Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.
Criteria: In accordance with Title 2 CFR Part 200.318, the Organization must maintain records to document the history of procurement of a vendor. Records include, but are not limited to, rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: For two (2) procurements made during fiscal year 2023, approval of the competitive bid analysis was not documented, and the analysis was not maintained with the related purchase order/vendor agreement. For a separate procurement during fiscal year 2023, the suspension and debarment check performed prior to execution of the agreement was not maintained or documented with the related purchase order/vendor agreement. Cause: Documentation supporting the procurement of contractors was not maintained in a logical manner to document the history of procurement. This finding was originally identified as part of the 2022 audit (2022-002) and reoccurred during 2023. Effect: Without appropriate documentation, the Organization may be unable to support whether the procurement of the vendors was performed in accordance with the procurement standards noted in Title 2 CFR Part 200.318. Questioned Costs: N/A Recommendation: Management should develop formal approval and record retention policies as it relates to the documentation pertaining to activities funded by federal awards. Views of Responsible Officials: Refer to Corrective Action Plan.
Procurement, Suspension and Debarment Questioned Costs: $729,080 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Grant recipients must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Purchases of equipment greater than $250,000 should be made using the sealed bid method. Condition: The City-Parish purchased Ford Explorers in the amount $729,080 without undergoing the bid process. Universe/ Population: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Effect: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Cause: The City-Parish has experienced turnover in the purchasing division in recent years. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Official: Purchasing Department has implemented the following corrective actions to avoid this in the future: requisition checklist outlining guideline for compliance; creating standard operating procedure for purchase of vehicles for City-Parish Agencies; conduct routine departmental training; ensure that supervisor approvals prior to bid release.
2023-003 Procurement Policy Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1052063; 2023 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318 states that the non-federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform with applicable federal law and the standards identified in this regulation. Condition: Traverse County has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations §200.318. Questioned Costs: None Context: This issue was discovered during the audit of the major federal program; however, it impacts federal programs entity-wide. Written policies that reflect the specific components of federal regulations improve controls to ensure compliance with federal award requirements. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements could increase the risk of noncompliance with federal program requirements. Cause: Traverse County management was unaware the procurement policy did not include all the requirements. Recommendation: We recommend Traverse County include the specific components of the Uniform Guidance requirements in its written procurement policies and procedures. View of Responsible Official: Acknowledge
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Finding 2023-002: Material Weakness - Internal Control Over Procurement, Suspension and Debarment Program: COVID-19 State & Local Fiscal Recovery Funds Grantor Agencies: U.S. Department of Treasury & WI Department of Health Services Assistance Listing Number: 21.027 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted that the Village did not have a written procurement policy to conform with Uniform Guidance requirements. There was not a system in place to track and document the procurement process and support the contracting decisions made. As a result, we were unable to verify if the Village followed the necessary federal procurement standards. Cause: The Village was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. The Village should also create a system to track projects that were procured during the year to ensure they are in compliance with their policy. Management response and Corrective Action Plan: Management agrees with the finding. A tracking procedure has been developed and a written procurement policy will be approved prior to the end of fiscal 2024 to further define procurement processes to align with Federal program standards and Village ordinance to address this deficiency.
Finding 2023-002: Material Weakness - Internal Control Over Procurement, Suspension and Debarment Program: COVID-19 State & Local Fiscal Recovery Funds Grantor Agencies: U.S. Department of Treasury & WI Department of Health Services Assistance Listing Number: 21.027 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted that the Village did not have a written procurement policy to conform with Uniform Guidance requirements. There was not a system in place to track and document the procurement process and support the contracting decisions made. As a result, we were unable to verify if the Village followed the necessary federal procurement standards. Cause: The Village was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. The Village should also create a system to track projects that were procured during the year to ensure they are in compliance with their policy. Management response and Corrective Action Plan: Management agrees with the finding. A tracking procedure has been developed and a written procurement policy will be approved prior to the end of fiscal 2024 to further define procurement processes to align with Federal program standards and Village ordinance to address this deficiency.
FINDING 2023-003 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): FR-2023-ILBC-00004 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases 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 for body cameras and associated equipment/accessories to the vendor totaled $117,144, of which $7,144 was paid from the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds received from the Indiana Department of Homeland Security. As a portion of the purchases to the vendor were paid with federal funds subject to procurement requirements, the entirety of purchases with the vendor was required to follow applicable procurement requirements. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the County 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. 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 200.320 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: . . . INDIANA STATE BOARD OF ACCOUNTS 18 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured. 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 statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured. 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 County. 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 procedures to ensure that property and services are properly procured. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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): FY23 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. Small Purchases 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, with total purchases of $33,100. Price or rate quotations were not obtained, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the threshold the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. One vendor was identified that fell within the SAT, with total purchases of $213,734. Sealed bids or competitive proposals were not obtained, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. 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. INDIANA STATE BOARD OF ACCOUNTS 20 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have any 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. A population of six covered transactions, totaling $470,435, that equaled or exceeded $25,000 paid from SLFRF award funds was identified. Four of the six covered transactions, totaling $312,745, were selected for testing. For each of the four transactions, the County did not verify the vendors' suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. 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 200.320 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. . . . INDIANA STATE BOARD OF ACCOUNTS 21 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 costreimbursement 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 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 over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. 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 statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. 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 County. INDIANA STATE BOARD OF ACCOUNTS 22 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-001 Procurement, Suspension, and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) (Journey to Independence) Award Number and Year: 5H79SM082970-03; 2023 and 5H79SM082970-04; 2024 Pass-Through Agency: Direct Award Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 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, contractor selection or rejection, and the basis for the contract price. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. PACT’s procurement policy requires that the contractor submit a certification that they are not suspended and debarred and also requires PACT staff to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: For the one contractor not considered a sole source vendor, PACT obtained three quotes or proposals but did not have documentation supporting the selection of this vendor. In addition, PACT did not collect a certification that the contractor is not suspended or debarred or document its verification that this contractor was not suspended, debarred, or otherwise excluded at SAM.gov before entering into the covered transaction. Questioned Costs: None Context: The majority of costs associated with this federal grant are payroll related with only five vendors providing goods or services that exceeded the micro-purchase threshold ($10,000). Other expenditures incurred are typically not related to contracts. PACT’s policy for non-payroll disbursements requires an approved Expenditure Authorization Form (EAF) as support documenting the reason for the purchase. PACT’s policy does not require documentation supporting the reason for the vendor selection. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because PACT did not document the rationale for the contractor selection. It also cannot be determined that an entity was not suspended, debarred, or otherwise excluded because PACT did not document that it performed a search on SAM.gov and did not collect a certification. Cause: PACT was not aware of the requirement to document the reasoning behind its contractor selections and believed obtaining quotes was sufficient. In addition, PACT believed that performing the search was sufficient and that documentation of the search or collection of a certification was not necessary. Revised procedures were in the process of being implemented during 2023. Recommendation: We recommend PACT develop formal procedures to document why a vendor is selected when price is not the sole factor (i.e., checklist or other criteria developed ahead of time). We recommend that PACT keep printouts (with dates) from SAM.gov to support that contractors were not suspended, debarred, or otherwise excluded prior to entering into covered transactions and collect certifications as required by policy. View of Responsible Official: Acknowledge
2023-005 Finding – Federal Award Type: Procurement – Material Non-Compliance and Material Weakness in Internal Control over Compliance. Identification of Federal Program: Research and Development Cluster: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: Per 2 CFR sections 200.318 through 200.326 an entity receiving federal funds must follow their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition / Context: During the audit it was noted that Forth had established a Procurement Policy which incorporated procurement requirements identified in 2 CFF Part 200. However, of the 3 items selected for testing did not follow the Procurement Policy. Cause: While the Procurement Policy is documented, the procedures and policies were not being followed. Effect: Failure to maintain sufficient internal controls and proper procedures may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should follow establish written policies and procedures regarding procurement and properly document the process for each procurement made. Management’s response: We agree with the auditor’s comments and the following actions have been taken to improve the situation. We hired a Contracts & Compliance Manager in 2024 who is now responsible for ensuring the procurement process is properly documented for each procurement made.
2023 - 001 No Documented Procurement Procedures Federal Agency: U. S. Department of Environmental Protection Federal program: Capitalization Grants for Drinking Water State Revolving Fund - Assistance Listing Number - 66.468 Compliance Requirement: Procurement, Suspension, and Disbarment Type of finding: Compliance • Criteria: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out in the Code of Federal Regulation (CFR) section 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. • Statement of Condition: The Borough does have a procurement policy; however, the policy is not in conformity with the requirements of 2 CFR part 200. During our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. • Statement of Cause: The Borough was unaware that their adopted procurement policy was outdated and did not conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. • Possible Asserted Effect: Without documented procurement procedures that follow Uniform Guidance, it is difficult to ensure compliance with relevant compliance requirements. • Questioned Costs: None noted. • Context: Per review of the general procurement standards of the Uniform Guidance and the related OMB Compliance Supplement, non-federal entities are required to have their own documented procurement procedures. While the Organization does have a procurement policy, the policy does not contain the information and documentation required by the applicable federal statutes and the procurement requirements identified in 2 CFR part 200. • Repeat Finding: No • Recommendation: The Borough should establish documented procedures and policies related to federal procurements that should be used in connection with all expenditures of federal awards. • Views of Responsible Officials and Planned Corrective Action: The Borough, in consultation with our solicitor, will develop and implement a procurement policy to be used when purchasing goods and services in connection with expenditures incurred under any federal awards and/or contracts.
Finding 2023-003, Procurement, Suspension and Debarment, Internal Control and Noncompliance Identification of the federal program Assistance listing number and title: 93.493 Congressional Directives Agency: U.S. Department of Health and Human Services Federal award identification number (FAIN): H79FG000996 Federal Award Year: 2023 Criteria or specific requirement (including statutory, regulatory or other citation) 2 CFR 200.303(a) requires that a 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 would be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 states that 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 2 CFR 200.318 through 200.327. 2 CFR 200.320 discusses the methods of procurement to be followed for the acquisition of property or services required under a Federal award or sub-award. Part 3-I-1 of the 2023 OMB Compliance Supplement summarizes the regulation as follows: • Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). Criteria or specific requirement (including statutory, regulatory or other citation), continued • For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). 2 CFR 200.214 provides that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition The System’s procurement policies did not conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200.320, and the suspension and debarment requirements in 2 CFR Part 180. Cause The System’s procurement policies lack certain elements of federal procurement, suspension and debarment standards. Effect or potential effect Not having policies that are consistent with federal requirements could lead to procurements under federal awards being inappropriate, not adequately documented or entered into with covered entities. Questioned costs None. Context The System’s procurement policies did not conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200.320. Specifically, the System’s procurement policies did not include a discussion of the criteria, thresholds and procedures to be followed for formal procurement methods (such as sealed bids and proposals), and for noncompetitive procurement. Further, the System’s vendor credentialing policy that is meant to address suspension and debarment requirements, includes a list of certain entities (such as academic institutions) that are exempted from the screening process. No such exemptions are provided for in 2 CFR Part 180. Identification as a repeat finding, if applicable Not a repeat finding. Recommendation: Management should enhance its procurement policies to ensure that all Federal requirements on procurement, suspension and debarment are incorporated. Management must ensure that the policies are supported by effective internal control activities to ensure compliance with Federal requirements. Views of responsible officials Vendor review for suspension and disbarment was performed monthly for all but one vendor in accordance with current CHST policies and management was informed of any vendors with issues; however, documentation of clean vendors was not provided. Management will coordinate with appropriate departments to review federal provisions for grant procurement and adjust policies and procedures to comply. Management will work with appropriate departments and each grant team to document monthly suspension and disbarment review process. Grant teams will review all current sourcing and provide sole source documentation where applicable.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.550 & 93.623 Federal Program Titles: Transitional Living for Homeless Youth; Basic Center Grant Award Period: October 1, 2022 through September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318, General procurement standards, requires that non-Federal entities must have documented procurement procedures, consistent with State and local laws and regulations for the acquisition of property or services required under a federal award and subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.326. Condition: During our testing, we noted that the Organization’s procurement policy did not address all of the identified requirements in 2 CFR 200.318 through 200.326. Questioned Costs: None. Context: In our review of the current procurement policy, The Adams Group, LLC noted the following: The policy did not include documented procedures for purchases above the simplified acquisition threshold ($250,000) in accordance with 2 CFR 200.320b. The policy did not include documented procedures for the use and instances of noncompetitive procurement in accordance with 2 CFR 200.320c. The policy did not include documented procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded as outlined in 2 CFR sections 200.212 and 200.318. We also noted that the Organization did not verify that the entities with which it entered into contracts were not debarred, suspended, or otherwise excluded. Effect: The Organization’s procurement policy is not in compliance with general procurement standards, and proper verification procedures for potentially suspended or debarred entities were not performed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization update their procurement policy to address all requirements identified in 2 CFR 200.318 through 200.326. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.550 & 93.623 Federal Program Titles: Transitional Living for Homeless Youth; Basic Center Grant Award Period: October 1, 2022 through September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318, General procurement standards, requires that non-Federal entities must have documented procurement procedures, consistent with State and local laws and regulations for the acquisition of property or services required under a federal award and subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.326. Condition: During our testing, we noted that the Organization’s procurement policy did not address all of the identified requirements in 2 CFR 200.318 through 200.326. Questioned Costs: None. Context: In our review of the current procurement policy, The Adams Group, LLC noted the following: The policy did not include documented procedures for purchases above the simplified acquisition threshold ($250,000) in accordance with 2 CFR 200.320b. The policy did not include documented procedures for the use and instances of noncompetitive procurement in accordance with 2 CFR 200.320c. The policy did not include documented procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded as outlined in 2 CFR sections 200.212 and 200.318. We also noted that the Organization did not verify that the entities with which it entered into contracts were not debarred, suspended, or otherwise excluded. Effect: The Organization’s procurement policy is not in compliance with general procurement standards, and proper verification procedures for potentially suspended or debarred entities were not performed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization update their procurement policy to address all requirements identified in 2 CFR 200.318 through 200.326. Views of Responsible Officials: Management agrees with the finding.
Criteria Non-federal entities other than states are required to follow the procurement standards set out at 2 CFR § 200.318 through § 200.326. They must use their own documented procurement procedures, which conform to applicable federal statutes and the procurement requirements identified in 2 CFR 200. Condition The Corporation’s written procurement standards do not comply with all of the procurement requirements set out at 2 CFR § 200.318 through § 200.326. Effect The Corporation is not in compliance with 2 CFR § 200.318 through § 200.326.
Finding 2023-001 Lack of Internal Control Over Procurement Federal Agency: U.S. Department of Transportation and Department of the Treasury, respectfully Federal Programs: Highway Planning and Construction & Coronavirus State and Local Fiscal Recovery Funds, respectfully ALN: 20.205 and 21.027, respectfully Award Numbers: DTFH69-13-H-00087, DTFH69-H-00087, Unknown Award Years: 2023 Type of Finding: Significant deficiency in internal control and noncompliance. Criteria: In accordance with 2 CFR sections 200.318, a 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 sections 200.317 through 200.327. Condition and Context: Management could not provide adequate procurement documentation for the purchase of a large piece of equipment. During our testing of allowable costs charged to the program we noted two (2) transaction out of six (6) tested that lacked adequate supporting documentation related to procurement. This appears to be an isolated instance of non-compliance. Cause: Lack of internal controls over procurement. Effect: Failure to follow compliance requirements could result in loss of federal funding or questioned costs being incurred. Questioned Costs: None noted. The price for the piece of equipment did not seem unreasonable and was within budgetary requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management establish a procurement policy and ensure that the policy is followed for all large purchases. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2023-001 Lack of Internal Control Over Procurement Federal Agency: U.S. Department of Transportation and Department of the Treasury, respectfully Federal Programs: Highway Planning and Construction & Coronavirus State and Local Fiscal Recovery Funds, respectfully ALN: 20.205 and 21.027, respectfully Award Numbers: DTFH69-13-H-00087, DTFH69-H-00087, Unknown Award Years: 2023 Type of Finding: Significant deficiency in internal control and noncompliance. Criteria: In accordance with 2 CFR sections 200.318, a 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 sections 200.317 through 200.327. Condition and Context: Management could not provide adequate procurement documentation for the purchase of a large piece of equipment. During our testing of allowable costs charged to the program we noted two (2) transaction out of six (6) tested that lacked adequate supporting documentation related to procurement. This appears to be an isolated instance of non-compliance. Cause: Lack of internal controls over procurement. Effect: Failure to follow compliance requirements could result in loss of federal funding or questioned costs being incurred. Questioned Costs: None noted. The price for the piece of equipment did not seem unreasonable and was within budgetary requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management establish a procurement policy and ensure that the policy is followed for all large purchases. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2023-001 Lack of Internal Control Over Procurement Federal Agency: U.S. Department of Transportation and Department of the Treasury, respectfully Federal Programs: Highway Planning and Construction & Coronavirus State and Local Fiscal Recovery Funds, respectfully ALN: 20.205 and 21.027, respectfully Award Numbers: DTFH69-13-H-00087, DTFH69-H-00087, Unknown Award Years: 2023 Type of Finding: Significant deficiency in internal control and noncompliance. Criteria: In accordance with 2 CFR sections 200.318, a 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 sections 200.317 through 200.327. Condition and Context: Management could not provide adequate procurement documentation for the purchase of a large piece of equipment. During our testing of allowable costs charged to the program we noted two (2) transaction out of six (6) tested that lacked adequate supporting documentation related to procurement. This appears to be an isolated instance of non-compliance. Cause: Lack of internal controls over procurement. Effect: Failure to follow compliance requirements could result in loss of federal funding or questioned costs being incurred. Questioned Costs: None noted. The price for the piece of equipment did not seem unreasonable and was within budgetary requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management establish a procurement policy and ensure that the policy is followed for all large purchases. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2023-001 Lack of Internal Control Over Procurement Federal Agency: U.S. Department of Transportation and Department of the Treasury, respectfully Federal Programs: Highway Planning and Construction & Coronavirus State and Local Fiscal Recovery Funds, respectfully ALN: 20.205 and 21.027, respectfully Award Numbers: DTFH69-13-H-00087, DTFH69-H-00087, Unknown Award Years: 2023 Type of Finding: Significant deficiency in internal control and noncompliance. Criteria: In accordance with 2 CFR sections 200.318, a 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 sections 200.317 through 200.327. Condition and Context: Management could not provide adequate procurement documentation for the purchase of a large piece of equipment. During our testing of allowable costs charged to the program we noted two (2) transaction out of six (6) tested that lacked adequate supporting documentation related to procurement. This appears to be an isolated instance of non-compliance. Cause: Lack of internal controls over procurement. Effect: Failure to follow compliance requirements could result in loss of federal funding or questioned costs being incurred. Questioned Costs: None noted. The price for the piece of equipment did not seem unreasonable and was within budgetary requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management establish a procurement policy and ensure that the policy is followed for all large purchases. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2023-001 Lack of Internal Control Over Procurement Federal Agency: U.S. Department of Transportation and Department of the Treasury, respectfully Federal Programs: Highway Planning and Construction & Coronavirus State and Local Fiscal Recovery Funds, respectfully ALN: 20.205 and 21.027, respectfully Award Numbers: DTFH69-13-H-00087, DTFH69-H-00087, Unknown Award Years: 2023 Type of Finding: Significant deficiency in internal control and noncompliance. Criteria: In accordance with 2 CFR sections 200.318, a 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 sections 200.317 through 200.327. Condition and Context: Management could not provide adequate procurement documentation for the purchase of a large piece of equipment. During our testing of allowable costs charged to the program we noted two (2) transaction out of six (6) tested that lacked adequate supporting documentation related to procurement. This appears to be an isolated instance of non-compliance. Cause: Lack of internal controls over procurement. Effect: Failure to follow compliance requirements could result in loss of federal funding or questioned costs being incurred. Questioned Costs: None noted. The price for the piece of equipment did not seem unreasonable and was within budgetary requirements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management establish a procurement policy and ensure that the policy is followed for all large purchases. Management’s Response: Management concurs with this finding. See corrective action plan.
FINDING 2023-004 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 Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $73,674,384 and chose to calculate its own revenue loss allowance, which totaled $35,932,557, to use for government services. Some SLFRF program funds expended in 2023 were expended under the revenue loss eligible use category. Additional program funds expended in 2023 were expended under the other eligible use categories. 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 set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. For funds expended under the revenue loss eligible use category, the above listed procurement requirements do not apply. During the audit period, the County had four vendors with purchases over the $10,000 micropurchase threshold which were expended under an eligible use category other than revenue loss and, as such, were considered small purchase procurements. The County did not provide competitive price quotations for the small purchase procurements for three of the four vendors, which totaled $257,038. Suspension and Debarment 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, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During the engagement, an employee of the Board of County Commissioners stated that verification was completed by checking the Excluded Parties List System when covered transactions were entered into by the County to verify 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. Six covered transactions, totaling $3,952,203, were paid from SLFRF funds to six different vendors for goods or services that equaled or exceeded $25,000 during the audit period. Three of the six covered transactions were selected for testing. For all three transactions tested, documentation was not provided that the vendor's suspension and debarment status was verified. 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 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause The County was unable to provide documentation to demonstrate it had properly procured services. In addition, the County was unable to provide documentation to demonstrate it had checked the Excluded Parties List System, per the County's procedures, to ensure vendors were not suspended or debarred prior to entering into covered transactions that exceeded $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the County could have overpaid for the services obtained. Furthermore, without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. 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 the Board of County Commissioners strengthen the County's system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchase procurements. Additionally, we recommended policies and procedures be strengthened to ensure appropriate supporting documentation for federal programs is retained. Lastly, we recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that all vendors that are 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 any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are 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." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.
2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are 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." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.
Finding 2023-001: Procurement Policy and Related Contract Program: 66.958 Water Infrastructure Finance and Innovation Federal Agency: U.S. Environmental Protection Agency Award No: WIFIA-N18147WI Award Year: 2023 This finding is a repeat finding of 2022-001 Criteria: 2 CFR section 200.318 - General Procurement Standards, requires non-Federal entities to 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. Condition: We reviewed the water utility's procurement policy and service contracts with costs reimbursed during 2023, noting they did not contain necessary federal language related to conflicts of interest and debarment and suspension. Cause: The water utility has not received federal funding in the past and did not update their procurement policy when they sought federal funding for the Great Lakes Water Supply project. Additionally, service contracts were entered into prior to receiving federal funds. Effect: Without adequate control of contract language the water utility could enter into contracts related to the Great Lakes Water Supply project that do not qualify for federal reimbursement. Questioned Costs: None noted. Recommendation: We recommend the water utility review its procurement policy and make necessary updates to be in compliance with federal standards. Additionally, we recommend the utility enter into contract addendums related to contracts previously executed without required federal language. Management Response: Waukesha Water utility management has worked closely with WIFIA to craft contracts that include all necessary language prior to releasing RFPs for construction contracts. WIFIA was presented all service contracts to review prior to reimbursements received in fiscal year 2023. The finance department is working to update the procurement policy to ensure necessary federal language is included. The finance department will also work with service contractors to execute contract addendums.
FINDING 2023-002 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): 2023 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 2022-002. Condition and Context Procurement Policy Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined for COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds. Policies and procedures for the procurement of the goods and services must be the County's own documented procedures which reflect applicable state and federal laws and regulations. INDIANA STATE BOARD OF ACCOUNTS 18 BARTHOLOMEW COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. Suspension and Debarment Prior to entering into subawards and covered transactions with the 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 any 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. A population of seven covered transactions, totaling $2,631,684, that equaled or exceeded $25,000 paid from SLFRF funds were identified. Four of the seven covered transactions, totaling $1,399,462, were selected for testing. For each of the four transactions, the County did not verify the vendors' suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of intenral 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." 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: INDIANA STATE BOARD OF ACCOUNTS 19 BARTHOLOMEW COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 County did not have a procurement policy in place that contained the requirements of the procurement standards as outlined in the Code of Federal Regulations. Due to the timing of the adoption of the County's Suspension and Debarment Policy, which defines procedures to verify suspension and debarment status for covered transactions, the items selected for testing were not verified. Effect Without the proper implementation of an effectively designed system of internal controls, the County 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 County 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the County strengthen its system of internal controls to ensure that all contractors that are 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 contracts. We also recommended strengthening its policies to reflect applicable state and federal laws and regulations for procuring goods and services paid with federal funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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 Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SWIF221677 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the 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 19 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement and Suspension and Debarment The County entered into an interlocal agreement with the City to procure services for a Sewer Lift Station Improvement/Line Extension to the New County Jail project. Per the agreement, the City would be responsible for all the procurement and suspension and debarment processes involved in the project, and the County would be responsible for the compliance with all grant funding for the project. On September 23, 2021, the County received notification that it was eligible to receive $1,900,000 from the Indiana Finance Authority (IFA) for a SWIF grant from SLFRF funds with the intention of using the funding for the Sewer project shared by the County and City. The notification stated that co-funding would be provided by the County and that the County could enter into the SWIF grant agreement with the IFA once the funding was secure. On February 24, 2022, the City's Common Council approved a bid with B & T Drainage for the project. On March 6, 2022, the County Council approved a $2,330,000 appropriation from its SLFRF funds for co-financing of the project and, on the same day, signed a grant agreement with the IFA for the SWIF grant funded with SLFRF funds totaling $2,300,000. The project was completed as of December 31, 2023. The County did not provide any of the following documentation requested to verify compliance with the procurement and suspension and debarment requirements for the SWIF funds spent on the project: Copy of the original contract for $3,965,507. Copy of any change orders. Copy of the Board minutes where the bid was awarded by the Common Council. Copy of the original bids made on the project. Copy of documentation that vendor was not suspended or debarred. The lack of internal controls and lack of appropriate supporting documentation was isolated to the project 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (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 the contract type, contractor selection of rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (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. (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. INDIANA STATE BOARD OF ACCOUNTS 21 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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 The County participated in a joint project with the City in which the City handled the procurement process. As the County was ultimately responsible for compliance, copies of the quotes or bids obtained by the City should have been obtained by the County; however, this documentation was not obtained or provided for audit. In addition, documentation to demonstrate the City checked the vendor was not suspended or debarred prior to entering into the contract should have been obtained by County. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. 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. INDIANA STATE BOARD OF ACCOUNTS 22 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation 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 as outlined in the code of federal regulations. We also recommended the County adhere to the procurement and suspension and debarment requirements and obtain required bids and verify that all vendors that are 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 any covered transactions. Finally, we recommended the County obtain and retain appropriate documentation for all expenses paid with SLFRF funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Procurement, Suspension and Debarment (Repeat Finding 2022-001 and 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury’s Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury’s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal – micro purchases (any amount up to $10,000) (b) Informal – small purchases ($10,000.01 to $249,999.99) (c) Formal – sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: “The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.” Condition/Context: 1. We tested two purchase orders totaling $208,832.12. Our procedures revealed the following: a. Dated documentation that demonstrates suspension and debarment searches were performed prior to entering into a covered transaction were not retained in the respective procurement files. b. Documentation supporting multiple source solicitations was not available. Cause: 1. At the time these services were procured, the City of Evanston’s procurement policies requiring suspension and debarment checks were not implemented. 2. The City of Evanston’s procurement policies in relation to single source do not meet federal requirements. Effect: City of Evanston was not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Date or time stamp suspension and debarment searches when performed. b. Revise procurement policies to mirror federal guidelines and requirements in relation to single and sole source purchases. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Ensure all departments are following applicable procedure in a uniform manner. Views of Responsible Officials: The purchases in question were made in the Equipment Replacement Fund where debarment searches are not required. ARPA funds were transferred to the Equipment Replacement Fund after the vehicles were delivered. We supplied the list of exclusions issued by the Office of Inspector General, which, from a compliance standpoint, demonstrates that the vendors are not suspended or debarred before entering a covered transaction. The list covers a one-month window and does not provide an exact date for when the list is retrieved from the Office of Inspector General website. When performing debarment searches in SAM.gov, if a vendor opts not to register or does not complete full registration process, the search results will display no matches, rendering it inconclusive to determine their standing. To prevent any potential deficiencies in control procedures, we intend to adopt the supplementary risk-based assessments proposed by the firm.
FINDING 2023-005 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): OMB Approval #1505-0271 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 21 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the 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. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 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. The County had one vendor that was identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micro-purchase threshold. The one vendor was selected for testing. For the one vendor, the County did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with 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. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction paid with SLFRF grant funds was identified during the audit period. The covered transaction totaled $66,000 with $46,752 paid in the audit period. The identified transaction was examined to determine if the County verified the suspension and debarment status of the vendor prior to payment. Upon review, the County had not performed procedures to ensure the vendor was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at any time during the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327 . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 23 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 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." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The County participated in a joint project with the City of Rochester (City) in which the City handled the procurement process. However, the County did not request copies of the quotes or bids obtained by the city, nor did the County document a sole source vendor situation. In addition, the County was unable to provide documentation to demonstrate they checked the vendor was not suspended or debarred prior to entering into the contract. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. 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. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation 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 as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are 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 any 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 2023-003 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): FY 2023 Pass-Through Entity: Indiana State Department of Health 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 2022-003. Condition and Context Procurement The Indiana State Department of Health created the Health Issues and Challenges Grant Program to provide funding to local and statewide service providers and planning organizations through the American Rescue Plan Act. The funds were to be used to prevent or reduce the prevalence of health issues or improve the health and behavioral health of Indiana residents. The City applied for and was awarded the Health Issues and Challenges grant in the amount of $447,112. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF NEW CASTLE 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 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. Four vendors fell within the small purchase threshold. Two of the four small purchases were selected for testing. For the two vendors tested, totaling $71,889, the City did not obtain price or rate quotes. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the rationale for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic 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 20 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . ." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. 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 establish documented procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In additions, we recommended the City adhere to the procurement policies. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
U.S. Department of Education, Congressionally Funded Community Projects, Assistance Listing Number 84.215K – Internal Control Over Compliance and Compliance Over Written Policies – Procurement Compliance Requirement Criteria: As defined in 2 CFR 200.318, a recipient of federal grant funding must have and use its own documented procurement procedures for the acquisition of property or services required under a Federal or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317-327. Condition: During our audit, we were advised that while management used the Federal procurement standards at 2 CFR 200.317-327 in making all applicable decisions, the Foundation did not have written procurement policies tailored to the organization’s unique systems and processes. Cause: The Foundation’s risk assessment and internal control processes did not identify the requirement for written procurement procedures tailored to the organization’s unique systems and processes. Effect: Without written procurement procedures tailored to the organization's unique systems and processes, there is a risk that the staff and consultants responsible for ensuring compliance with the Foundation’s procurement policies will not be aware of proper procedures. Repeat Finding: No Recommendation: We recommend that management develop written procurement procedures tailored to the Foundation’s unique systems and processes that conform to the procurement standards identified in 2 CFR 200.317-327. Views of responsible officials and planned corrective actions: Written procurement procedures have been written for the Nevada Test Site Historical Foundation to ensure that procurements will be processed in conformity with 2 CFR 200.317 to 327. These procedures will be followed for procurements related to grants awarded to the entity. The dollar amount of the grant will determine the process to follow to be in compliance. Implementation of these changes will begin as of the date of this writing
Compliance Requirement: Procurement, Suspension, and Debarment Criteria: According to 2 CFR 200.318(a) non-federal entities must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of 2 CFR 200.318 through 200.327, for the acquisition of property or services required under a Federal award. Condition: During our testing of vendor procurement compliance, we noted the entity had a procurement policy in line with the federal award’s specific procurement guidelines but not in line with standards of 2 CFR 200.318 through 200.327. In particular, the policy did not address methods of procurement based on micro-purchase, small purchase, and simplified acquisition purchase thresholds, circumstances in which noncompetitive procurement could be used, and procedures for verifying that a vendor with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The auditee was not aware of the requirements outlined in 2 CFR 200.318 through 200.327, and believed the contracting guidelines outlined for their specific award were sufficient. Effect: The auditee was not in compliance with procurement policies outlined in of 2 CFR 200.318 through 200.327. There was a lack of full and open competition and auditee did not ensure the vendors with which it planned to enter into a covered transaction were not debarred, suspended, or otherwise excluded. Repeat Finding: This is a repeat finding. Questioned Costs: There were no questioned costs related to this finding. Recommendation: We recommend that the Organization adopt an updated procurement policy in line with 2 CFR 200 requirements and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of relevant procurement requirements.
Finding Number: 2023-001 Repeat Finding: No Program Name/Title: Rural Health Outreach and Rural Network Development Program Federal Assistance Listing Number: 93.912 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: N/A Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Questioned Cost: No Criteria: Under 2 CFR sections 180.220 and 200.318 through 200.326, 45 CFR 75.327 through 75.334 and 45 CFR 75 Part E, the Organization is required to implement certain written Procurement and Suspension and Debarment policies and procedures that adhere to the minimum Federal Procurement standards. The Organization must use its own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements outlined in Uniform Guidance and maintain sufficient records to detail the history of procurements. Condition: The Organization did not maintain a written procurement policy, the Organization did not have adequate procurement policies in place to meet the minimum federal requirements for procurement standards. Cause: The Organizations did not meet all of the minimum federal requirements under Uniform Guidance. The Organization could not provide support to demonstrate that it performed all of the necessary procurement steps and did not have a written procurement policy. Effect: The Organization was not in compliance with federal regulations. Recommendation: The Organization should put in place a procurement policy to meet the minimum federal requirements and ensure procurement policies are being followed for all procurement levels with written documentation. View of Responsible Officials: Management agrees with the finding and will work to develop a procurement policy.
Finding Number: 2023-001 Repeat Finding: No Type of Finding: Significant Deficiency Description: Procurement and Suspension and Debarment Questioned cost: No Criteria: Under 2 CFR sections 180.220 and 200.318 through 200.326, 45 CFR 75.327 through 75.334 and 45 CFR 75 Part E, the Organization is required to implement certain written Procurement and Suspension and Debarment policies and procedures that adhere to the minimum Federal Procurement standards. The Organization must use its own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements outlined in Uniform Guidance and maintain sufficient records to detail the history of procurements. Condition: The Organization's policy did not meet all of the minimum federal requirements under Uniform Guidance. Cause: Historically the Organization has received few federal grants subject to the Uniform Guidance, and while the Organization maintained a written procurement policy, it did not meet certain requirements of the Guidance. Effect: The Organization was not in compliance with federal regulations. Recommendation: The Organization should update their procurement policy to meet the minimum federal requirements and ensure procurement policies are being followed for all procurement levels with written documentation. View of Responsible Officials: Management are working on developing a policy.
FINDING 2023-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - 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): ARP2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) awards 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 expended 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 Town's policies related to the SLFRF suspension and debarment requirement did not include checking the EPLS for vendor suspension and debarment. Three covered transactions were identified. All three covered transactions were selected for testing. The three covered transactions, totaling $1,836,413, did not include the appropriate provisions in the contracts, nor did the Town require a certification or check the EPLS to ensure the entity was not suspended or debarred prior to making payment. Additionally, the Town did not have a formalized procurement policy outlining its processes and procedures with regards to the procurement of goods and services using federal grant funds. The policy must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 and should address ensuring vendors are not suspended or debarred prior to entering into covered transactions if the contract is expected to equal or exceed $25,000. The lack of internal controls and noncompliance was a systemic issue throughout the audit period and enabled material noncompliance to occur and remain undetected. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF WHITESTOWN 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). . . ." 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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." Cause The system of internal controls as established by management of the Town was not properly implemented to ensure that the policies and procedures in place related to suspension and debarment were appropriately followed. The Town did not verify that the entities were not suspended or debarred prior to entering into the covered transactions. In addition, management of the Town had not established a system of internal controls, including policies and procedures, for the procurement of goods or services with federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. In addition, procurements of goods or services could have been noncompliant. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF WHITESTOWN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the Town strengthen its system of internal controls to ensure vendors that are 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 any covered transactions. We also recommended the Town adopt a formal procurement policy for the purchase of goods or services with federal funds that complies with the procurement standards outlined in the Code of Federal Regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization does not have a documented procurement policy that conforms to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Context: During the year, the Organization entered into contracts for services that was greater than the Simple Acquisition Threshold of $250,000. As part of the audit procedures, we requested the Organization’s documented procurement policy. The Organization did not have a documented procurement policy. Prior to entering agreements to making purchases in excess of the simplified acquisition threshold, the Organization performed a price analysis in a manner consistent with 2 CFR Part 200. Cause: The Organization was not aware that a documented procurement policy was required. Effect: Without documented procurement policies, the Organization could procure assets in a manner that is not consistent with 2 CFR Part 200. Recommendation: We recommend that the Organization familiarize themselves with the requirements of 2 CFR sections 200.318 through 200.326 and develop a documented procurement policy that conforms to applicable federal statutes and procurement requirements. Management’s Response: Management agrees.
Finding 2023-001 - Procurement (Compliance) Repeat of Prior Audit Finding 2022-003 ALN No.: 93.829 - Section 223 Demonstration Programs to Improve Community Mental Health Services Award Year: January 1, 2023 - December 31, 2023 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: Under 2 CFR Part 200.318(a) of the Uniform Guidance the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR Part 200.317 through 200.327. Condition/Context: South Shore’s documented procurement procedures are not fully in accordance with Uniform guidance standards. Cause: South Shore did implement a documented procurement policy as a result of finding 2022-003 in the prior year. The policy was not fully compliant with the requirements of the Uniform Guidance. Effect: South Shore has not complied with the specific requirements for procurement as described in the Uniform Guidance. Questioned Costs: None. Recommendation: South Shore should further develop a documented procurement policy that is fully in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees with the recommendation and plans to improve upon the formal procurement policy.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: County of Dane Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Section 200.303 requires establishing and maintaining internal controls that provides reasonable assurance that the non-federal entity is managing the Federal award in compliance with the Federal statutes, regulations, and terms and conditions of the Federal award. Title 2 CFR Section 200.318(i) requires the maintenance of records sufficient to detail the history of procurement. These records will include the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Centro Hispano does not have written procurement procedures, did not document the procurement history, and did not use the proper method of procurement. Cause: Centro Hispano obtained the contractor in 2022 and did not perform any procurement procedures prior to entering into the contract. During 2023, funding was obtained to cover the costs of this contract and nothing was indicated that the contractor was selected without proper procurement procedures for contracts over $250,000. Effect or Potential Effect: Contract costs not supported by adequate documentation of procurement history using the correct procurement method could be disallowed. Questioned Costs: $6,850,000 Repeat Finding: No. Recommendation: Procurements should follow the required methods per Uniform Guidance and document the full procurement history. Procurement procedures should be designed, implemented, and written consistent with Uniform Guidance. Personnel responsible for procurement should be trained on Uniform Guidance requirements and Centro Hispano's written procurement procedures. Views of Responsible Officials: Centro Hispano agrees with the finding and is establishing policies and procedures to provide adequate documentation of review and approval for procurement.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... 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". Furthermore, 2 CFR 200.320(b) states that "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.". Condition: During our testing, it was noted that the Organization was not performing suspension and debarment checks prior to entering into vendor contracts to ensure the vendor was not listed in the suspended or debarred database maintained by the General Services Administration. In addition, the Organization does not have an established procurement policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. Questioned costs: None. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: For procurement, a sample of 8 was made from a population of 30 procurement transactions charged to the major program that exceeded $3,000 (the Organization's procurement policy after 2023 and below the minimum micro-purchase threshold before it was increased by the FAR to $10,000 for those with a written established policy). Of the 8 sampled procurement selections, three did not retain an adequate number of price comparisons prior to exercising the procurement, four did not follow the formal procurement methods for proposals when required, and all lacked evidence of controls over procurement considerations. For suspension and debarment, a sample of 3 was made from a population of 3 (entire population) suspension and debarment transactions charged to the major program. Of the 3 sampled, all were not checked for suspension or debarment prior to entering into the transaction. Cause: Prior to completing the prior year’s audit, staff were not aware of the specific compliance requirements and procedures for procurement, suspension, and debarment status. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding number was 2022-002. Recommendation: We recommend the Organization ensure its current process to review potential contractors for suspension and debarment is taking place prior to entering into transactions with such entities. The Organization has already taken steps to address considerations around procurement by implementing a Procurement Approval form. CLA recommends the use of this form, including signature, and emphasizes the importance of retaining adequate price rate quotations, RFP documentation, sole-source evidence, and price analyses in accordance with their established thresholds. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2023–003: Procurement Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.318, General procurement standards (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 Section 200.317 through 200.327.” Section 200.318 (i) states “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.” Also, Section 200.327 Contract provisions states that the non-Federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Award. SDA’s Fiscal Policies and Procedures Manual updated July 21, 2022 (“the Manual”) states “Procurement shall be made using one of the following methods: 1) Micro and Small Purchase Threshold; 2) Competitive Sealed Bids and Competitive Negotiations; and 3) Non-Competitive Negotiations. All methods of procurement, when funded by federal grants or contracts, must follow procurement requirements contained in the OMB, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for federal awards. Any purchases over $10,000 must bid competitively if subject to a single federal audit.” In addition, the Manual states “purchases related to Federally funded grants over $10,000 will be bid through either a Request for Proposal (RFP) or Request for Qualifications (RFQ) process. In addition, Request for Information (RFI) process may be used to help inform the development of either RFP, RFQ or other forms of procurement. Awards will be awarded to responses that meet the outlined criteria and reflect the lowest responsible bid. Contractors will be excluded from conducting business with SDA if the contractor has been debarred and/or suspended from conducting business with the federal government. On a regular basis, SDA will check vendors for any debarment status change on the federal System for Award Management (SAM). All source documents supporting any given transaction (e.g., receipts, invoices, and RFP data) will be retained and filed with SDA contract files in a centralized location. At a minimum, source document data must be sufficient to establish the basis for selection, the basis for the cost (including the reasonableness of cost), the rationale for the method of procurement and selection of contract type, and the basis for payment.” Condition During the current audit period, SDA did not adequately ensure federally funded contracts issued to vendors/contractors followed federal regulations and its internal policy, which includes maintaining documents to support its procurement decisions. Cause Based on our discussions with management, SDA completed a formal RFQ process for all vendors selected but did not maintain adequate documentation of the decision-making process. Effect The failure to maintain adequate documentation to support the procurement of federally funded contracts is a violation of federal regulations. Questioned Costs None. Context During our tests of procurement, we noted a total of four federally funded contracts were awarded by SDA during fiscal year 2023 (based on SDA’s procurement policy that required contracts with expenditures over the $10,000 threshold requiring competitive bid). We selected all four contracts for testing and noted the following: For all four contracts, we noted no evidence that debarment/suspension verification checks were performed prior to awarding the contract. For two contracts, we noted no evidence (justification memo) to support the basis for contractor selection (based on evaluation criteria and scoring outlined in the RFQs). We noted that while the contract agreement includes language that the contractor shall comply with all appliable laws, ordinances, and codes of federal, state and local government. To avoid any confusion on the part of the contractors regarding federal compliance, a direct reference to 2 CFR Part 200 Appendix II should be included in the contract. Identification of Repeated Findings Repeated (Prior Finding No. 2022-003). Recommendation We recommend that SDA’s management adhere to its written policy and maintain documentation, including its justification memo to support all management decisions related to federally funded procurements to comply with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
Finding 2023–003: Procurement Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.318, General procurement standards (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 Section 200.317 through 200.327.” Section 200.318 (i) states “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.” Also, Section 200.327 Contract provisions states that the non-Federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Award. SDA’s Fiscal Policies and Procedures Manual updated July 21, 2022 (“the Manual”) states “Procurement shall be made using one of the following methods: 1) Micro and Small Purchase Threshold; 2) Competitive Sealed Bids and Competitive Negotiations; and 3) Non-Competitive Negotiations. All methods of procurement, when funded by federal grants or contracts, must follow procurement requirements contained in the OMB, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for federal awards. Any purchases over $10,000 must bid competitively if subject to a single federal audit.” In addition, the Manual states “purchases related to Federally funded grants over $10,000 will be bid through either a Request for Proposal (RFP) or Request for Qualifications (RFQ) process. In addition, Request for Information (RFI) process may be used to help inform the development of either RFP, RFQ or other forms of procurement. Awards will be awarded to responses that meet the outlined criteria and reflect the lowest responsible bid. Contractors will be excluded from conducting business with SDA if the contractor has been debarred and/or suspended from conducting business with the federal government. On a regular basis, SDA will check vendors for any debarment status change on the federal System for Award Management (SAM). All source documents supporting any given transaction (e.g., receipts, invoices, and RFP data) will be retained and filed with SDA contract files in a centralized location. At a minimum, source document data must be sufficient to establish the basis for selection, the basis for the cost (including the reasonableness of cost), the rationale for the method of procurement and selection of contract type, and the basis for payment.” Condition During the current audit period, SDA did not adequately ensure federally funded contracts issued to vendors/contractors followed federal regulations and its internal policy, which includes maintaining documents to support its procurement decisions. Cause Based on our discussions with management, SDA completed a formal RFQ process for all vendors selected but did not maintain adequate documentation of the decision-making process. Effect The failure to maintain adequate documentation to support the procurement of federally funded contracts is a violation of federal regulations. Questioned Costs None. Context During our tests of procurement, we noted a total of four federally funded contracts were awarded by SDA during fiscal year 2023 (based on SDA’s procurement policy that required contracts with expenditures over the $10,000 threshold requiring competitive bid). We selected all four contracts for testing and noted the following: For all four contracts, we noted no evidence that debarment/suspension verification checks were performed prior to awarding the contract. For two contracts, we noted no evidence (justification memo) to support the basis for contractor selection (based on evaluation criteria and scoring outlined in the RFQs). We noted that while the contract agreement includes language that the contractor shall comply with all appliable laws, ordinances, and codes of federal, state and local government. To avoid any confusion on the part of the contractors regarding federal compliance, a direct reference to 2 CFR Part 200 Appendix II should be included in the contract. Identification of Repeated Findings Repeated (Prior Finding No. 2022-003). Recommendation We recommend that SDA’s management adhere to its written policy and maintain documentation, including its justification memo to support all management decisions related to federally funded procurements to comply with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
FINDING 2023-004 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… Section III – Federal Award Findings and Questioned Costs (Continued) Finding 2023-003 (Continued) (h) 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 section 200.320 states in part: (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:… (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. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The City entered into three contracts funded by the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant during the audit period. Two of those contracts were selected for testing and the City was unable to provide any procurement history. Upon inquiry of the City on their purchasing policies and procedures, it was verified the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. There were $237,044 in expenditures incurred on the contracts tested in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023-002 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Procurement, Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listing Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 2023 Compliance Requirement: Procurement, Suspension and Debarment Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) 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 section 200.320 states in part: (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:… (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. Condition: The Town contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 nor did the City provide documentation supporting a noncompetitive procurement. There was no available history of the procurement process. Cause: The Town’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the Town does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The Town’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the Town at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The Town entered into three contracts funded by the Water and Waste Disposal Systems for Rural Communities (WWTP) grant during the audit period. Two of those contracts were selected for testing. For one of those contracts selected for testing, the Town was unable to provide any procurement history. There were $459,737 in expenditures incurred on the contract tested with exceptions in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the Town establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.