal procurement, suspension and debarment regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: No Recommendation: We recommend that the Organization revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the comment and will revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations.
Federal Program Name: Research and Development Cluster: Uniformed Services University Medical Research Projects Federal Agency: U.S. Department of Defense Federal Assistance Listing Number: 12.750 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The Organization’s policies do not contain adequate documentation to demonstrate compliance with federal procurement, and suspension and debarment regulations. Effect: Without adequate procurement policies and documentation of suspension and debarment checks, the auditee may inadvertently award contracts to ineligible vendors. Questioned Costs: None Context: The Organization’s documented procurement policies do not contain all of the specific requirements of 2 CFR sections 200.318 through 200.326. Additionally, the Organization’s policies do not contain all the specific requirements of 2 CFR sections 180 and 200.14 regarding suspension and debarment. Cause: The writing of the policy did not take into account the federal procurement, suspension and debarment regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: No Recommendation: We recommend that the Organization revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the comment and will revise its policies to incorporate all required elements of the federal procurement, suspension and debarment regulations.
Finding 2024-001 Procurement, Suspension, and Debarment Agency and Award: Federal Agency: U.S. Department of Housing and Urban Development Program: Economic Development Imitative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Federal Award Identification Number: B-23-CP-CA-0141 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. They must use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and procurement requirements identified in 2 CFR Part 200. These standards require non-federal entities to maintain written procedures for procurement transactions to ensure full and open competition, proper cost analysis, and avoidance of conflicts of interest. Condition and context: ASMYCA does not have an internal procurement policy established. Without a formal procurement policy, ASYMCA lacks a consistent framework for vendor selection, contract negotiation, and cost justification. Cause: ASYMCA’s management did not retain evidence in compliance with the above criteria regarding procurement. Effect: ASYMCA’s documentation was lacking evidence of an internal procurement policy. This may lead to inconsistent procurement practices, potential favoritism, increased risk of unallowable costs, or overpayment for goods and services. Questioned costs: None Repeat finding: No Recommendation: ASYMCA develop and implement a formal procurement policy as soon as possible. Views of Responsible Officials: Management concurs with this finding and a response is included in the corrective action plan.
Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. Condition: The cooperative’s procurement policy had not identified the dollar thresholds of procurement within the methods of procurement. In addition, one contract selected for testing was missing one of the required contract provisions. Cause: The cooperative’s procurement policy is very thorough and identifies the methods of procurement, however, management had not identified the thresholds of procurement included within the policy. Effect: The Cooperative’s policy was missing required information Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 7 transactions out of 29 transactions were selected for testing, which accounted for $1,134,758 of $3,548,469 federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review their procurement policy to ensure it includes the dollar thresholds for each of the procurement methods. In addition, we suggest the Cooperative review their contracts to ensure it includes all the required contract provisions. Views of Responsible Officials: Management agrees with the finding.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
Department of Treasury, State of Iowa Department of Management, Federal Financial Assistance Listing 21.029, 526659 Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Cooperative’s formally documented procurement policy was missing one required element as it relates to the methods of procurement. • One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. • One instance where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. • Two instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this are of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative update their procurement policy to ensure it includes the required elements as it relates to the methods of procurement. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed as it relates to covered transactions and those contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-002: 10.761 - U.S. Department of Agriculture - Water and Waste Technical Assistance and Training - Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria: Per Title 2 U.S. Code of Federal Regulations (CPR) Part 200, Subpart D, section 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement and suspension and debarment. Condition: During our testing of internal controls over compliance related to procurement and suspension and debarment, we identified vendors/ contractors that were awarded without required procurement and suspension and debarment documentation. Although there was no documentation to support this verification being performed prior to the payment, we noted that the vendors/contractors were not suspended or debarred. Questioned Costs: None. Cause: EWB-USA did not have adequate controls in place to ensure compliance with applicable federal requirements. Effect: EWB-USA was not in compliance with the procurement and suspension and debarment provisions as prescribed in the CFR. Recommendation: We recommend that EWB-USA implement procedures and controls to ensure that the approval of contractors or vendors are adequately supported by sufficient documentation and detail. In addition, this documentation should be retained, at a minimum, through the completion of the contract. Response: 1. Develop procurement procedures for procurement transactions under Federal awards or subawards, including verification that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. 2. Provide training to relevant staff on the new procedures for procurement transactions including the verification of suspension and debarment for any subrecipient awards and the importance of compliance with federal regulations.
Finding 2024-002: 10.761 - U.S. Department of Agriculture - Water and Waste Technical Assistance and Training - Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria: Per Title 2 U.S. Code of Federal Regulations (CPR) Part 200, Subpart D, section 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement and suspension and debarment. Condition: During our testing of internal controls over compliance related to procurement and suspension and debarment, we identified vendors/ contractors that were awarded without required procurement and suspension and debarment documentation. Although there was no documentation to support this verification being performed prior to the payment, we noted that the vendors/contractors were not suspended or debarred. Questioned Costs: None. Cause: EWB-USA did not have adequate controls in place to ensure compliance with applicable federal requirements. Effect: EWB-USA was not in compliance with the procurement and suspension and debarment provisions as prescribed in the CFR. Recommendation: We recommend that EWB-USA implement procedures and controls to ensure that the approval of contractors or vendors are adequately supported by sufficient documentation and detail. In addition, this documentation should be retained, at a minimum, through the completion of the contract. Response: 1. Develop procurement procedures for procurement transactions under Federal awards or subawards, including verification that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. 2. Provide training to relevant staff on the new procedures for procurement transactions including the verification of suspension and debarment for any subrecipient awards and the importance of compliance with federal regulations.
2024-005 - Lack of Written Federal Policies and Procedures Required by Uniform Guidance Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Condition/Finding: The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. Criteria: Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318–320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Cause: The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect: The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Recommendation: We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.
FINDING 2024-002 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds, micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Procurement - Simplified Acquisition During the audit period, the City had two vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Both vendors were tested. For one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total amount spent with this vendor was $2,391,895. Procurement - Policy The City provided its purchasing policy for review, but it did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of four covered transactions for goods or services were paid from USDA award funds during the audit period. A sample of two vendors were selected for testing. Of the two vendors tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were isolated to the same single vendor for both the simplified acquisition and the suspension and debarment issues as noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The vendor in question was an engineering firm that the City originally hired to do a study at $40,000 in 2018 related to the wastewater treatment plant project. Through the years, the City did amendments to the contract to include more engineering services and did not advertise for bids or verify that the engineering firm was not suspended or debarred from receiving federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
The Town received and spent federal grant funds during the year ended December 31, 2024. Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) § 200.318 requires the Town to establish, in writing, procurement standards for use in the Town’s procurement (purchases) over federal grant expenditures.
U.S. Department of Agriculture Passed through the Alabama State Department of Education Program: Summer Food Service Program CFDA: 10.559 Grant Number: AF6-0000 Noncompliance/Significant Deficiency Procurement Criteria Per 2 CFR 200.318-200.326, non-federal entities must follow federal procurement standards when acquiring goods and services, including adherence to competition requirements and proper documentation. Condition During our audit of procurement activities, we identified purchases made from two food vendors that exceeded the micro-purchase threshold of $10,000. There was no evidence that the entity obtained price comparisons or quotations from other sources prior to selecting these vendors. Each vendor was used repeatedly throughout the year, and the cumulative totals were $38,998. Cause Staff believed that long-standing relationships with vendors or prior approvals were sufficient and did not realize that federal procurement rules still apply annually. Effect Failure to follow small purchase procedures increases the risk of overpaying for goods and may affect allowability of expenditures charged to the program. Recommendation We recommend the entity train staff on federal procurement guidelines. Purchases from vendors should be forecasted at the beginning of each grant period. Procurement guidelines should be followed for all vendors from which it is reasonably foreseeable that total purchases will exceed $10,000. Documentation should be maintained for all price quotations and comparisons reviewed prior to purchases for items exceeding the micro-purchase threshold. Management's Response Management acknowledges the importance of adhering to federal procurement standards, including the requirement for competitive pricing and documentation for purchases exceeding the micro-purchase threshold
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context An effective internal control system was not in place at the County to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. INDIANA STATE BOARD OF ACCOUNTS 20 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have internal controls in place to ensure compliance with the suspension and debarment compliance requirement. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County stated that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were identified. Each transaction was examined to determine whether the County verified the suspension and debarment status of either vendor prior to payment. The two covered transactions, totaling $95,122, did not include the appropriate provisions in the contracts nor did the County require a certification or check the EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." INDIANA STATE BOARD OF ACCOUNTS 21 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Additionally, we recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
U.S. Department of Treasury Passed through State of South Dakota Board of Water and Natural Resources Federal Financial Assistance Listing 21.027 Federal Award Number SLFRP5319 Federal Award Year 2021 Coronavirus State and Local Fiscal Recovery Funds Procurement Material Weakness in Internal Control over Compliance and Noncompliance Criteria: Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327, which include having documented procedures for procurement transactions and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Condition: The City does not have a formal documented procurement policy which includes written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts with federal funds. Cause: The City has not formalized their practiced procurement policy and conflict of interest standards into a formal written document. Effect: This condition increases the risk of that federal procurement requirements and conflict of interest standards are not adequately communicated to and understood by employees engaged in the selection, award, and administration of contracts, which increases the risk of procurements under federal awards being made not in compliance with federal regulations or other procurement requirements specific to an award. Context/Sampling: No sampling used. Repeat Finding from Prior Year(s): No Recommendation: We recommend management formally document their procurement policy, ensuring that all required procurement standards within 2 CFR sections 200.318 through 200.327 are addressed. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediate prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $40,458. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing the City to claim $10,000,000 of its total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $16,549,045 as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to contracts. The City's policies related to SLFRF suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. There were 13 covered transactions identified that equaled or exceeded $25,000, and 2 covered transactions, totaling $251,334, were selected for testing. For both of the transactions tested, the City did not verify the suspension or debarment status prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow the City's established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW222046 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The grant covered one project with one vendor that fell within the simplified acquisition threshold. Payments to the vendor for the project totaled $189,741 with $120,452 of that amount was grant funds. As such, the formal bid process should have been followed. The City did not perform bid procedures or provide the rationale for the method of procurement, the selection of vendor, or the basis for price. Additionally, the City did not obtain a written contract for the services. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. The City's policies related to COVID-19 - Coronavirus State and Local Fiscal Recovery Funds suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. As noted above, the grant covered one project with one vendor utilized and the City did not verify the suspension or debarment status prior to payment for this vendor. The lack of internal controls and noncompliance was isolated to the instance noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow its established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.