Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: ? Equipment (2 CFR 200.313) ? General procurement standards (2 CFR 200.318) ? Competition (2 CFR 200.319) ? Methods of procurement to be followed (2 CFR 200.320) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management?s Response: Management agrees with the finding.
Finding 2022-003 - Procurement (Compliance) ALN No.: 93.829 - Section 223 Demonstration Programs to Improve Community Mental Health Services Award Year: January 1, 2022 ? December 31, 2022 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: Under 2 CFR Part 200.318(a) of the Uniform Guidance the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR Part 200.317 through 200.327. Condition/Context: South Shore does not have documented procurement procedures in accordance with Uniform guidance standards. Cause: South Shore did not adequately document in form of a written procurement policy, however they were aware of and were following the federal procurement standards under the Uniform Guidance. Effect: South Shore has not complied with the specific requirements for procurement as described in the Uniform Guidance. South Shore is following applicable standards but did not have a formally documented policy. Questioned Costs: None. Recommendation: South Shore should develop a documented procurement policy in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees with the recommendation and plans to develop a formal procurement policy.
FINDING 2022-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County elected to receive the standard revenue loss allowance, allowing the County to claim its total State and Local Fiscal Recovery Funds (SLFRF) allocation of $7,694,555 as revenue loss to use for government services. As such, all SLFRF program funds were expended under the revenue loss eligible use category. The U. S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for good and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County divulged that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were identified. Each transaction was examined to determine whether the County verified the suspension and debarment status of either vendor prior to payment. The first covered transaction in the amount of $100,000 was made to a contractor for the construction of a new park pavilion. The contract, as provided by the contractor, included a clause stating they were neither excluded nor disqualified. Although the contract was signed by a County official, the contract was not appropriately reviewed by the County to ensure the suspension and debarment clause was included prior to signing. The second covered transaction in the amount of $144,359 was made for the purchase of new elevators for the annex building and the courthouse. The County was unable to provide documentation to support whether the County verified the vendor's suspension and debarment status prior to issuing payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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." 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management view of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were made, were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. We also recommended that supporting documentation be retained in order to be presented for audit.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
U.S. Department of Transportation FEDERAL TRANSIT CLUSTER 20.507 Federal Transit Formula Grant (applies to all grants) 20.526 Section 5339 Formula Apportionment 2022-005 Procurement and Suspension and Debarment Criteria: The Uniform Guidance regulations (?200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and noncompetitive proposals. Additionally, ?200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. In addition, non-federal entities are prohibited from contracting with 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. 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, (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 portion related to procurement is a repeated finding from 2019, 2020 and 2021. During our testing of purchases under the procurement regulations, for 2 out of 10 vendors (paid approximately $1.59 million out of the amount tested of $12.8 million) selected for testing, the System was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in ?200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over $10,000 consisting of 154 vendors paid approximately $22 million. Additionally, while the System does maintain written policies and procedures related to procurement standards, documentation addressing the acquisition of unnecessary or duplicative items was not present.Condition: During our testing of compliance with the suspension and debarment regulations, for 2 out of 10 vendors selected for testing (same vendors selected for procurement testing above), the System was unable to provide documentation of its conclusions that these vendor were not suspended or debarred. The universe (population) from which the items were selected were all vendor payments in 2022 over $25,000 consisting of 94 vendors paid approximately $21 million. Based on a review of SAM.gov, none of these vendors were suspended or debarred. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement and suspension and debarment. The System does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the System?s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals or its determination of whether the vendor is suspended or debarred. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The System may not be receiving the overall lowest cost for services and supplies procured by the agency. Without ensuring documentation is maintained over whether a vendor is suspended or debarred, the System may enter into contracts with unauthorized parties. Recommendation: We recommend the System implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. Additionally, we recommend that the System enhance its written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies should include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. A review of all contracts to ensure the appropriate language exits regarding suspension and debarment regulations or the System should consider an annual review of SAM.gov for all vendors.View of Responsible Official: The Agency will implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with ?200.320. The Agency will update our written policies and procedures to ensure that documentation is included regarding the avoidance of the acquisition of unnecessary or duplicative items. Documentation and policies will include procedures for the competitive bidding of bus parts on a quarterly basis and evidence that purchases are from these bid responses and from the lowest qualified vendor. Procurement will perform an annual review of SAM.gov for all vendors.
FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS Finding Number: 2022-001 Repeat Finding: Yes; 2021-001 Program Name/Assistance Listing Title: MBDA Business Center Assistance Listing Number: 11.805 Federal Agency: US Department of Commerce Federal Award Numbers: MB20OBD8050207, MB21OBD8050182 Pass-Through Agency: N/A Questioned Costs: $200,052 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment CRITERIA Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR ?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. Additionally, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR ?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 of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR ?180.300). CONDITION Adequate internal controls over the organization?s procurement procedures to ensure compliance with federal regulations and guidelines were not in place. In addition, the organization did not verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. CAUSE Staff were not aware of the procurement requirements contained within 2 CFR part 200, and, therefore, no internal controls had been designed or implemented to avoid non-compliance until June 2022 when the organization underwent its first single audit. A procurement policy was created and implemented in October 2022, well after the contracts were in place for the purchases identified in the finding. EFFECT The organization was not in compliance with federal guidelines regarding procurement. CONTEXT During our review of purchases, we noted the following: ? The Organization did not establish written procurement standards until October 2022. The procurements standards did not establish suspension and debarment checks for vendors. ? Small purchase procedures were not followed for seven purchases that exceeded the micropurchase threshold ($10,000) but were less than the simplified acquisition threshold ($250,000). These purchases were contracted before the Organization was aware of the deficiency, which was first identified during the previous single audit in summer 2022. ? The Organization did not verify four vendors were not suspended or debarred. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The Organization should establish written procurement standards address suspension and debarment requirements. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS Finding Number: 2022-001 Repeat Finding: Yes; 2021-001 Program Name/Assistance Listing Title: MBDA Business Center Assistance Listing Number: 11.805 Federal Agency: US Department of Commerce Federal Award Numbers: MB20OBD8050207, MB21OBD8050182 Pass-Through Agency: N/A Questioned Costs: $200,052 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment CRITERIA Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR ?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. Additionally, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR ?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 of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR ?180.300). CONDITION Adequate internal controls over the organization?s procurement procedures to ensure compliance with federal regulations and guidelines were not in place. In addition, the organization did not verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. CAUSE Staff were not aware of the procurement requirements contained within 2 CFR part 200, and, therefore, no internal controls had been designed or implemented to avoid non-compliance until June 2022 when the organization underwent its first single audit. A procurement policy was created and implemented in October 2022, well after the contracts were in place for the purchases identified in the finding. EFFECT The organization was not in compliance with federal guidelines regarding procurement. CONTEXT During our review of purchases, we noted the following: ? The Organization did not establish written procurement standards until October 2022. The procurements standards did not establish suspension and debarment checks for vendors. ? Small purchase procedures were not followed for seven purchases that exceeded the micropurchase threshold ($10,000) but were less than the simplified acquisition threshold ($250,000). These purchases were contracted before the Organization was aware of the deficiency, which was first identified during the previous single audit in summer 2022. ? The Organization did not verify four vendors were not suspended or debarred. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The Organization should establish written procurement standards address suspension and debarment requirements. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
2022-004 Department of Environmental Protection Agency, Passed through North Dakota Department of Environmental Quality Federal Financial Assistance Listing/CFDA Number 66.458 Clean Water State Revolving Fund Cluster Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance Criteria ? Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition ? During the course of our engagement, 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 increase the overall risk that employees are not aware of the specific requirements with of procurement, suspension, and debarment. Questioned Costs ? None reported Context/Sampling ? Overall Procurement Policy 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.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2022, SWIF220329 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $140,378 directly from the U.S. Department of the Treasury (Treasury). During the audit period, the Town expended these funds out of the revenue loss use category. The Treasury has decided that only some of the provisions in the Uniform Guidance apply to the revenue loss use category, as such, the provisions related to procurement, per the Treasury, are not applicable to the revenue loss use category. Therefore, the Town's use of its SLFRF funds received directly from the Treasury are not subject to procurement testing. In addition, the Town received an SLFRF allocation of $800,000 from the Indiana Finance Authority through the State Water Infrastructure or Transportation (SWIF) grant program. These funds are subject to the procurement provisions as outlined in the Uniform Guidance. The suspension and debarment provisions apply to all SLFRF funds regardless of use category or who (Treasury or other entity) awarded the funds. Procurement - Policy (SWIF award) Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The Town did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement - Simplified Acquisition (SWIF award) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT. Both vendors were selected for testing. One of the vendors, paid with SWIF funds, was originally contracted for $84,840, which is below the simplified acquisition threshold. At that time, the Town obtained quotes as would have been required at the small purchase threshold. However, the Town elected to change the scope of the project once SLFRF funds were awarded to cover additional improvements. As the scope of the project changed and the total price increased to over $429,000, more than 20 percent above of the original contract price, the project should have been reviewed and bid out. Since the new total of the project was over the SAT and formal procurement methods were not adhered to, this vendor was not properly procured. Suspension and Debarment (Treasury award) Prior to entering into subawards and covered transactions with federal award funds, 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements for the money received directly from the Treasury, the Town stated procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transactions. Two covered transactions for goods or services that equaled or exceeded $25,000 paid from the direct SLFRF funds during the audit period were identified. Both transactions were examined to determine whether the Town verified the suspension and debarment status of the vendors prior to payment. The Town had not performed procedures to ensure the two vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance for procurement was isolated to the SLFRF SWIF funding, and the noncompliance for suspension and debarment was isolated to the SLFRF direct funding. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The items 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." Indiana Code 5-22-10-9 states: "A purchasing agent may make a special purchase when purchase of the required supplies or services under another purchasing method under this article would seriously impair the functioning of the using agency." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the Town to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and contracts exceeding the simplified acquisition threshold were not properly bid. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2022, SWIF220329 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $140,378 directly from the U.S. Department of the Treasury (Treasury). During the audit period, the Town expended these funds out of the revenue loss use category. The Treasury has decided that only some of the provisions in the Uniform Guidance apply to the revenue loss use category, as such, the provisions related to procurement, per the Treasury, are not applicable to the revenue loss use category. Therefore, the Town's use of its SLFRF funds received directly from the Treasury are not subject to procurement testing. In addition, the Town received an SLFRF allocation of $800,000 from the Indiana Finance Authority through the State Water Infrastructure or Transportation (SWIF) grant program. These funds are subject to the procurement provisions as outlined in the Uniform Guidance. The suspension and debarment provisions apply to all SLFRF funds regardless of use category or who (Treasury or other entity) awarded the funds. Procurement - Policy (SWIF award) Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The Town did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement - Simplified Acquisition (SWIF award) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT. Both vendors were selected for testing. One of the vendors, paid with SWIF funds, was originally contracted for $84,840, which is below the simplified acquisition threshold. At that time, the Town obtained quotes as would have been required at the small purchase threshold. However, the Town elected to change the scope of the project once SLFRF funds were awarded to cover additional improvements. As the scope of the project changed and the total price increased to over $429,000, more than 20 percent above of the original contract price, the project should have been reviewed and bid out. Since the new total of the project was over the SAT and formal procurement methods were not adhered to, this vendor was not properly procured. Suspension and Debarment (Treasury award) Prior to entering into subawards and covered transactions with federal award funds, 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements for the money received directly from the Treasury, the Town stated procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transactions. Two covered transactions for goods or services that equaled or exceeded $25,000 paid from the direct SLFRF funds during the audit period were identified. Both transactions were examined to determine whether the Town verified the suspension and debarment status of the vendors prior to payment. The Town had not performed procedures to ensure the two vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance for procurement was isolated to the SLFRF SWIF funding, and the noncompliance for suspension and debarment was isolated to the SLFRF direct funding. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The items 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." Indiana Code 5-22-10-9 states: "A purchasing agent may make a special purchase when purchase of the required supplies or services under another purchasing method under this article would seriously impair the functioning of the using agency." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the Town to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and contracts exceeding the simplified acquisition threshold were not properly bid. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Federal Agency: Federal Communications Commission FAL No. and Name : 32.006 COVID-19 Telehealth Program Award number: Unknown 2022-101: Procurement and Record Retention Criteria: In accordance with 2 CFR 200.318 (i), the Organization must maintain records sufficient to detail the history of procurement. Condition: For one of the purchases tested with a value of approximately $686,000, the Organization was unable to provide supporting documentation that the procurement process was performed in accordance with competitive bidding requirements, including the approval from the grantor to utilize a sole-source. Cause: The Organization did not consistently employ adequate record retention procedures that enabled them to provide documentation to support the use of a sole-source in its bidding process. Effect: We were unable to verify the Organization's compliance with federal procurement requirements. Recommendation: The Organization should maintain proper documentation to help ensure that all the required documentation is retained in order to confirm its compliance with federal procurement requirements. The Organization's responsible officials' views and planned corrective action are included in its corrective action plan located at the end of this report.
2022-001 ? Procurement Suspension & Debarment Program: AL# 97.024 ? Emergency Food and Shelter National Board Program Sponsor Award Number: Phase 39; ARPAR Sponsor Agency: U.S. Department of Homeland Security Criteria: Non-federal entities that are operating federal programs must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. This includes utilizing appropriate procurement methods and following requirements for each method selected. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). Citation: 2 CFR section 200.320(b) Condition: The Organization did not obtain price or rate quotes from an adequate number of qualified sources. Cause: Although the Organization?s procurement policies and procedures are updated to comply with the Uniform Guidance, they were not consistently followed. Effect: Failure to obtain price or quotes from an adequate number of qualified sources may result in ineffective use of government funds. Questioned Costs: None. Context: During our testing of the Organization?s procurement requirements, we noted a lack of documentation supporting the Organization?s review of an adequate number of qualified sources before the procurement decision was made. Repeat Finding: No Recommendation: We recommend that the Organization implement monitoring procedures to ensure internally established procurement policies are followed. Documentation should include the rationale for the method of procurement used, the basis for contractor selection, and the basis for the contract price. Views of Responsible Officials: See Corrective Action Plan.
2022-003: Procurement/Full and open competition Cluster Name: Research and development Award Name: 2019 Fire Prevention and Safety (FP&S) Assistance Listing Number: 97.044 Award Number: EMW-2019-FP-00770 Agency: Department of Homeland Security Award Year: 2019 Criteria: Underwriters Laboratories Inc. has a policy whereby purchases shall comply with Uniform Guidance for Grants and Cooperative agreements, as established in 2 CFR 200.320 Methods of Procurement and they have adopted $10,000 as their micro-purchase threshold. 2 CFR 200.318 requires that documentation of the history of the procurement, the procurement method and rationale for the method selected, selection of contract type, basis for contractor selection, and basis for the contract price to be included in the procurement file. Condition: There were two transactions over the $10,000 threshold and both were selected for testing. For one transaction in August 2022 totaling $69,239 out of the two transactions tested totaling $123,408, excluding transactions with subrecipients, management provided us with the Underwriters Laboratories, Inc. Vendor Selection Form noting multiple vendors were identified for the project at hand. However, management received two responses (one being a decline of services), of four vendors identified, and did not provide rationale for why the selected vendor was sufficient (both from a capabilities and cost side) within the Vendor Selection Form section ?Why did you choose the selected vendor?? prior to the purchase being made. Note, as of September 2022 a corrective action plan around procurement/full and open competition was created by management related to finding 2021-002 from FY21. As such, this had not been implemented at the time of vendor selection in August 2022. There were no exceptions noted for the other selection. Cause: At this point in time (August 2022) there was no formal review to ensure all federal documentation requirements related to purchases above the micro-purchase threshold had been included in the procurement files (i.e., Vendor Selection Form). Effect: The lack of a formal process for review of the Vendor Selection Form could result in inadequate bids and competition. Questioned Costs: There are no questioned costs associated with this finding. Recommendation: We recommend Underwriters Laboratories Inc. formalize the documentation and review required for procurements over the micro-purchase threshold, including instances where requests for bids from multiple vendors are not received to ensure the vendor selection process is adequately communicated prior to the purchase being made. Management?s View and Corrective Action Plan: Management?s views and corrective action plan are included at the end of this report after the summary of status of prior audit finding.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
Type of Finding: Significant Deficiency in Internal Control over Compliance Program Name/ALN Title: Emergency Rental Assistance Program Federal Assistance Listing Number: 21.027 Federal Agency: Department of Treasury Award Period: 1/1/2022 ? 12/31/2022 Federal Award Number: 21-4619C-130 Criteria or specific requirement: 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". Per the Organization's written procurement policy, the adequate number of sources is determined to be three. Condition: For the entire population (two disbursements from one procurement), documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required and stated in the Organization's written procurement policy. Context: A sample of two disbursements from a population of one procurement transaction charged to the major program that exceeded the Organization's established micro purchase threshold of $10,000. The transaction was found to be out of compliance with the Procurement requirements, as documentation was not retained for the adequate number of price comparisons. Cause: An employee charged with the procurement process for these transactions misinterpreted the aggregation rules between capitalization and procurement thresholds, and therefore did not obtain nor retain three contemporaneous quotes. Effect: Without adequate records retained, the Organization is at risk of noncompliance with the standards of Procurement. Questioned Costs: Unknown Recommendation: Opportunity Council has already taken steps to communicate the error with the applicable employee and is currently implementing an additional level of fiscal review earlier in the procurement process to ensure that documentation exists prior to procurement and that it is retained with the accounting record. We recommend moving forward with the additional layer of review and emphasizing the importance of the procurement standards and established policy to all authorized purchasers within the Organization. Views of responsible officials and planned corrective actions: Management accepts the finding and has provided its corrective action plan.
Finding 2022-001: Reportable Finding Considered a Significant Deficiency ? Procurement Assistance Listing Number: 10.181 Agency: U.S. Department of Agriculture Program: Agricultural Worker Pandemic Relief and Protection Program Award Number: AM22FFWDC0002-00 Grant Years: 2022 Criteria: Nonfederal 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. Section 200.318 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, Section 200.320 Methods of procurement to be followed, states that for acquisitions exceeding the simplified acquisition threshold, the nonfederal entity must use one of the following procurement methods: (a) the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); (b) the competitive proposals method under the conditions specified in 2 CFR section 200.320(b)(2); or (c) the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c). Condition: During our 2022 audit, we noted three consultant contractors which were charged to the Federal program under the competitive proposals method but did not comply with the criteria in 2 CFR section 200.320(b) and one noncompetitive proposals method but did not comply with the criteria in 2 CFR section 200.320(c). We noted that the Foundation did not have records sufficient to detail the history and the rationale of the method of procurement at the time the contracts were executed. Cause: The Foundation did not document the history or the justification for the method of procurement selected for various consultants charged to the Federal program at the time the contracts were executed. Effect: The Foundation may have inadvertently selected noncompetitive proposals by not following the requirements noted in section 200.320 Methods of procurement to be followed, and thereby failing to full and open competition as required by the regulations. Context: There were four consultants during the audit period for which 2 CFR section 200.320 applied. Questioned Costs: There are no questioned costs associated with this finding. Repeat Finding: This is not a repeat finding. Recommendation: The Foundation should adopt and enforce a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.326. We also recommend that documentation is maintained to substantiate adherence to this policy and ensure that all instances are adequately documented according to the regulations, including for contacts already in place.
Finding No. 2022-004: Procurement Policy ? Material Weakness in Internal Control Over Financial Reporting; U.S. Department of Health and Human Services, Rare Disorders: Research, Surveillance, Health Promotion, and Education; Assistance Listing Number 93.315 Condition There is no evidence of a documented formal procurement policy with regards to federal grant awards and expenditures, no documented support that a competitive price analysis for vendors and organizations funded with federal grant funds were performed and no evidence that suspension and debarment verifications were performed for certain vendors and organizations, as required by the general procurement standards of the Uniform Guidance. Context We selected four samples which were deemed sole sourced by management and noted no written documentation for this conclusion or evidence of suspension or debarment verification being performed was maintained in the file. Based on our discussions with management, they were not aware of the Uniform Guidance requirements with regards to procurement. Criteria Under the Uniform Guidance Section 200.318, General Procurement Standards, a non-Federal entity must have and use documented procurement procedures for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement also known as sole source. Under Uniform Guidance Section 200.214, Suspension and Debarment, and 2 CFR Part 180, non-federal entities are required to verify that vendors are not suspended or debarred from participating in federal funds. Cause Management stated it was not aware of the Uniform Guidance requirements with regards to procurement and, therefore, did not develop a procurement policy that includes the provisions of the general procurement standards required under the Uniform Guidance. Effect Charges relating to vendor services and sub-awards that were charged to the federal award may not be in accordance with the specific compliance requirements of the Uniform Guidance. Questioned Costs $97,078, representing total sub-awards and consulting expenses paid during the year. Repeat Finding No. Recommendation We recommend that the Association establish a written procurement policy governing contracts with vendors that will be reimbursed by federal grants to incorporate all of the provisions included in the general procurement standards of the Uniform Guidance Section 200.318 and the debarment and suspension regulations of Uniform Guidance Section 200.214. We also recommend that a review of all existing vendor or sub-awardee contract files be performed to ensure that the documentation as required under the Uniform Guidance is maintained in the files. Views of Responsible Officials and Planned Corrective Action See corrective action plan.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: 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. Non-federal entities other than 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/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: 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. Non-federal entities other than 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/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: 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. Non-federal entities other than 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/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
U.S Department of Treasury Finding 2022.001 CFDA# 21.027 - Coronavirus State and Local Fiscal Recovery Fund Compliance Requirement - Procurement Condition: NCHC did not have adequate procurement policies in effect that meet the minimum federal requirements for procurement standards. Criteria: Under Uniform Guidance, NCHC is required to implement certain written procurement policies that adhere to the minimum federal requirements as outlined at 2 CFR 200.318 through 200.327. Context: During the audit, it was determined that NCHC's procurement policies did not meet minimum federal requirements. Cause: NCHC did not have adequate procurement policies in effect that meet the minimum federal requirements. Effect: NCHC was not in compliance with 2 CFR 200.318 through 200.327 and as a result did not perform proper procurement procedures over all transactions. Recommendations: We recommend NCHC implement policies and procedures that adhere to the minimum procurement requirements as outlined in federal procurement standards 2 CFR 200.318 through 200.327. View of Responsible NCHC will implement policies and procedures to ensure compliance with the Officials: requirements as outlined in 2 CFR 200.318 through 200.327.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. 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 procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. 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 procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. 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 procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 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 Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 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 Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 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 Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 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 Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
2022-002 Federal Agency: U.S. Department of Agriculture Federal Program Title: Supplemental Nutrition Assistance Program CFDA Number: 10.561 Award Period: December 1, 2019 through September 30, 2023 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318(a) states, ?the non-Federal entity must have and use document 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.? In addition, per the Code of Federal Regulations 2 CFR 200.214, non-Federal entities are subject to the non-procurement debarment and suspension regulations. The 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. Condition: During our testing, we noted the Organization had not adopted a procurement policy and no procurement procedures were performed in selecting contractors. Questioned Costs: None Cause: Procurement policies and procedures were not adopted by the Organization. Effect: The Organization may not have received a competitive bid for services, and may have engaged a suspended or debarred contractor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization implement necessary internal controls to ensure a competitive bid process is performed, and all vendors are reviewed for suspension and debarment, prior to entering into contracts utilizing federal awards. These internal controls should also include a conflict-of-interest clause with all vendors within contract language. Views of responsible officials: Management agrees with the finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds CFDA Number: 21.027 Award Period: June 23, 2022 through June 22, 2023 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318(a) states, ?the non-Federal entity must have and use document 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.? In addition, per the Code of Federal Regulations 2 CFR 200.214, non-Federal entities are subject to the non-procurement debarment and suspension regulations. The 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. Condition: During our testing, we noted the Organization had not adopted a procurement policy and no procurement procedures were performed in selecting contractors. Questioned Costs: None Cause: Procurement policies and procedures were not adopted by the Organization. Effect: The Organization may not have received a competitive bid for services, and may have engaged a suspended or debarred contractor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization implement necessary internal controls to ensure a competitive bid process is performed, and all vendors are reviewed for suspension and debarment, prior to entering into contracts utilizing federal awards. These internal controls should also include a conflict-of-interest clause with all vendors within contract language. Views of responsible officials: Management agrees with the finding.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.