Findings Citing § 200.318

Finding 2024-003 (Material Weakness) Program: Crime Victim Assistance Federal Agency: Department of Justice (DOJ) AL #: 16.575 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entity: Missouri Department of Social Services Type of Compliance Finding: I - Procurement, Suspension, & Debarment 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 and they must not be suspended or debarred. Condition/Context During our audit of the Organization’s fiscal year ended December 31, 2024 federal award program, we noted the Organization did not follow their documented procurement procedures for approving one contractor. Cause Management did not follow their procurement procedures for approving contractors / vendors. Effect Potential repayment of federal funds. Questioned Costs $120,489 Is the finding a repeat finding No Recommendations We recommend that Management follow their documented procurement procedures. Views of Responsible Officials / Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead

U.S. Department of the Treasury Finding: Procurement Policy & Procurement Action Documentation Reference Number: 2024-004 Program: 21.027 COVID-19 State and Local Fiscal Recovery Funds Program Identifying Number: SLFRP0139 Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Condition: The Land Bank did not retain supporting documentation for procurements entered during the year ended December 31, 2024. The Land Bank adopted a written procurement policy on September 11, 2024. The Land Bank entered contracts after the adoption of its new procurement policy during the period from September 11, 2024 through December 31, 2024 without performing the required procurement actions. A similar finding was reported in the 2023 audit. Context: The Land Bank represented that contractors were evaluated by analyzing City of Wilmington permit information prior to the implementation of the procurement policy in September 2024. The Land Bank did not retain documentation of this analysis to support its procurement actions. Criteria: CFR § 200.318, General Procurement Standards and § 200.320 Methods of Procurement to be Followed, of the Uniform Guidance apply to the State and Local Fiscal Recovery Funds Program and require the following: i. The Land Bank must adopt documented procurement procedures that are consistent with the applicable State, local, and federal regulations. ii. The Land Bank’s documented procurement procedures must include the following elements at a minimum: a. Micro-purposes - purchases up to $50,000 may be made without soliciting competitive price or rate quotations if the price is considered reasonable. b. Small Purchases - purchases between $50,000 and $250,000 may be made with soliciting competitive price or rate quotations from an adequate number of qualified sources. c. Formal Procedures - purchases over $250,000 must be made by sealed bid or competitive proposal. The Land Bank’s procurement policy requires the following: Method of Purchase: Selection of contracts for goods and services shall be made only on a competitive basis except as otherwise set forth herein. The following method of purchase shall be used when required by this Policy in order to achieve the highest quality and lowest cost: i. Micro-purposes ($0-$49,999) - Designated staff may procure goods and services on behalf of the Land Bank without obtaining three quotations and without approval of the Board. Vendor selection and pricing should be reviewed at least annually for convenience and cost savings. ii. Small Purchases ($50,000-$249,999) - At least three written quotations will be obtained whenever possible. The Land Bank shall solicit informal quotations utilizing sources most likely to identify the highest quality and lowest price of a particular good or service, including newspaper and magazine advertisements, internet searches, chamber of commerce recommendations, and prior experience of the Land Bank. The Land Bank shall create and maintain a written or digital record of the quotations solicited and received for such purchases. At its discretion, Land Bank staff may decide to utilize the RFP process in lieu of the quotation process for any contract even when it is not required. iii. Large Purchases ($250,000+)- A request for proposals (RFP) issued by the Land Bank shall be required. Any large purchase contract entered into by the Land Bank shall require the approval of the Board. Cause: The Land Bank did not adopt a written procurement policy until September 2024. The Land Bank did not retain evidence to support its assertion that procurement actions were performed during the year ended December 31, 2024. Questioned Costs: None Effect: The Land Bank did not comply with the Uniform Guidance requirement to adopt a procurement policy until September 2024 and did not fully document its procurement actions. Recommendation: We recommend Land Bank adhere to the adopted procurement policy and prepare and retain documentation for each procurement action.

Criteria: In accordance with 2 CFR §200.318, non-federal entities must: (1) maintain and use documented procedures for procurement transactions under a Federal award or subaward, including the acquisition of property or services; (2) maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts; and (3) award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of the proposed contract. Additionally, 2 CFR §180.300 requires non-federal entities to verify that entities with which they plan to enter into a covered transaction are not suspended, debarred, or otherwise excluded from federal programs. Entities must retain documentation that procurements have been performed in compliance with these requirements and have internal controls over compliance built into their policies and procedures. Condition: The YWCA uses an expenditure approval matrix that supplements its procurement policy. The matrix establishes approval authority and spending thresholds, which were within federal procurement guidelines. The matrix also includes the requirements to review SAM.gov to verify vendors are not on the exclusion list. However, the matrix does not fully address all the requirements of 2 CFR §200.318, such as written standards of conduct for conflicts of interest and explicit procedures for awarding contracts only to responsible contractors. Additionally, while vendors were reviewed against SAM.gov, the YWCA does not have explicit procedures requiring documentation or retention of evidence of this verification in accordance with 2 CFR §180.300. Section III – Federal Award Findings and Questioned Costs (continued) Context: During the audit, we noted the YWCA expended $265,344 under the MBDA Capital Readiness Program for expenditures related to non-payroll related third-party vendors. We confirmed that the vendors contracted were not suspended or debarred. However, evidence of the verification process was not retained. Cause: The YWCA’s small size and limited familiarity with the detailed documentation requirements 2 CFR §200.318 and §180.300 contributed to reliance on a policy that does not address all federal procurement requirements or require formal documentation. Effect: Although the vendors tested during the audit period were eligible and the procurement thresholds were consistent with federal guidelines, the absence of a fully developed procurement policy and procedures for documenting suspension and debarment verification represents both a significant deficiency in internal control and an instance of immaterial noncompliance with Uniform Guidance. These gaps increase the risk of future noncompliance, contracting with ineligible vendors, questioned costs, or loss of federal funding. Questioned costs: None Identification of a repeat finding: N/A Recommendations: We recommend that the YWCA: (1) expand its procurement policy to fully comply with 2 CFR §200.318, including formal written standards of conduct and procedures for ensuring contracts are awarded only to responsible contractors; and (2) establish and document procedures to maintain evidence that contractors and vendors are not suspended, debarred, or otherwise excluded from participation in federal programs in accordance with 2 CFR §180.300. Views of Responsible Official: The YWCA subsequently drafted a policy that aims to comply with the requirements of 2 CFR §200.318 and revised existing procedures to maintain evidence that contractors and vendors are not suspended, debarred, or otherwise excluded from participation in federal programs in accordance with 2 CFR §180.300.

2024-001 – Internal Controls over Compliance and Compliance with Procurement Standards Identification of the Federal Program - U.S. Department of the Treasury, Passed through Whitman-Walker Health System, Inc. 21.029 - COVID-19 – Coronavirus Capital Projects Fund Criteria – 2 CFR 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.” Per 2 CFR Section §200.319, “All procurement transactions for the acquisition of property or services under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320.” 2 CFR Section §200.324 stipulates that a non-Federal entity must perform a cost or price analysis for each procurement in excess of a minimum threshold. Additionally, 2 CFR Section §200.320(c) states in part, “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of [the defined] circumstances apply”. Condition – We noted there was insufficient documentation retained to support adherence to the required procurement policy and standards. Documentation was unable to be provided to support that cost or price analyses were performed and were conducted providing full and open competition. Additionally, for one procurement deemed noncompetitive by WWH, none of the circumstances allowing noncompetitive procurement were met. Cause – WWH did not maintain all required aspects of formal documentation as required by the applicable 2 CFR standards, was unable to provide evidence of full and open competition, and in one instance improperly elected noncompetitive procurement. Effect – We were unable to determine whether the value of procurements for goods or services that exceeded the micro-purchase threshold followed a proper formal procurement method in accordance with 2 CFR Sections §200.319, 320, and 324. Questioned costs – Not determinable Context – We selected a sample of 7 procurements by non-statistical methods, out of a population of 8 procurements. All procurements related to eligible pre-award costs. WWH was unable to provide sufficient formal procurement documentation to support full and open competition and performance of cost or price analysis for 4 out of 7 selected procurements. One of those samples was deemed noncompetitive by WWH but did not meet the circumstances allowing noncompetitive procurement. Repeat finding – This is not a repeat finding. Recommendation – We recommend WWH designate a responsible and qualified individual within the organization to oversee the procurement policy and ensure compliance. Additionally, we recommend WWH explore alternative organizational and tracking methods to ensure all procurements are properly tracked for workflow purposes and adequately maintained for retention. View of Responsible Officials - WWH has internal controls for the procurement process for federal funds and did not follow those practices as clearly with these investments. The utilization of team members with multiple responsibilities, without stronger controls, led to document retention challenges.

Finding: Item 2024-003 – Procurement Significant Deficiency Federal Program – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Pass-through Grantor's Numbers – CMF 2021125, 2159FR0292, 2159FR0310, 2159FR0317, 2159FR0334, 2159FR0318 Federal Award Year – December 31, 2024 Federal Agency – U.S. Department of Treasury Pass-Through Entity – Tulsa County/City of Tulsa Criteria: Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326, which stipulates that the organization must have a policy in place to comply with these standards. Condition/context: The Foundation had no documented policies in place over procurement of goods or services with the use of federal awards. As such, evidence was not available to document that federal procurement standards were followed as transactions took place. Cause: The Foundation and affiliates lacked a formally documented policy to prevent or detect inappropriate procurement from being entered into. Effect: The Foundation may improperly award and/or pay more than what could have been obtained for comparable goods or services for the geographic area. If instances of noncompliance with federal procurement have occurred or occur in the future, it could result in loss of grant funds, additional federal oversight of federal funding, or repayment of overspent federal monies could be requested to be paid by the Foundation. Questioned cost: Not applicable. Repeat finding: Yes, 2023-005. Recommendation: The Foundation should create a documented procurement policy that follows federal procurement policies and ensure that all affiliates establish and follow that policy. The Foundation and its affiliates should also establish formally documented controls to ensure that the procurement policies are being followed. View of responsible officials: Management's response is reported in "Corrective Action Plan" at the end of this report.

Assistance Listing Number, Federal Agency, and Program Name 59.059, U.S. Small Business Administration, Congressional Grants Federal Award Identification Number and Year - SBAHQ24I0024, 2024 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.318(i) The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not 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 200.319(a) All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR 200.320(a)(2)(i) 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 nonfederal entity. Condition - The Organization did not have controls to retain documentation that the procurement process was followed to ensure more than one vendor was reviewed for pricing before selecting the vendor chosen (as required under 2 CFR 320(a)(2)(i)). Questioned Costs - The Organization charged a total of $107,795 to grant SBAHQ24I0024 during 2024 for covered transactions for which there was no supporting documentation to indicate that the services were procured under the requirements above. If Questioned Costs are not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported - Not applicable Identification of How Questioned Costs Were Computed - The amount of the covered transactions charged against grant advances during 2024 Context - Four covered transactions with total expenditures charged to the grants totaling $107,795 were reviewed. The population subject to testing included a total of five covered transactions. Cause and Effect - The Organization's internal controls did not ensure written documentation of procurement procedures or decisions were retained, which resulted in a lack of evidence to support that the procurement policies were followed. Recommendation - The Organization should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Corrective Action Plan - Management agrees that documentation of the procurement process was not adequately retained. Management will implement controls to ensure proper support of the procurement process is retained. Although the procurement process was not fully documented, management believes its procurement policies were appropriately followed when entering these four covered transactions.

Identifying Number: 2024-006 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: The grant agreement specifies in Article VII, Miscellaneous, 7.20 “If the Recipient uses the CDFI ERP Award to procure property or services, the Recipient shall comply with the General Procurement Standards as described in the Uniform Requirements at 2 C.F.R. §§ 200.318 – 200.327.” Condition: The Credit Union did not maintain adequate records to support its adherence to suspension and debarment standards outlined under the procurement standards. The Credit Union could not support that procedures had been performed to document vendors used were not suspended or debarred. Cause: Management did not have effective controls to maintain documentation related to suspension and debarment. Effect: Failure to maintain support of procedures required by Uniform Guidance could result in deficiencies relating to accountability, transparency or improper use of federal grant funds. Questioned Costs: Not applicable. Context: This is applicable to all vendors the Credit Union paid with federal funds subject to suspension and debarment testing. Repeat finding: Not applicable. Recommendation: Management should maintain documentation of vendor due diligence related to suspension or debarment. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.

FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 92-02, 92-03, 92-04, 92-05 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. 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. The State of Indiana has established a more restrictive threshold of $150,000 for informal procurement methods. 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. Two vendors were identified that were paid $10,500 and $59,408, respectively, during the audit period using federal funds under the award, thereby requiring small purchase procedures for both procurements. Both vendors were selected for testing. The City was unable to provide any documentation for either vendor that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including the rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented for either vendor. 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 document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases- (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendors in question had been utilized by the City for various services over the course of multiple years, including for several years under this award with the ongoing multi-year project. For continuity purposes, the City chose to limit competition when procuring the services. The City included the requirements for limiting competition in its purchasing policy but did not follow the established policy. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services by not receiving the most competitive pricing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: The County is required to follow procurement standards set out at 2 CFR sections 200.318 through 200.327. 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 County has procurement policies in place; however, those procedures were not followed for grant disbursements. Context: A test of grant disbursements revealed the County did not follow competitive bid requirements for the grant disbursements. Effect: The County risks overpayment by not following competitive bid process. Cause: The County did not have specific procedures in place to ensure all required disbursements follow the competitive bid process. Questioned Costs: The County may have received a lower bid, but the difference would be immaterial to the federal program and below the questioned cost threshold. Recommendation: We recommend the County implement procedures to strictly comply with the requirements of 2 CFR sections 200.318 through 200.327, as it related to federal procurement requirements. Response: The County is aware that its policy on procurement was not followed in this situation and has taken steps to correct the situation for future purchases related to this program.

Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Department of the Treasury Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), ALN No. 21.027 Compliance Requirement: Procurement Repeat Finding: No Condition: During our testing of one covered transaction, we noted that management was not able to provide supporting documentation that procurement procedures were performed prior to the start of the procurement contracts including the reason for the vendor being considered a sole-source vendor. Questioned Costs: None Context: For one of two vendors tested, in the population of two, for procurement, management was not able to provide the required supporting documentation showing that the procurement policy was followed. The City confirmed that they deemed the covered transaction as a sole source procurement activity, however, did not keep documentation supporting that analysis. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.318 General Procurement Standards, the non-Federal entity must maintain records sufficient to detail the history of procurement and this procurement activity must be supported with a procurement policy. 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. Cause: There was a lack of personnel within the finance department of the City and grants administration was missing supervision by key personnel. Effect: The finding indicates that there should be process improvements in how the procurement policy is followed and tracked throughout the procurement process to provide evidence the compliance requirements are being met. Recommendation: We understand that the City has a procurement policy in place; however, we recommend that the City has procedures in place to ensure that all procurement and contractual documentation is maintained and able to be located.

U.S. Department of Treasury - direct funding COVID 19 - Coronavirus State and Local Fiscal Recovery Funds - 21.027 Criteria or Specific Requirement: Procurement and Significant Deficiency In accordance with 2 CFR 200.318, recipients and subrecipients must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including acquisition of property and services. These documented procurement procedures must be consistent with State, local and tribal laws and regulations and the standards identified in 2 CFR 200.317 through 2 CFR 200.327. Condition: During our test work over the Coronavirus State and Local Fiscal Recovery grant, we noted the Unified Government did not perform procurement procedures on two of its vendor contracts. Cause: The vendors identified were granted a non-competitive procurement under national emergency conditions due to the effects of COVID-19. However, the vendor was utilized again after the national emergency period and the Unified Government's procurement policy should have been followed at this time, but was not. Effect: Federal funds could be paid to entities outside of the Unified Government's procurement policy. Questioned Costs - $15,000 - This represents the total purchase for the two vendors which did not follow the Unified Government's formal procurement procedures. These charges were included in the direct award received from the U.S. Department of Treasury. Context: For 21.027, there were 50 vendors receiving a total of $10,862,254 subject to procurement requirements. Of those 50, a sample of thirteen vendors receiving a total of $1,523,729 were selected for testing. Two of the thirteen vendors selected for testing did not undergo the Unified Government's formal procurement procedures. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: 2023-011 Recommendation: We recommend that the Unified Government communicate to all departments that purchases using federal funds follow the procurement policy procedures prior to purchase and the procurement department provide training on the requirements to properly document that the procedures are completed. View of Responsible Official and Planned Corrective Actions: We agree with the finding. See management corrective action plan.

Compliance Requirement Procurement Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2020-PU-00079 – IJ#1, IJ#3, IJ #4 EMW-2021-PU-00030 – IJ#1, IJ#3 EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs $463,460 Criteria - Federal rules require grant recipients to follow strict purchasing standards. This includes seeking fair and open competition when buying goods or services, obtaining bids or quotes once purchases reach certain dollar thresholds, and verifying that vendors are not suspended or barred from receiving federal funds through the SAM.gov system. Federal rules set strict procurement standards that the District must follow: • 2 CFR 200.318 – Requires non-federal entities to maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. • 2 CFR 200.319 – Requires full and open competition in all procurement transactions. • 2 CFR 200.320 – Establishes methods of procurement, including micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals. • 2 CFR 200.323 – Requires cost or price analysis for procurements above the Simplified Acquisition Threshold. • 2 CFR 200.213 – Requires checks for suspension and debarment (SAM.gov).Under Louisiana law, political subdivisions such as ports are also subject to state purchasing thresholds: (a) $0 – $9,999: Purchases may be made directly but must be reasonable and properly documented. (b) $10,000 – $60,000: At least three (3) telephone or written quotations are required, with documentation kept on file. (c) Over $60,000: A formal advertised public bid process is required in compliance with Louisiana Public Bid Law. For professional services, the District is required to follow competitive selection processes consistent with their policies, Louisiana state law and federal guidance, ensuring fair opportunity, transparency, and reasonable pricing. Condition - The District failed to comply with federal procurement standards in multiple areas, indicating a pervasive breakdown in procurement controls and noncompliance with 2 CFR 200.318–.327. a) The District did not obtain competitive bids for the camera purchases and installation, resulting in questioned costs of $234,217 b) For professional services contracts funded by the PSGP, relating the IT services, engineering and consulting services, and GIS implantation services, the District did not maintain records documenting requests for price quotes or maintain records demonstrating the reasonableness of costs. Resulting in questioned costs of $305,657. c) For all ten (10) vendors tested under the Port Security Grant Program, the District did not retain documentation demonstrating that SAM.gov suspension and debarment verifications were performed prior to award or payment. Cause - The District failed to enforce federally required procurement standards and did not maintain sufficient documentation to demonstrate compliance. This deficiency reflects a significant weakness in procurement oversight and a lack of management attention to ensuring adherence with federal regulations governing competition, cost reasonableness, and vendor selection. Effect - Because the District did not obtain the required bids, quotes, or suspension and debarment checks, it cannot demonstrate compliance with federal procurement standards. This failure increases the risk of waste, favoritism, or contracting with ineligible vendors, and resulted in questioned costs as calculated by the auditor.Recommendation - The District must consistently apply written procurement policies that require competitive bids or price quotes for all purchases and professional services. Documentation of price reasonableness must be retained for every procurement action to ensure compliance with 2 CFR 200.318–.327 The District must document SAM.gov suspension and debarment verification for all vendors and contractors prior to contract execution or payment. This documentation must be maintained in the procurement file. The District must consult with FEMA regarding the allowability of identified questioned costs.

2024-004 U.S. Department of Treasury Passed-Through Burleigh County COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No. 21.027 2024 Award Year Procurement and Suspension & Debarment Material Weakness in Internal Controls over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition – In our testing of procurement and suspension & debarment, it was identified that the District did not include Buy America provisions in three contracts. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect – Failure to properly procure services may result in noncompliance with the provisions of applicable requirements of federal programs. Questioned Costs – None reported Context/Sampling – Three out of three vendors were selected for testing. Repeat Finding from Prior Year(s) – No Recommendation – Management should implement written policy procedures to ensure they are properly procuring services that comply with the provisions of applicable requirements of federal programs. Views of Responsible Officials – There is no disagreement with the finding. The District is in the process of reviewing its procurement practices and intends to implement a formal policy in alignment with state and federal requirements. Coordination with Burleigh County will continue to ensure compliance and proper documentation of procurement activities.

2024-005 U.S. Department of Treasury Passed-Through Burleigh County COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No. 21.027 2024 Award Year Procurement and Suspension & Debarment Material Weakness in Internal Controls over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition – In our testing of procurement and suspension & debarment, it was identified that the District did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of documented policies increases the overall risk that employees are not aware of the specific requirements with contracting and awarding contracts to lower tier entities. Questioned Costs – None reported Context/Sampling – N/A Repeat Finding from Prior Year(s) – No Recommendation – We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the finding. The District is in the process of reviewing its procurement practices and intends to implement a formal policy in alignment with state and federal requirements. Coordination with Burleigh County will continue to ensure compliance and proper documentation of procurement activities.

2024 – 004 Procurement, Suspension and Debarment Federal Agency: U.S. Department of the Interior Federal Program Name: Outdoor Recreation Acquisition, Development, and Planning Assistance Listing Number: 15.916 Federal Award Identification Number and Year: P23AP01170 - 2023 Pass-Through Agency: Wisconsin Department of Natural Resources Pass-Through Number(s): 55-01943 Award Period: September 1, 2023 – September 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: 2 CFR 200.318 requires grant recipients and subrecipients to have documented procurement procedures. These documented procedures must be consistent with the regulations and standards identified in Section 200.317-200.327. The grant recipient or subrecipient must also 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. No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. Criteria or specific requirement (continued): When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The City has established a simplified acquisition threshold for public construction but not for "nonpublic works items". The current policy only requires three or more quotes for all other purchases other than the public construction purchases but with no established threshold. The City entered into procurement transactions that exceeded the covered transaction threshold and did not maintain documentation of a search for suspension and debarment nor did it receive a certification from the entity or include a clause regarding suspension and debarment status in the contract with the entity in accordance with 2 CFR section 180.220. Questioned costs: None Context: The City’s current financial policies lack the necessary requirements related to procurement of items other than construction over the simplified acquisition threshold. Supporting documentation of the search for suspension and debarment was requested for the four procurement transactions that exceeded the covered transaction threshold in 2024. No deviations were expected. The city had no support or documentation for suspension and debarment status for these transactions. Cause: The city does not receive frequent federal awards at a level which triggers needing a single audit and was unfamiliar with documentation requirements surrounding procurement procedures. The City did not adopt or modify policies and implement internal controls to address the procurement, conflict of interest and suspension and debarment requirements of the Uniform Guidance. Effect: Contracts for non-construction related procurements and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. The potential exists that the city could award contracts to vendors who are suspended or debarred by the federal government resulting in noncompliance. Repeat Finding: No Recommendation: City personnel should familiarize themselves with the documentation requirements of the CFR related to procurement. City policies and procedures should be modified to help ensure documentation is maintained on all compliance requirements. The written policies should be expanded to clearly address all five procurement methods allowed under Uniform Guidance. The city should also adopt a written conflict of interest policy. We also recommend that the City review and update policies and procedures to help ensure that all federal grants with covered transactions have vendors reviewed for suspension and debarment status prior to entering into the transaction and that documentation of the status is maintained with the procurement history of each transaction that it is required for. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: 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. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County’s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County’s procurement policy was not followed before the contracts were awarded. Repeat Finding: Yes, repeat of prior year finding 2023-003. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.

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 was not able to provide a procurement policy for the year ended December 31, 2024. Cause: The Organization does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management prepare a procurement policy that aligns with the Uniform Guidance and continue to implement additional control processes in order to ensure proper controls are in place and followed.

The City did not have adequate internal controls in place to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Water and Waste Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture, Rural Utilities Service Federal Award/Contract Number: 089123264 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the City spent $1,000,515 in the Water and Waste Disposal System for Rural Communities program funds. The program’s objective is to provide funds to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The City used this funding for a water main improvement project. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations also require recipients to follow their own documented procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Description of Condition The District paid an engineer $155,805 in 2024 for a water main improvement project. Our audit found the City did not have adequate controls to ensure it complied with procurement requirements. Specifically, the City did not establish written procurement procedures and did not follow the most restrictive requirements when using federal funds to procure an engineering firm. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition The City does not regularly receive federal grant audits. Staff were unaware they needed a written procurement procedure. Additionally, the City has experienced turnover in the public works department, including roles responsible for procuring architect and engineering services for the project. Additionally, staff said they worked closely with U.S. Department of Agriculture and submitted the contract for the engineer, which received approval; however, the documentation provided only indicated approval of the contract and not the procurement of the engineer. Effect of Condition Without written procurement procedures, the City is at greater risk of not complying with the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. Additionally, the City cannot ensure it allowed for full and open competition and selected the most qualified contractor. Further, the City cannot ensure it complied with federal procurement requirements. Recommendation We recommend the City establish procurement procedures to conform with federal procurement requirements. Additionally, we recommend the City strengthen its internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. City’s Response The City of Royal City is committed to meeting all federal grant requirements and thanks SAO for providing guidance regarding this matter. We will proceed with developing written procurement procedures for purchases, services and public works contracts. It is our goal to ensure all stipulations are met for solicitation and award of Architectural and Engineering Services and Public Works contracts as required by state and federal granting agencies. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and requirements for maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities.

Finding Reference: 2024-002 – No written procurement policy Federal Agency: Environmental Protection Agency Federal Program: Capitalization Grants for Clean Water State Revolving Funds – ALN 66.458 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: General procurement standards of the Uniform Guidance under 2 CFR 200.318 require that the non-federal must maintain and use documented procurement procedures that are consistent with applicable state and local regulations, and conform to standards identified in the Uniform Guidance. Statement of Condition: The Authority does not have a formal procurement policy that complies with the federal requirements. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. Statement of Causes: The Authority was unacquainted with the general procurement standards of the Uniform Guidance. Possible Asserted Effects: Without a documented federal procurement procedure, it is difficult for the Authority to ensure compliance with relevant compliance requirements. Questioned Costs: None noted Context: Per review of the general procurement standards of the Uniform Guidance and related compliance supplement, non-federal entities are required to have their own documented procurement procedures. Per review of the Authority's policies and procedures, no such policies exist related to federal procurement requirements. Repeat Finding: Not Applicable Recommendations: The Authority should establish a documented procedure that relates to federal procurement. Views of responsible officials and planned corrective actions: The audit findings were communicated to the Authority and expecting the Authority to enter into other federal programs in the future, the Authority has decided to implement its own written procurement policy. The process and implementation are further discussed in the corrective action plan.

FINDING 2024-001 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number or Year (or Other Identifying Number): Interim Financing Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City did not have an effective system of internal controls over federal award requirements, including procurement and suspension and debarment. The City failed to properly design and implement internal controls, such as appropriate segregation of duties, to ensure compliance and detect or correct noncompliance in a timely manner. 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. Procurement - Small Purchases During the audit period, the City had six vendors with purchases under the $150,000 threshold that were considered simplified acquisition procurements and over the $10,000 threshold that was considered micro-purchase procurements. All six vendors were selected for testing, and for five of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these five vendors during 2024 was $246,055. Procurement - Simplified Acquisitions During the audit period, the City had three vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. All three vendors were selected for testing, and for two of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these two vendors during 2024 was $2,654,999. Procurement - Policy Per Uniform Guidance, 2 CFR 200.318(a), a non-federal entity that receives federal funds must have and use documented procurement procedures that conform to applicable federal, state, and local laws and regulations. Additionally, state law, such as Indiana Code 5-22, prescribes specific procedures for purchasing supplies and services based on various dollar thresholds. The City did not provide a purchasing policy for review that included the applicable federal regulation, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or services to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (ELPS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City failed to verify that vendors were not suspended or debarred prior to entering into covered transactions exceeding $25,000. Of the eight vendors tested, no documentation was provided to show that a check was performed against the EPLS or through other acceptable verification methods. The lack of internal controls and noncompliance was determined to be a systemic issue 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(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's management was not aware of federal compliance requirements related to procurement and suspension and debarment. The City had not established or implemented the necessary internal controls and written policies to ensure purchases and contracts were administered in accordance with federal and state regulations. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statues, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2 CFR 1000.10 gives regulatory effect to the U.S. Department of Treasury for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when entering into procurement transactions using Federal funds. 2 CFR § 200.320(b) provides formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. 2 CFR § 200.320(b) outlines two formal methods of procurement that are used for procurement transactions above the simplified acquisition threshold, which are (1) sealed bids and (2) competitive proposals. Further, 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement transaction. These records must 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. Due to inadequate controls over the procurement process, for one out of three (33%) vendors examined during testing of the Coronavirus State and Local Fiscal Recovery Funds, the Village did not obtain sealed bids or competitive proposals before contracting with Arcadis G & M of Ohio to provide engineering services. Expenditures for these services funded with Coronavirus State and Local Fiscal Recovery Funds during 2024 totaled $403,969. Failure to obtain proposals from a variety of vendors may result in the Village not utilizing the most qualified vendor as well as further noncompliance with federal requirements. The Village should adopt procedures to help ensure records are maintained to document the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition (if applicable).

Internal Controls over Compliance and Compliance with Procurement Standards Information on the Federal Program: Federal Agency: U.S. Department of Treasury Assistance Listing Number: 21.029 Assistance Listing Name: COVID-19 - Coronavirus Capital Projects Fund Pass-through Award: Pass-through Entity Award Number Award Period District of Columbia CPFFN0167 November 21, 2023 through December 31, 2026 Criteria: 2 CFR 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.” Per 2 CFR Section §200.319, “All procurement transactions for the acquisition of property or services under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320.” 2 CFR Section §200.324 stipulates that a non-Federal entity must perform a cost or price analysis for each procurement in excess of a minimum threshold. Additionally, 2 CFR Section §200.320(c) states in part, “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of [the defined] circumstances apply”. Condition: We noted there was insufficient documentation retained to support adherence to the required procurement policy and standards. Documentation was unable to be provided to support that cost or price analyses were performed and were conducted providing full and open competition. Additionally, for one procurement deemed noncompetitive by WWHS, none of the circumstances allowing noncompetitive procurement were met. Cause: WWHS’ internal controls over procurement did not fully operate as designed for the year ended December 31, 2024. WWHS did not maintain all required aspects of formal documentation as required by the applicable 2 CFR standards, was unable to provide evidence of full and open competition, and in one instance improperly elected noncompetitive procurement. Effect: We were unable to determine whether the value of procurements for goods or services that exceeded the micro-purchase threshold followed a proper formal procurement method in accordance with 2 CFR Sections §200.319, 320, and 324. Failure to perform procurement procedures in accordance with WWHS’ documented policies and General Procurement Standards as outlined in the 2 CFR Part 200 could result in the procurement being disallowed. Questioned costs: Not determinable Context: We selected a sample of 6 procurements by non-statistical methods, out of a population of 11 procurements. All procurements are related to eligible pre-award costs. WWHS was unable to provide sufficient formal procurement documentation to support full and open competition and performance of cost or price analysis for 4 out of 6 selected procurements. One of those samples was deemed noncompetitive by WWHS but did not meet the circumstances allowing noncompetitive procurement. The prevalence of these findings is detailed in the condition section above. Repeat finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency throughout all WWHS purchase transactions. We also recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy and that a standardized checklist is used for all purchase transactions. Finally, we recommend management train personnel involved in procurement transactions, including reviewer and approver, to adhere to the documented procurement procedures. View of Responsible Officials: The procurement referenced in this finding was completed in 2021 and was connected to the buildout of a new facility that was opened in 2023. The federal award used to ultimately fund the project was obtained in 2024, and thus the expenditures retroactively applied to the award. Management concurs with this finding and will ensure proper adherence to the procurement policy.

Federal Agency: U.S. Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Federal Award Identification Number and Year: MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): 1054531 Award Period: 1/1/2024-12/31/2024 Type of Finding: • Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: 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. Non-federal entities should also follow any state procurement requirements as well. Condition: During our testing we noted the Organization did not apply any procurement procedures for four small purchases and two proposals as they did not perform nor retain adequate documentation in accordance with Uniform Guidance and state requirements. Questioned costs: Unknown Context: Six out of six procurement selections did not have any procurement procedures followed for a total of $192,756 charged to the grant. This was not a statistically valid sample. Cause: Vendors in place had been procured in prior years, before current management assumed operations. Current management was unable to verify if the policies were followed. Effect: Potential effect of noncompliance with Uniform Guidance and state requirements when procuring goods and services for expenditures over federal awards. Repeat finding: This is a repeat finding. Recommendation: The Organization should review 2 CFR sections 200.318 through 200.326 and state requirements for procurement. The Organization should ensure documents are retained to support whether procurement policies were followed for vendors procured in years past. Views of responsible officials and planned corrective actions: There are no disagreements with the audit finding. The Organization will review the procurement standards as well as ensure documents are retained to support whether procurement policies were followed.

Failure to Conduct Competitive Procurement Procedures Criteria Per 2 CFR §§ 200.318–200.327, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. Sole source procurement may only be used when one of the circumstances outlined in 2 CFR § 200.320(c) applies and is adequately documented in the procurement file. Condition The Organization procured services from contractors identified in the approved grant budget prior to award. However, no evidence was provided to demonstrate that a competitive procurement process was conducted in accordance with the Uniform Guidance. There was no documentation of a sole source justification or other exception permitting noncompetitive procurement. Cause The Organization did not conduct competitive procurement or maintain a documented sole source justification for 4 out of 7 contracts reviewed. Listing the contractor in the grant budget prior to award does not satisfy federal procurement requirements outlined in the Uniform Guidance. Effect Failure to conduct competitive procurement increases the risk of noncompliance with the Uniform Guidance and the possibility that funds are not used appropriately, potentially resulting in questioned costs. Questioned Costs No questioned costs were identified as a result of our procedures. Context/Sampling Seven procurement transactions were tested under the program. In four instances, the Organization did not follow federal procurement requirements. No evidence of competitive bidding or documented sole source justification was provided for these transactions. Recommendation We recommend that the Organization implement procedures to ensure compliance with the procurement standards in 2 CFR §§ 200.318–200.327 for all federally funded purchases, including those where a contractor is named in the grant budget. For future procurements, the Organization should either conduct a competitive bidding process or document and obtain approval for a sole source procurement as allowed under 2 CFR § 200.320(c). Management’s Corrective Action Planned Management accepts the recommendation and will ensure compliance with the procurement standards in 2 CFR §§ 200.318–200.327 for all federally funded purchases by either conducting a competitive bidding process or documenting and obtaining approval for a sole source procurement as allowed under 2CFR §200.320(c).

Significant deficiency in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: U.S. Department of Commerce ‐ The National Telecommunications and Information Administration Program Title: Public Wireless Supply Chain Innovation Fund Grant Program Assistance Listing Number: 11.038 Project Number: 06-60-IF008 Award Period: December 1, 2023 - November 30, 2025 Criteria Requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a nonfederal entity establish a written procurement policy which conforms. Among other requirements, the written procurement policy must identify formal and informal procurement actions to be taken based on the size of the procurement covering both goods and services. Cause Open Networking Foundation’s written procurement policy did not cover all requirements outlined in the Uniform Guidance procurement standards. Missing elements of the written procurement policy consisted of: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $2,500. - The policy does not have clear provisions for maintaining detailed procurement records related to services. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. Effect or Potential Effect The absence of a policy that fully conforms to the Uniform Guidance could result in noncompliance issues including the lack of records sufficient to detail the history of a procurement transaction. Questioned Costs Not applicable. Repeat Finding No Recommendation We recommend Open Networking Foundation implement measures to ensure that its procurement policy conforms to procurement standards outlined in 2 CFR Part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment. Views of Responsible Officials Management concurs with the finding and has provided the accompanying management corrective action plan.

2024-002 The District did not have adequate controls and did not comply with federal suspension, debarment and procurement requirements. Assistance Listing Number and Title: 97.044 – Assistance to Firefighters Grant Federal Grantor Name: Department of Homeland Security Federal Award/Contract Number: EMW-20023-FG-04692; EMW-20023-FG-04692 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $ 0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the District spent $772,976 in federal funds from the Assistance to Firefighters Grant program. This program provides funding to protect the health and safety of the public and firefighting staff against fire and fire-related hazards. Federal regulations require recipients to establish, document and maintain internal controls that ensure compliance with program requirements. These controls include understanding the program requirements and monitoring the effectiveness of established controls. Suspension and debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods. When using federal funds to purchase goods or services, governments must apply the most restrictive of either federal requirements, state laws or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. The District must maintain documentation showing the procurement process it performed. Additionally, federal regulations also require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees and officers involved in selecting, awarding and administering contracts procured with federal funds. Description of Condition Suspension and Debarment Our audit found the District did not have internal controls to verify the two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Procurement Our audit found the District’s internal controls were ineffective for ensuring it complied with federal procurement requirements. Although the District has an established procurement policy, it does not conform with federal requirements. Specifically, it does not include methods and thresholds for formal bids, small purchases and piggybacking or cooperative purchases. Further, the District does not have a standards of conduct policy covering conflicts of interest for employees or agents who award contracts, as federal regulations require. Additionally, the District did not retain documentation to show it procured a fire apparatus totaling $514,000 and cannot demonstrate it followed the most restrictive of federal, state or local procurement requirements for this purchase. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Suspension and Debarment District staff were unaware of the federal requirements for suspension and debarment. Procurement Management and staff were unaware the District’s documented procurement procedures did not conform to federal procurement standards and did not know they should update them. They also did not know the District should have documented procedures covering standards of conduct. Further, current staff were unable to locate documentation to demonstrate compliance with procurement requirements as staff who no longer work for the District purchased the fire apparatus. Effect of Condition Suspension and Debarment The District did not obtain a written certification from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid $740,000 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The District subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Procurement Without written policies and procedures that conform to federal procurement standards, the District is at an increased risk of not complying with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds. Without effective internal controls and retention of documents, the District cannot show it complied with federal procurement standards, allowed for full and open competition, and received the best price or selected the most qualified contractor. Recommendation Suspension and Debarment We recommend the District establish internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. Procurement We recommend the District establish internal controls to comply with federal procurement requirements, including establishing written procurement and standards of conduct procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327), and retaining all procurement documentation to demonstrate compliance for purchases. District’s Response 1. Develop and Implement Comprehensive Procurement and Public Works Policies: The District will immediately develop and adopt robust written procurement and public works policies and procedures. These policies will ensure compliance with both federal regulations and Washington state law (RCW). The policies will include detailed procedures for: Vendor and Subcontractor Vetting: Incorporating explicit steps for checking potential vendors against the federal System for Award Management (SAM) database to ensure they are not suspended or debarred. This process will apply to all federally funded procurements, as well as any other procurements exceeding the federal threshold of $25,000 paid with federal funds. Competitive Bidding: Establishing clear thresholds for purchases and public works projects requiring minimal, informal, or formal competitive bidding, in line with state guidelines. Public Works Requirements: Mandating compliance with prevailing wage requirements and incorporating bonding and retainage rules for all public works projects. Documentation: Requiring detailed record-keeping for all procurement activities, including bids, vendor evaluations, and justification for contract awards. Contract Clauses: Including a standard contract clause affirming vendor understanding and compliance with federal debarment and suspension requirements. Policy Approval: Submitting the draft policies for review and adoption by the district’s governing body. Assigned to: Fire Chief and Administrative Assistant. 2. Conduct Staff Training: All relevant staff, particularly the Fire Chief and Administrative Assistant, will undergo mandatory training on the new policies and procedures. Training will cover the correct application of procurement rules, the importance of federal suspension and debarment checks, and proper documentation procedures. Assigned to: Fire Chief. 3. Implement Management Review and Oversight: The Fire Chief will conduct and document a review of all procurement and public works transactions to ensure compliance with the newly adopted policies before any contract is finalized, or a purchase order is issued. Assigned to: Fire Chief. 4. Establish Periodic Compliance Self-Assessment: The District will perform annual self-assessments of its procurement process to identify and correct any control weaknesses and ensure ongoing compliance with federal and state regulations. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Port of Woodland January 1, 2024 through December 31, 2024 2024-001 The Port did not have adequate internal controls and did not comply with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: COVID 19 - 21.029 – Coronavirus Capital Projects Fund Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: S21-96401-023 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the COVID-19 Coronavirus Capital Projects Fund is to fund multi-purpose community centers and broadband-related infrastructure projects designed to deliver reliable internet service that meets or exceeds 100/100 Mbps symmetrical speeds. In 2024, the Port expended $1,327,754 related to broadband-related infrastructure. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Port enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The Port may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Port must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. These procedures must reflect the most restrictive of applicable federal, state or local thresholds and methods. When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. The Port must maintain documentation showing the procurement process it performed. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees and officers involved in selecting, awarding and administering contracts procured with federal funds. Finally, federal regulations require nonfederal entities to incorporate the Build America, Buy America Act (BABAA) preference requirements in all applicable contracts and purchase orders for work performed or products supplied under a federal award with an infrastructure project. Nonfederal entities can meet this requirement by including the BABAA domestic preference provisions in the agreement or obtaining a BABAA waiver. Description of Condition Suspension and Debarment Although the Port has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the Port did not follow this process and did not verify all five contractors were not suspended or debarred before purchasing from them. Procurement Our audit found the Port’s internal controls were ineffective for ensuring it complied with federal procurement requirements. Although the Port has an established procurement policy, it does not conform with federal requirements. Specifically, it does not include methods and thresholds for purchases, the correct thresholds for public works projects, and requirements included in 2 CFR § 200.321-327. Further, the Port does not have a standards of conduct policy covering conflicts of interest for employees or agents who award contracts, as federal regulations require. Additionally, the Port did not have a process to ensure it followed the most restrictive of federal, state or local procurement requirements when procuring a professional service firm for about $19,750. Finally, the Port did not have a process in place to ensure it included the BABAA preference requirements in all applicable contracts for work performed or products supplied to the infrastructure project. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Since the District does not regularly manage federal funds, staff were unaware of the applicable federal requirements. In addition, the project was funded by multiple sources that each had their own requirements, which further added to the complexity of ensuring compliance. Effect of Condition Suspension and Debarment The Port did not obtain written certification from the contractors, insert a clause into the contract or retain evidence that it checked for exclusion records at SAM.gov to verify contractors it paid $1,226,616 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Port increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the Port made to an ineligible party would be unallowable, and the federal agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Procurement Without written policies and procedures that conform to federal procurement standards, the Port increases its risk of not complying with standards of conduct requirements when using federal funds. Additionally, without effective internal controls, the Port cannot demonstrate it complied with federal procurement standards, allowed for full and open competition, received the best price or selected the most qualified contractor, and that federal funds were spent on American products. Recommendation Suspension and Debarment We recommend the Port strengthen its internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. Procurement We recommend the Port update and maintain internal controls to comply with federal procurement requirements, including establishing written procurements and standards of conduct procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327). We also recommend the Port establish internal controls to ensure that contracts include the BABAA under a federal award with an infrastructure project, include the BABAA domestic preference provisions in the agreement, or obtain a BABAA waiver. Port’s Response The Port of Woodland thanks the Washington State Auditor’s Office (SAO) for a thorough review of our financial statements and compliance with federal procurement requirements related to the port’s capital infrastructure program. The Port respects the findings of SAO and will implement the recommendations, including improving adequate internal controls related to procurement policies, implementing processes where necessary, and training staff designed to comply with Title 2 U.S Code of Federal Regulations (CFR) Part 180, Part 184, Part 200, and other guidance accepted as best practice for compliance audits. Concerning SAO’s findings related to 2 CFR Part 180, verification of suspension and debarment status of contractors, the Port can state with confidence that none of the contractors were suspended or debarred from participating in federal programs for the duration of their contract with the Port. The Port concurs that it was unable to produce a time-stamped verification that these checks occurred before contract award. The Port will implement new procedures that conform to the Port’s existing policy to verify suspension and debarment status of all applicable contractors in the future. This includes performing verification, modifying future contract language, and retaining evidence of verification. Regarding SAO’s recommendations, designed to ensure the Port complies with federal procurement requirements, the Port intends to review 2 CFR Parts 184 and 200 and modify existing policies and procedures to conform with federal procurement standards. The Port is currently restructuring staffing and work functions, which will provide staff with greater clarity on their specific roles and responsibilities. This will also allow the Port to ensure staff have sufficient training to carry out those responsibilities in accordance with the updated internal controls, including compliance with the Build America, Buy America Act. Auditor’s Remarks We thank the Port for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the Port’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement. Title 2 CFR Part 184, Buy America Preferences for Infrastructure Projects, describes the requirements to purchase iron, steel, manufactured products, and construction materials incorporated into an applicable infrastructure project produced in the United States.

Assistance Listing Number: 10.728 Name of Federal Program: Inflation Reduction Act Hazardous Fuels Transportation Assistance Name of Federal Agency: Department of Agriculture Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal award must establish and maintain written policies and procedures addressing areas including, but not limited to, cash management (§200.302(b)(6)), allowability of costs (§200.302(b)(7)), procurement (§200.318-.326), compensation (§200.430(a)(1)), and fringe benefits (§200.431). Condition: ALC has not implemented all policies and procedures required by 2CFR Part 200, such as cash management, allowability of costs, procurement, compensation, and fringe benefits. Cause: ALC has not detailed its policies to conform with the requirements of the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without documented and implemented policies and procedures, ALC increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs Context: Policies and procedures were inspected for compliance with the requirements of the Uniform Guidance. Repeat Finding: No Recommendation: ALC should develop, formally adopt, and implement all Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and will implement procurement policies and procedures.

U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction – 20.205 2024-005 Procurement and Suspension and Debarment Policies Condition: The County does not have written policies and procedures in place for the procurement of contractors per 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114. The County does not have written standards of conduct that covers conflicts of interest and governs the performance of its employees engaged in the selection and administration of contracts per 2 CFR Section 200.318(c) and 48 CFR Sections 52.203-13 and 52.303-16. Criteria: Policies and procedures for the procurement of service providers should be documented and maintained to ensure the proper advertisement and selection of contractors and consultants. Policies should give all contractors and consultants (in-State and out-of-State) a fair opportunity to be considered for awards. Policies in place should also document standards to prevent conflicts of interest during the selection process. Cause: The County was not aware they were required to have written procurement policies and procedures. Effect: In the absence of procurement policies and procedures, conflicts of interest may exist, and bids may be inadequately obtained and awarded. Context: In a sample of three out of three highway planning and construction contracts the County followed procurement standards 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114 when bidding and selecting contracts. Due to the estimated fee range, geographic location of the projects, and the Quality Based Selection Ranking for engineer services, the County does not believe the selection process would have changed if written policies and procedures for the procurement of contractors was in place. Therefore, there are no questioned costs. Recommendation: The County Board should draft and approve policies and procedures for the procurement of contractors per the Compliance Supplement, Code of Federal Regulations, United States Codes, and Federal Acquisition Regulations to ensure the proper advertisement and selection of contractors and consultants, and to prevent conflicts of interest during the selection of contractors and consultants. Views of Responsible Officials and Planned Corrective Actions: Management will draft and approve the recommended procurement policies and procedures and disseminate the information to department heads and County employees during the fall of 2025.

U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction – 20.205 2024-005 Procurement and Suspension and Debarment Policies Condition: The County does not have written policies and procedures in place for the procurement of contractors per 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114. The County does not have written standards of conduct that covers conflicts of interest and governs the performance of its employees engaged in the selection and administration of contracts per 2 CFR Section 200.318(c) and 48 CFR Sections 52.203-13 and 52.303-16. Criteria: Policies and procedures for the procurement of service providers should be documented and maintained to ensure the proper advertisement and selection of contractors and consultants. Policies should give all contractors and consultants (in-State and out-of-State) a fair opportunity to be considered for awards. Policies in place should also document standards to prevent conflicts of interest during the selection process. Cause: The County was not aware they were required to have written procurement policies and procedures. Effect: In the absence of procurement policies and procedures, conflicts of interest may exist, and bids may be inadequately obtained and awarded. Context: In a sample of three out of three highway planning and construction contracts the County followed procurement standards 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114 when bidding and selecting contracts. Due to the estimated fee range, geographic location of the projects, and the Quality Based Selection Ranking for engineer services, the County does not believe the selection process would have changed if written policies and procedures for the procurement of contractors was in place. Therefore, there are no questioned costs. Recommendation: The County Board should draft and approve policies and procedures for the procurement of contractors per the Compliance Supplement, Code of Federal Regulations, United States Codes, and Federal Acquisition Regulations to ensure the proper advertisement and selection of contractors and consultants, and to prevent conflicts of interest during the selection of contractors and consultants. Views of Responsible Officials and Planned Corrective Actions: Management will draft and approve the recommended procurement policies and procedures and disseminate the information to department heads and County employees during the fall of 2025.

U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction – 20.205 2024-005 Procurement and Suspension and Debarment Policies Condition: The County does not have written policies and procedures in place for the procurement of contractors per 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114. The County does not have written standards of conduct that covers conflicts of interest and governs the performance of its employees engaged in the selection and administration of contracts per 2 CFR Section 200.318(c) and 48 CFR Sections 52.203-13 and 52.303-16. Criteria: Policies and procedures for the procurement of service providers should be documented and maintained to ensure the proper advertisement and selection of contractors and consultants. Policies should give all contractors and consultants (in-State and out-of-State) a fair opportunity to be considered for awards. Policies in place should also document standards to prevent conflicts of interest during the selection process. Cause: The County was not aware they were required to have written procurement policies and procedures. Effect: In the absence of procurement policies and procedures, conflicts of interest may exist, and bids may be inadequately obtained and awarded. Context: In a sample of three out of three highway planning and construction contracts the County followed procurement standards 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114 when bidding and selecting contracts. Due to the estimated fee range, geographic location of the projects, and the Quality Based Selection Ranking for engineer services, the County does not believe the selection process would have changed if written policies and procedures for the procurement of contractors was in place. Therefore, there are no questioned costs. Recommendation: The County Board should draft and approve policies and procedures for the procurement of contractors per the Compliance Supplement, Code of Federal Regulations, United States Codes, and Federal Acquisition Regulations to ensure the proper advertisement and selection of contractors and consultants, and to prevent conflicts of interest during the selection of contractors and consultants. Views of Responsible Officials and Planned Corrective Actions: Management will draft and approve the recommended procurement policies and procedures and disseminate the information to department heads and County employees during the fall of 2025.

U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction – 20.205 2024-005 Procurement and Suspension and Debarment Policies Condition: The County does not have written policies and procedures in place for the procurement of contractors per 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114. The County does not have written standards of conduct that covers conflicts of interest and governs the performance of its employees engaged in the selection and administration of contracts per 2 CFR Section 200.318(c) and 48 CFR Sections 52.203-13 and 52.303-16. Criteria: Policies and procedures for the procurement of service providers should be documented and maintained to ensure the proper advertisement and selection of contractors and consultants. Policies should give all contractors and consultants (in-State and out-of-State) a fair opportunity to be considered for awards. Policies in place should also document standards to prevent conflicts of interest during the selection process. Cause: The County was not aware they were required to have written procurement policies and procedures. Effect: In the absence of procurement policies and procedures, conflicts of interest may exist, and bids may be inadequately obtained and awarded. Context: In a sample of three out of three highway planning and construction contracts the County followed procurement standards 2 CFR Part 200.318 – 200.327, 23 CFR Part 172, and 23 CFR Sections 635.104 & 635.114 when bidding and selecting contracts. Due to the estimated fee range, geographic location of the projects, and the Quality Based Selection Ranking for engineer services, the County does not believe the selection process would have changed if written policies and procedures for the procurement of contractors was in place. Therefore, there are no questioned costs. Recommendation: The County Board should draft and approve policies and procedures for the procurement of contractors per the Compliance Supplement, Code of Federal Regulations, United States Codes, and Federal Acquisition Regulations to ensure the proper advertisement and selection of contractors and consultants, and to prevent conflicts of interest during the selection of contractors and consultants. Views of Responsible Officials and Planned Corrective Actions: Management will draft and approve the recommended procurement policies and procedures and disseminate the information to department heads and County employees during the fall of 2025.

Criteria: Per 2 CFR §200.318, general procurement standards, the entity must establish policies for procurement of services funded by federal funds. The procurement records and files for purchases in excess of the micro purchase threshold shall include at a minimum the following items: the basis for contractor selection, justification for lack of competition when competitive bids are not obtained, and basis for award cost or price. In addition, award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. To ensure this is done, recipients should utilize the Excluded Parties List System website. Condition/Context: For our sample of one (representing the entire population), there was no documentation of policies and procedures for procurement of services funded by federal funds of $40,000. We determined for this program that rate quotations and rationale for limited competition was not retained for the vendor. It was also determined that there was no documentation retained regarding verification of vendor suspension or debarment. Questioned Costs: None noted. Cause: The entity has written policies including detailed levels of approvals for various vendors and purchases. However, the entity does not have policies and procedures designed for procurements under the Uniform Guidance, and therefore, there is not a formal process established to document the performance of such controls. We note that inadequate controls could result in a reasonable possibility that the entity would not be able to detect and correct noncompliance in a timely manner. Effect: Costs charged to federal awards without appropriate documentation of procurement policies and processes may be subject to disallowance. Repeat Finding: No. Recommendation: We recommend developing written procurement policies in accordance with the Uniform Guidance and implementing a system of review and approval controls to complement the design of processes over the procurement, suspension, and debarment compliance requirements. In addition, we recommend retaining documentation regarding procurement decisions including rate quotations and verification of vendor suspension and debarment checks. Views of Responsible Officials: The Entity agrees with the recommendation. The Entity will develop a formal procurement plan for federal expenditures which will include the specific processes for selecting vendors including documentation retention of the selection process. The policy will also include the process to be followed for verification of vendor suspension or debarment. At the time of the policy’s adoption by the Division, the document will be shared with all corps officers and program administrators throughout the Division. The Divisional Contract Compliance Manager will be responsible for identifying grants to which the policy would apply and to assist with retaining the documentation.

Federal Award Identification Assistance Listing Program Title Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Program Number 21.027 Federal Award ID Number and Year SLFRP1965 Federal Agency U.S. Department of the Treasury Pass-Through Entity Nebraska Department of Health and Human Services Significant Deficiency in Internal Control Over Procurement and Suspension and Debarment Criteria The Health Department’s procurement policy states that documentation of procurements shall be retained for seven years and shall include all federally-required elements of procurement transactions. The Health Department’s procurement policy states that it will require all vendors to self-certify that they are not suspended or debarred. The Health Department is to then check that statement against the Federal System for Award Management. This policy is in compliance with 2 CFR 200.212; 2 CFR 200.318(h); 2 CFR 180.300; 48 CFR 52.209-6. Condition The Health Department did not retain evidence of its procurement of a covered transaction. The Health Department entered into a covered transaction prior to verifying whether the contractor was suspended or debarred. Repeat Finding No. Cause The Health Department did not have a system of controls in place to ensure that their procurement policy was followed. Effect or Potential Effect The Health Department may neglect to procure covered transactions. The Health Department may enter into a covered transaction with a debarred, suspended, or otherwise excluded vendor. Questioned Costs No. Statistical Sample No. Context The Health Department entered into a covered transaction during the year to modernize its restrooms. The Health Department followed its procurement policy and requested proposals from an adequate number of vendors. However, despite repeated attempts to obtain multiple bids, the Health Department was only able to obtain a bid from single vendor. The Health Department proceeded with that bid, as evidenced by the publicly-available board minutes, but failed to follow its procurement policy as it pertains to 1) documentation retention requirements and 2) suspension and debarment. In testing this transaction, the auditor performed a search on the System for Award Management website, noting that the vendor is not on the exclusion list. Recommendation The auditor recommends that the Health Department establish a robust system of controls to ensure it complies with its procurement policy when entering into covered transactions. Views of Responsible Officials See Corrective Action Plan, below.

FINDING 2024-004 PROCUREMENT, SUSPENSION, AND DISBARMENT SIGNIFICANT DEFICIENCY Water and Waste Disposal Systems for Rural Communities COVID-19 State and Local Fiscal Recovery Fund Assistance Listing Number: 10.760 and 21.027 Grant Number: Various Grant Period: Various Criteria According to the Uniform Guidance, non-federal entities must have written procurement policies and procedures that comply with federal regulations. These policies should ensure that procurements are conducted in a manner providing full and open competition, and that conflicts of interest are avoided. Condition During our audit, we noted that the City does not have documented procurement policies and procedures in place as required by the Uniform Guidance (2 CFR Part 200.318). Cause The City has not developed or implemented written procurement policies and procedures. Effect Without documented procurement policies, there is an increased risk of noncompliance with federal procurement standards, potential conflicts of interest, and inefficient use of federal funds. Recommendation We recommend that the City develop and implement written procurement policies and procedures that comply with the Uniform Guidance. These policies should include standards of conduct covering conflicts of interest, procurement methods, and documentation requirements.

FINDING 2024-004 PROCUREMENT, SUSPENSION, AND DISBARMENT SIGNIFICANT DEFICIENCY Water and Waste Disposal Systems for Rural Communities COVID-19 State and Local Fiscal Recovery Fund Assistance Listing Number: 10.760 and 21.027 Grant Number: Various Grant Period: Various Criteria According to the Uniform Guidance, non-federal entities must have written procurement policies and procedures that comply with federal regulations. These policies should ensure that procurements are conducted in a manner providing full and open competition, and that conflicts of interest are avoided. Condition During our audit, we noted that the City does not have documented procurement policies and procedures in place as required by the Uniform Guidance (2 CFR Part 200.318). Cause The City has not developed or implemented written procurement policies and procedures. Effect Without documented procurement policies, there is an increased risk of noncompliance with federal procurement standards, potential conflicts of interest, and inefficient use of federal funds. Recommendation We recommend that the City develop and implement written procurement policies and procedures that comply with the Uniform Guidance. These policies should include standards of conduct covering conflicts of interest, procurement methods, and documentation requirements.

FINDING 2024-004 PROCUREMENT, SUSPENSION, AND DISBARMENT SIGNIFICANT DEFICIENCY Water and Waste Disposal Systems for Rural Communities COVID-19 State and Local Fiscal Recovery Fund Assistance Listing Number: 10.760 and 21.027 Grant Number: Various Grant Period: Various Criteria According to the Uniform Guidance, non-federal entities must have written procurement policies and procedures that comply with federal regulations. These policies should ensure that procurements are conducted in a manner providing full and open competition, and that conflicts of interest are avoided. Condition During our audit, we noted that the City does not have documented procurement policies and procedures in place as required by the Uniform Guidance (2 CFR Part 200.318). Cause The City has not developed or implemented written procurement policies and procedures. Effect Without documented procurement policies, there is an increased risk of noncompliance with federal procurement standards, potential conflicts of interest, and inefficient use of federal funds. Recommendation We recommend that the City develop and implement written procurement policies and procedures that comply with the Uniform Guidance. These policies should include standards of conduct covering conflicts of interest, procurement methods, and documentation requirements.

Criteria: 2 CFR Section 200.318 requires 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 standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition: During testing of the Organization’s controls on compliance over procurement and suspension and debarment, we identified selected vendors the Organization did not have all the needed documentation around the procurement process and the suspension and debarment check. The Organization also must enhance its current procurement policy. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: The Organization was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None. Identification as a Repeat Finding: N/A. Recommendation: We recommend that the Organization review its current documented procurement policy, and its current processes and controls over procurement and suspension and debarment to ensure all required elements are included and the appropriate level of documentation is retained and available.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Assistance Listing #15.657 Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non- Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable for our inspection. It is our understanding that some contracts were procured under noncompetitive (sole source) justification. However, in certain instances we were unable to review documentation detailing the history and rationale of the procurements. Cause: The Organization's processes in place during 2024 did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Additionally, the Organization does not have a formal policy in place related to contractor screenings under CFR §200.213. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Additionally, the Organization may have inadvertently selected noncompetitive proposals method when the circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be followed, and thereby failing to administer full and open competition as required by the regulations. Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003 Recommendation: We then recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files. We also recommend that the Organization enhance its existing policy related to noncompetitive procurement to ensure include the five specific circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally, we recommend that the Organization enhance its policies to include screening procedures related to 200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.

Federal Agency: Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: 1H79SM087513-01 - 2024 Award Period: September 30, 2023 through September 29, 2027 Type of Finding: • Other Matters Criteria or specific requirement: According to 2 CFR 200.318, non-federal entities must have and use documented procurement procedures that reflect applicable state and local laws and regulations, and conform to federal law and the standards identified in 2 CFR 200.318 through 2 CFR 200.327. Condition: During our review of the organization's procurement processes, it was noted that the organization does not have a procurement policy that complies with federal requirements. Specifically, the policy does not address key elements such as competition, cost or price analysis, and documentation requirements as outlined in federal regulations. Questioned costs: None Context: Policies exist, but do not meet requirements. There are no requirements to retain documentation related to comparison or analysis prior to purchase or procurement. Cause: The absence of a compliant procurement policy appears to be due to a lack of awareness of the specific federal requirements and the absence of a formal process to review and update organizational policies to ensure compliance. Effect: Without a procurement policy that complies with federal requirements, the organization is at risk of non-compliance with grant conditions, which could lead to questioned costs, potential disallowance of expenditures, and jeopardize future funding opportunities. Recommendation: We recommend that the Organization develop and implement a procurement policy that complies with federal requirements, including provisions for competition, cost or price analysis, and proper documentation. Views of responsible officials: There is no disagreement with the audit finding.

Failure to Follow Procurement Policy Finding 2024-002 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed for the heating ventilation and cooling project, new roof, and electric vehicle charging stations. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Criteria: The following requirements are documented in 2 CFR 200-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 2 CFR 200.214 Suspension and Debarment 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. 2 CFR Part 200.318 General Procurement Standards (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (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 Methods of Procurement to be Followed (b) 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. 2 CFR 200.324 Contract Cost and Price (a) The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Todd Shurn, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority acknowledges the finding and is currently working to correct this.

Failure to Follow Procurement Policy Finding 2024-002 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed for the heating ventilation and cooling project, new roof, and electric vehicle charging stations. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Criteria: The following requirements are documented in 2 CFR 200-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 2 CFR 200.214 Suspension and Debarment 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. 2 CFR Part 200.318 General Procurement Standards (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (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 Methods of Procurement to be Followed (b) 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. 2 CFR 200.324 Contract Cost and Price (a) The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Todd Shurn, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority acknowledges the finding and is currently working to correct this.

Failure to Follow Procurement Policy Finding 2024-002 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed for the heating ventilation and cooling project, new roof, and electric vehicle charging stations. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Criteria: The following requirements are documented in 2 CFR 200-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 2 CFR 200.214 Suspension and Debarment 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. 2 CFR Part 200.318 General Procurement Standards (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (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 Methods of Procurement to be Followed (b) 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. 2 CFR 200.324 Contract Cost and Price (a) The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Todd Shurn, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority acknowledges the finding and is currently working to correct this.

Failure to Follow Procurement Policy Finding 2024-002 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed for the heating ventilation and cooling project, new roof, and electric vehicle charging stations. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Criteria: The following requirements are documented in 2 CFR 200-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 2 CFR 200.214 Suspension and Debarment 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. 2 CFR Part 200.318 General Procurement Standards (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (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 Methods of Procurement to be Followed (b) 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. 2 CFR 200.324 Contract Cost and Price (a) The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Todd Shurn, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority acknowledges the finding and is currently working to correct this.