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.
2024-001 The District did not have adequate internal controls for ensuring compliance with federal procurement and suspension and debarment requirements, and it did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 10.902 – Soil and Water Conservation Federal Grantor Name: U.S Department of Agriculture Federal Award/Contract Number: NR230546XXXXG001 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 The purpose of the Soil and Conservation program is to provide conservation technical assistance to private landowners, conservation districts, tribes, and other organizations through a national network of professional conservationists and assist them in conserving, improving, and sustaining natural resources and the environment. In 2024, the District spent $2,812,023 in program funds for lake treatment. 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. Procurement Federal regulations require recipients to establish and 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. 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 that the contractors have not been 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. Description of Condition Procurement Our audit found the District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the District did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. Suspension and Debarment Our audit found the District did not have internal controls to verify the contractor it paid more than $25,000 in federal funds was 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. Cause of Condition District staff were not aware of the federal procurement and suspension and debarment requirements. The District does not typically receive large federal grants and this is its first single audit. Staff responsible for complying with these requirements did not dedicate necessary time and resources to understanding the requirements. Effect of Condition 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. Although the District did not have written policies or procedures over procurement in place, it received guidance from the federal grantor and did comply with procurement requirements for the competitive solicitation and selection of the contractor hired for lake treatment. Suspension and Debarment The District did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify one contractor it paid $2,760,992 using federal funds was 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 contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation Procurement We recommend the District establish written procurement procedures that conform to federal procurement requirements. Suspension and Debarment We recommend the District 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. District’s Response The Columbia Basin Conservation District appreciates the opportunity to respond to the Washington State Auditor’s Office (SAO) findings and recommendations. We extend our sincere thanks to the audit staff for their professionalism, patience, and guidance throughout the audit process. The District agrees with the findings and recommendations. We recognize the importance of maintaining strong internal controls and ensuring full compliance with federal requirements. This audit provided valuable insight into areas where improvements were needed, and we have taken proactive steps to address the identified deficiencies. Auditor’s Remarks We appreciate the District’s commitment to resolving the issue and the District’s helpfulness and professionalism during the audit. We will review the status of the 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. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Non-procurement), establishes non-procurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689. 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.
2 CFR §1201.1 states, in part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). 2 CFR §200.318(h) states, in part, the non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. The Village’s LPA Federal Local-Let Project Agreement between the Village and Ohio Department of Transportation (ODOT), section 7.8, states before awarding a contract to the selected contractor, the LPA shall verify that the contractor is not subject to a finding for recovery under ORC Section 9.24, that the contractor has taken the appropriate remedial steps required under ORC Section 9.24, or that the contractor otherwise qualifies under the exceptions to this section. Findings for recovery can be viewed on the Auditor of State’s website at https://ohioauditor.gov/findings.html. If the LPA fails to verify, ODOT may immediately terminate this Agreement and release all Federal funding commitments. The Village had one contract subject to bid for the Highway Planning and Construction program. The Village did not verify the contractor was not subject to a finding for recovery, that the contractor has taken the appropriate remedial steps, or that the contractor otherwise qualifies under the exceptions prior to entering into the contract. This error was caused by a failure in controls related to the Terms and Conditions of the grant agreement. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are unqualified to receive the funding. The Village should ensure that it checks the Ohio Auditor of State’s website for any Findings for Recovery related to the potential vendors prior to entering into a contract.
Finding: Finding Type: Material Weakness Title and Federal Assistance Listing Number of Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR 200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. For purchases exceeding the micro-purchase threshold of $10,000, the entity must obtain price or rate quotations from an adequate number of qualified sources, unless the purchase qualifies as a sole-source procurement under 2 CFR 200.320(c). Additionally, 2 CFR 200.303 requires the non-federal entity to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of the federal award. Furthermore, 2 CFR 200.318(b) and 200.324 require that written contracts be executed with contractors, including all required Federal provisions to safeguard Federal funds. Condition: We examined 60 transactions during our testing of procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds. We noted that a competitive bidding process was not used in 42 of 60 transactions tested. In all 42 instances, Historic South did not provide evidence that multiple bids or quotes were solicited. The documentation and explanation provided by Historic South was not deemed to be adequate justification to qualify for the use of sole-source procurement under 2 CFR 200.320(c). Additionally, all 60 procurement transactions tested did not have a fully executed, signed contract with the respective contractors. The award/contracting process and methods used to render and pay services did not meet the expected level of formal contractual agreements in place. Cause: In early 2024, Historic South made revisions to the procurement process in order to maximize efficiency and improve overall project outcomes. These revisions were made based on the challenges of securing bids on all potential projects, the need to expend the awarded dollars in a timely fashion and a verbal agreed-upon understanding with the Ohio Department of Health. The requirement to obtain multiple bids was replaced with a strategic invitation approach based on a preferred vendor pool. The result was that Historic South did not have a procedure in place to ensure that procurement transactions were conducted in compliance with Uniform Guidance. Specifically, the procurement policy lacked provisions to enforce competitive procurement practices for purchases above the micro-purchase threshold. Additionally, the process Historic South used to make awards to contractors did not meet the expected standards required for formal contract execution prior to project initiation or payment. - 29 - Historic South Initiative Schedule of Findings and Questioned Costs - continued Year Ended December 31, 2024 Section III – Federal Program Audit Findings and Questioned Costs - continued Effect: Failure to obtain competitive bids or quotes increases the risk of paying higher prices for goods/services, or unfair contracting practices. Additionally, the lack of competitive procurement represents noncompliance with Uniform Guidance, which may lead to questioned costs and potential disallowance by the granting agency. Furthermore, the lack of formally signed contracts increases the risk of misuse of federal funds and an inability to enforce contractual obligations or resolve disputes. While our testing did not identify any instances of misspent or improperly used federal funds, the control deficiencies represent a material weakness in internal control over compliance. Questioned Costs: $1,555,114 These costs are considered questioned due to lack of compliance with Uniform Guidance. The amount represents the total bid/contract amount of the 42 transactions tested, that did not meet the competitive bidding requirements. Recommendation: We recommend that Historic South implement and enforce formal procurement procedures that comply with the requirements of 2 CFR 200.317-200.327. These procedures should include obtaining competitive bids and/or maintaining documentation for any alternative bidding process used and approval requirements. Additionally, Historic South should require that fully executed, signed contracts be obtained prior to the start of work or payment to contractors. Staff responsible for procurement should be trained on federal procurement standards to ensure compliance. Views of Responsible Official and Planned Corrective Action: Prospectively, Historic South will review best practices related to the contract awarding process and formal contracting arrangements for construction work. In addition, Historic South will implement policies of: 1. Requiring the solicitation of multiple bids for all construction work in excess of $10,000 2. Establishing criteria for awarding all construction work 3. Implementing formal contracting processes for all construction work
Finding Reference: 2024-003 – No written procurement policy Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 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. Condition: The Borough 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. Cause: The Borough 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 Borough 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 Borough’s policies and procedures, no such policies exist related to federal procurement requirements. Repeat Finding: Not Applicable Recommendations: The Borough 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 Borough and expecting the Borough to enter into other federal programs in the future, the Borough has decided to implement its own written procurement policy. The process and implementation are further detailed on the separate corrective action plan.
Criteria or Specific Requirement – 2 CFR Section 200.318 requires recipients of federal grants to maintain and use documented procedures for procurement transactions under a Federal award. Conditions – During 2024, the Organization did not have a written procurement policy. Context – The Organization exceeded the single audit threshold for the first time in 2024, primarily due to a one-time coronavirus grant. We looked up selected vendors on the SAM.gov website and verified they were not suspended or debarred. Cause – Management was not aware of the requirement to have a written procurement policy. Effect or Potential Effect – Not having a written procurement policy could result in inappropriate expenditure of Federal grant proceeds. Recommendation – We recommend that the Organization develop and implement a written procurement policy. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding and appreciates the auditor’s recommendation. The Organization exceeded the Single Audit threshold for the first time in 2024 due to a one-time coronavirus-related grant. As a result, management was not fully aware of the federal procurement documentation requirements applicable to these funds. To address this matter, management has implemented procedures to ensure that procurement documentation supporting compliance with federal regulations is maintained for all federal expenditures. These procedures include staff training on federal grant compliance requirements, enhanced oversight of procurement activities, and the use of standardized documentation and retention practices. Management believes these corrective actions will mitigate the risk of future noncompliance and strengthen overall federal grant administration.
Criteria or Specific Requirement – 2CFR Section 200.318(i) requires an Organization to maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type, contractor selection or rejection, and the basis for the contract price. Conditions – During 2024, the Organization did not maintain documentation related to how they chose a contractor for construction projects such as how they chose contractors to get bids from, how many bids were obtained, detailed bid information, and what factors they considered in choosing a contractor. No documentation exists showing considerations of price, contingencies, length of contract, and perceived risks. Context – The Organization exceeded the single audit threshold for the first time in 2024, primarily due to a one-time coronavirus grant. Cause – Management was not aware of the requirement to maintain procurement documentation. Effect or Potential Effect – The absence of procurement documentation increases the risk of non-compliance with federal regulations and limits the ability to demonstrate that federal regulations were followed. Recommendation – We recommend maintaining documentation supporting the compliance with federal regulations for all expenditures of federal funds. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding and appreciates the auditor’s recommendation. The Organization exceeded the Single Audit threshold for the first time in 2024 due to a one-time coronavirus-related grant. As a result, management was not fully aware of the federal procurement documentation requirements applicable to these funds. To address this matter, management has implemented procedures to ensure that procurement documentation supporting compliance with federal regulations is maintained for all federal expenditures. These procedures include staff training on federal grant compliance requirements, enhanced oversight of procurement activities, and the use of standardized documentation and retention practices. Management believes these corrective actions will mitigate the risk of future noncompliance and strengthen overall federal grant administration.
Finding 2024-001 – Noncompliance with Procurement Standards – Professional Services Federal Program: Coronavirus State and Local Fiscal Recovery Funds (Covid-19), ALN #21.027 Criteria: Uniform Guidance requires non-federal entities to maintain documented procurement procedures that ensure full and open competition (2 CFR §200.318). For procurements within the small purchase threshold, nonfederal entities are required to obtain price or rate quotations from an adequate number of qualified sources (2 CFR §200.320). Professional service contracts are subject to these requirements. Condition: The auditee did not follow established procurement policies and the procurement standards set forth in 2 CFR §200.317–§200.327 when engaging legal counsel. Specifically, the auditee procured legal services with total costs between $10,000 and $250,000 without obtaining and documenting required price or rate quotations or performing a documented evaluation of qualified firms. Cause: The auditee did not document a noncompetitive procurement justification or otherwise comply with the small purchase procurement requirements because it was not aware that professional legal services were subject to standards under Uniform Guidance. Additionally, at the time the legal services were engaged, management did not anticipate that the related expenditures would be subject to a Single Audit. Effect: Failure to follow required procurement procedures increases the risk of noncompliance with federal regulations and may result in questioned costs if the expenditures are determined to be unallowable. Context: The audit finding represents an isolated instance. The amount of the audit finding was $22,672 out of the total of $4,605,256 for the program and was discovered using a valid judgmentally selected sample size. Recommendation: We recommend the auditee strengthen internal controls over procurement by ensuring all professional service contracts within the $10,000 to $250,000 threshold comply with federal procurement standards, including obtaining and documenting price or rate quotations from qualified sources and documenting justification for any noncompetitive procurements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and plans to reinforce procurement requirements, and implement review procedures to ensure compliance with procurement thresholds and documentation requirements prior to contract execution.
Finding 2024-002: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Procurement and Suspension and Debarment, Non-Compliance Criteria: Per 2 CFR § 200.318(a), non-Federal entities must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Additionally, policies must address standards of conduct, competition, cost analysis, and methods of procurement. Condition: During the review of the Organization’s procurement procedures, it was noted that the Organization does not have an updated, written procurement policy that reflects the requirements outlined in 2 CFR § 200.318 – 200.327. The current policy on file predates the implementation of the Uniform Guidance and does not incorporate key standards such as micro-purchase thresholds, competitive bidding requirements, or conflict of interest provisions. Effect: Without an updated procurement policy that aligns with federal requirements, the Organization is at risk of noncompliant procurement practices. This could lead to unallowable costs being charged to federal awards, and potentially jeopardize future funding. Questioned Costs: None. Cause: The Organization has not reviewed or revised its procurement policy since the adoption of the Uniform Guidance, resulting in outdated internal procedures. _x000C_Recommendation: The Organization should update its procurement policy to fully align with the procurement standards outlined in 2 CFR § 200.318 through § 200.327. Staff responsible for procurement should also be trained on the updated procedures to ensure consistent and compliant practices.
Program: ALL No. 10.523 Centers of Excellence at 1890 Institutions Significant Deficiency and Noncompliance over Procurement and Suspension and Debarment Repeat Finding: Yes Condition: During our audit we noted that procurement documentation was not available to support the selection of a sole source vendor nor able to obtain documentation to support the Foundation entering into contractual agreements with vendors who were not debarred or suspended from doing business with the federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Per 2 CFR 200.318 General procurement: (b) The non-federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in this part. Per Uniform Guidance, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: Program personnel were unaware of the requirement included in Uniform Guidance related to procedures required for procurement. Effect: If procurement were not in compliance with Uniform Guidance, the Foundation would not identify the noncompliance timely. Questioned Costs: Unknown. Recommendation: We recommend that management develop and implement written procurement policies and procedures in accordance with Uniform Guidance, provide periodic training to program personnel, and establish a review process to ensure procurement activities comply with applicable federal requirements. We also recommend the Foundation follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Finding 2024-001: Procurement US Department of the Treasury – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Condition: During our testing of procurement for ALN 21.027, we noted that the City procured certain goods/services through the Commonwealth of Pennsylvania’s COSTARS cooperative purchasing program. For items selected for testing, totaling $184,512, the City did not conduct its own competitive procurement process. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. The City does not have implemented monitoring procedures over its use of COSTARS, including [e.g., periodic review of COSTARS procurement documentation, confirmation that COSTARS contracts were competitively awarded, and verification that applicable federal clauses are incorporated]. Documentation in the procurement files was not sufficient to clearly demonstrate how the underlying COSTARS procurement complied with the Uniform Guidance procurement standards for the specific federal award (e.g., basis for contractor selection, method of procurement relative to 2 CFR 200.320 thresholds, and required federal contract provisions). Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.327, the City is required to ensure that procurement methods used for purchases are appropriate based on the value of the procurement transaction. Cooperative purchasing arrangements (such as state contracts or COSTARS) are not prohibited by the Uniform Guidance; however, the municipality must assume responsibility for the procurement and document how the cooperative contract satisfies the federal procurement requirements applicable to the award. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. The City has chosen to leverage the COSTARS cooperative purchasing program to improve efficiency and obtain favorable pricing. While the City has implemented monitoring over COSTARS (for example, reviewing selected COSTARS contract information and maintaining communication with the state regarding procurement practices), those procedures have not been formalized in the written procurement policy, and the related documentation is not consistently retained in the individual grant procurement files. As a result, the audit file did not contain clear, consistent evidence that the COSTARS contracts used for the tested transactions met all applicable Uniform Guidance procurement requirements. Effect: The City was not in compliance with the procurement requirements of the Uniform Guidance. In addition, without documentation demonstrating clear, consistent evidence that COSTARS contracts used for purchases met all applicable Uniform Guidance procurement requirements, there is an increased risk of noncompliance which could result in unallowable costs being charged to the Federal awards. Repeat finding: Yes, finding 2023-002 Questioned costs known and likely: $184,512 known and $124,662 likely. Recommendation: We recommend that the City establish procedures to ensure that their purchasing policy follows all Uniform Guidance procurement standards, especially regarding cooperating purchasing programs. View of Responsible Officials: Management agrees. See Corrective Action Plan.
2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 Payment. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B) 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. The General Health District did not have written policies as required by Uniform Guidance. The failure to implement written policies as required by Uniform Guidance could result in noncompliance with the District’s federal programs. The General Health District should adopt written policies in accordance with the Uniform Guidance.
2024-004 Procurement and Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1057187; 2024 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Minnesota Department of Transportation State Aid Manual provides guidance and responsibilities for project sponsors. In addition to acting as the fiscal agent, the sponsor is taking on responsibility that the project will be completed in accordance with all of the federal and state rules and regulations that apply. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the County must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction with the contracting party. Condition: Faribault County acted as the sponsor for a project for a local city and the Minnesota Department of Transportation. The County did not develop controls over the sponsored project to ensure compliance for procurement. This included: • The County did not maintain records to support the history of procurement. • The County did not maintain documentation that the requirements for suspension or debarment were met by (a) checking SAM.gov exclusions, (b) collecting a certification from the vendor, or (c) verifying a clause or condition was included in the contract. Questioned Costs: None. Context: In June 2024, the County approved a resolution to act as a sponsoring agent for a city project. The project expenditures were $61,458 with payments made to the city for reimbursement. Effect: Without controls in place over the sponsored project, there is an increased risk of noncompliance with applicable laws, rules, and regulations. Cause: The County was unaware of the responsibilities of a project sponsor. Recommendation: We recommend the County implement controls to ensure projects the County sponsors are completed in accordance with all the federal and state rules and regulations that apply. View of Responsible Official: Acknowledge
Department of the Treasury Federal Financial Assistance Listing/ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, and Debarment Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement policies required. Condition – The Organization does not have a procurement policy that conforms to applicable standards under Uniform Guidance and 2 CFR sections 200.318 through 200.326. In addition, it was noted that there was no documentation to support suspension and debarment verification. Additionally, the Organization did not have proper procedures to ensure contracts include all required provisions. Cause – The Organization did not have proper procedures to ensure a procurement policy in accordance with Uniform Guidance was followed and controls were not adequately designed to ensure compliance with all the requirements for procurement, suspension, and debarment. Effect – The Organization did not comply with Uniform Guidance relating to Procurement. Questioned Costs – None reported. Context/Sampling – Overall procurement policy and two contracts out of a population of six total contracts. Repeat Finding from Prior Year(s) – No Recommendation – We recommend the Organization revise their procurement policy to follow Uniform Guidance and to follow those applicable procurement policies for applicable contracts. We also recommend the Organization review all contracts to ensure they include all required provisions as outlined by Uniform Guidance. Views of Responsible Officials – There is no disagreement with the finding.
Finding 2024-003: Procurement (Significant Deficiency) Federal Programs ALN 19.019 Criteria: Under 2 CFR 200.318, the Uniform Guidance requires that a recipient of U.S Government funds must use their own documented procurement procedures which reflect the applicable Uniform Guidance requirements to procure goods and services in order to ensure that all purchases are conducted in a manner that provides full and open competition. Condition: During our testing over procurement, we determined that ICMEC did not consistently document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: ICMEC did not follow their established internal procurement policy and that policy did not follow the requirements of the Uniform Guidance for procurement. Effect: Purchases of goods and services could be made above prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that ICMEC will not receive the best value for its purchases. The procurement process also allows for the evaluation of potential conflicts of interest with prospective vendors and contractors. Failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition. Questioned Costs: None noted. Context: Our audit procedures consisted of testwork completed on individual expenditures charged to the Federal awards. The report in which samples were selected was generated directly from ICMEC's general ledger (accounting system). We consider our sample to be representative of the population. The condition appeared to be systemic in nature. Identification as a Repeat Finding, if Applicable: Refer to Finding 2023-003. Recommendation: We recommend that ICMEC revise their procurement policy to be align with required Uniform Guidance standards. This policy should be communicated to all employees and enforced during the upcoming year. All procurement records for purchases in excess of the threshold should include the following at a minimum: (a) basis for the contractor/goods selected or (b) justification for lack of competition when quotes or competitive bids are not obtained. Additionally, the conclusion should be clearly documented and accompany the procurement documentation. We also believe that all long-standing contractual engagements should evidence occasional re-evaluation to ensure such relationships are free of conflicts.
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.