Assistance Listing Number, Federal Agency, and Program Name 21.027, U.S. Department of the Treasury, COVID 19 - Coronavirus State and Local Fiscal Recovery Funds, and 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year 21.027 192908 and 93.493 6 CE2CS52794 01 07 Pass through Entity 21.027 Chicago Department of Public Health; 93.493 N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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 Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Per 2 CFR 200.319(a) All procurement transactions under the federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320(b) covering formal procurement methods. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold (SAT), including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Finally, per 2 CFR 180.300, nonfederal entities must verify that outside parties are not suspended or debarred from engaging in federal activity before entering into a covered transaction. Condition Controls were not sufficient to ensure procurement activities were performed in accordance with 2 CFR 200 and management’s internal policies and procedures related to procurement, suspension, and debarment. Questioned Costs $ 237,890 If Questioned Costs are not Determinable, Description of why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent expenditures under these contracts reported on the SEFA. Context For three contracts in excess of the Organization's formal procurement threshold ($50,000), management did not retain documentation of having obtained the required number of competitive bids or document rationale for sole procurement, did not document the history of procurement decisions, and was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Cause and Effect A lack of controls to ensure required procurement activities were performed could result in material noncompliance with federal procurement standards. Recommendation We recommend that management retain documented evidence that its policies and procedures were followed to ensure compliance with federal procurement standards. Additionally, we recommend management review its internal procurement policy regularly to ensure compliance with federal procurement standards under 2 CFR 200.317 through 200.327. Views of Responsible Officials and Corrective Action Plan Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Careful consideration was done in selecting the vendors to look at obtaining the best cost for the value of the service as IWS was responsible for a portion of the expenses. Necessary revisions will be made to the existing procurement processes and controls in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Finding No. 2024-004 Procurement Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRFP4547 – 2021 Award Period: 3/3/21 – 12/31/24 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The Town must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General procurement standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (See the definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micropurchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a noncompetitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Condition: The Town purchasing policy does not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs: None Context: Although the Town’s purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 7 of 7 procurement transactions tested. Cause: Management was not aware of the procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Effect: The Town is at risk for noncompliance with Federal grants as it relates to procurement. Repeat Finding: No Recommendation: We recommend that the Town update its procurement policies to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials: Management is working with our current auditors to update the Town’s procurement policies to be in compliance with the Uniform Guidance.
2024-009 – Material Weakness and Material Noncompliance – Procurement and Suspension and Debarment U.S. Department of Agriculture Passed through State of Connecticut Department of Education Child Nutrition Cluster Assistance Listing Number: 10.553 Program Name: School Breakfast Program Assistance Listing Number: 10.555 Program Name: National School Lunch Program Criteria: Per 2 CFR Part 200.320, “There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319.” 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance) requires compliance with provisions of procurement, suspension, and debarment. 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 nonfederal 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. Condition: The Town did not have documentation to support they complied with their purchasing policy or Uniform Guidance procurement requirements for three out of six selections. The Town did not have documentation to support it verified four vendors were not suspended or debarred for 4 out of 4 selections. Cause: Due to significant staff turnover within the Greenwich Public Schools finance function during the audit period, established controls related to procurement were not consistently applied or effectively monitored. Effect: Documentation of the requirement for procurement was not maintained. Questioned costs: $119,367 Context: See condition above. Identification as a repeat finding is applicable: N/A Recommendation: We recommend the Town develop and implement a comprehensive plan to address key personnel turnover. This plan should include clearly documented policies and procedures and appropriate cross-training to ensure continuity of operations and maintain adequate internal controls and retention of records. View of Responsible Officials: We agree with the finding. See corrective action plan.
2024-009 – Material Weakness and Material Noncompliance – Procurement and Suspension and Debarment U.S. Department of Agriculture Passed through State of Connecticut Department of Education Child Nutrition Cluster Assistance Listing Number: 10.553 Program Name: School Breakfast Program Assistance Listing Number: 10.555 Program Name: National School Lunch Program Criteria: Per 2 CFR Part 200.320, “There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319.” 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance) requires compliance with provisions of procurement, suspension, and debarment. 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 nonfederal 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. Condition: The Town did not have documentation to support they complied with their purchasing policy or Uniform Guidance procurement requirements for three out of six selections. The Town did not have documentation to support it verified four vendors were not suspended or debarred for 4 out of 4 selections. Cause: Due to significant staff turnover within the Greenwich Public Schools finance function during the audit period, established controls related to procurement were not consistently applied or effectively monitored. Effect: Documentation of the requirement for procurement was not maintained. Questioned costs: $119,367 Context: See condition above. Identification as a repeat finding is applicable: N/A Recommendation: We recommend the Town develop and implement a comprehensive plan to address key personnel turnover. This plan should include clearly documented policies and procedures and appropriate cross-training to ensure continuity of operations and maintain adequate internal controls and retention of records. View of Responsible Officials: We agree with the finding. See corrective action plan.
Prior Year Finding: 2023-004 Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 Coronavirus State and Local Fiscal Relief Fund Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: (7/1/2023 6/30/2024) Compliance Requirement: Procurement Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Compliance: Per 2 CFR section 200.318, a non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. Per 2 CFR section 200.319, all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. Per the Towns purchasing policy, goods or services costing $10,000 or more must be purchased from the lowest responsive bidder meeting specifications after advertising for bids. Condition/Context: The Town failed to provide documentation supporting compliance with required procurement processes for goods or services exceeding $10,000 for five out of five vendors tested. This includes a lack of evidence on how these vendors were selected and whether the procurement process ensured full and open competition. Questioned Costs: Unknown. Cause: The Town's internal controls were not sufficient to ensure that procurement policies were followed for purchases made for the program. Effect: Failure to adhere to procurement policies and procedures may result in obtaining goods or services under terms that are not in the best interest of the federal program. Recommendation: We recommend that the Town enhance its procedures and internal controls to ensure that it verifies vendors are not suspended or debarred from business prior to all goods and services charged to the program. The Town should retain documentation of procurement suspension/debarment status verifications for its vendors audit purposes. Views of Responsible Officials: Management agrees with the finding.
Condition: Expenditures for federal programs did not follow the non-federal entities procedures before entering a covered transaction. Two (2) disbursements totaling $28,882 were not properly encumbered in accordance with state statute. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: I plan to communicate with the Budget Board regarding this finding and have already introduced to the Budget Board, a form guideline called “Payne County Grant Administration Plan” to aid in proper documentation, reporting and proper spending of all grant awards. County Clerk: The Payne County Budget Board has approved and adopted a Federal Funding Checklist as well as Federal Funding guidelines on agreements and awards. The Payne County Clerk’s office also communicates with each department and requests that they report to our office any Federal Grants and Awards they receive and report those on their SEFA annually to our office. We also communicate with the Treasurer’s office and request to know when any Federal money has been received. Criteria: Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (8. Procurement, Suspension & Debarment.) reads as follows: Recipients are responsible for ensuring that any procurement using SLFRF funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327, unless stated otherwise by Treasury. As outlined in FAQ 13.15, only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart D (Post Federal AwardRequirements) applies to recipients’ use of funds in the revenue loss eligible use category. The procurement standards set forth in the Uniform Guidance at 2 CRF 200.317 through 2 CRF 200.327 are not included in FAQ 13.15’s list of applicable Subpart D requirements that apply to recipients’ use of funds in the revenue loss eligible use category. The Uniform Guidance establishes in 2 CFR 200.319 that all procurement transactions for property or services must be conducted in a manner providing full and open competition, consistent with standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only in certain circumstances. Recipients must have and use documented procurement procedures that are consistent with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. In addition, the Uniform Guidance at 2 CFR 200.214, 2 CFR Part 180, and Treasury’s implementing regulations at 31 CFR Part 19, prohibit recipients from entering into contracts with suspended or debarred parties. The procurement standards outlined in the Uniform Guidance require an infrastructure for competitive bidding and contractor oversight, including maintaining written standards of conduct. Your organization must ensure adherence to all applicable local, State, and federal procurement laws and regulations. Further, 2 CFR § 200.319 Competition (d) reads as follows: The non-Federal entity must have written procedures for procurement transactions.
2024-001 U.S. Department of the Treasury Passed-through Norfolk County, Massachusetts COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Material Weakness in Internal Controls over Compliance and Compliance Finding Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Two vendors were awarded a contract without a competitive procurement process as a result of relying on State procurement exemptions which do not apply to this Federal award. Cause: The Town did not follow its documented procurement policies and procedures. Effect: The Town is not in compliance with Federal procurement requirements. Questioned Costs: $49,990 Repeat Finding from Prior Year: Yes; Finding 2023-002. Recommendation: The Town should review and follow its procurement procedures to ensure that competitive procurement procedures are performed on all applicable contracts for goods and services charged to Federal awards. Views of Responsible Official: Management agrees with the finding.
2024-001 U.S. Department of Agriculture Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Child Nutrition Cluster – ALN 10.553, 10.555 & 10.559 Significant Deficiency in Internal Controls Over Compliance Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Per 2 CFR section 200.214, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Condition: The District utilized prices that were competitively procured by French River Collaborative, of which it is a member, and did not obtain individual contracts with the five vendors. Additionally, the District only obtained one of the four required suspension and debarment certifications. Cause: The District did not follow federal award policies and procedures for contract management and suspension and debarment verification when procuring school lunch goods and services. Effect: The District might not obtain the proper negotiated rates that were part of the competitive procurement. The District is at risk of awarding contracts to vendors not eligible to participate in federal awards programs. It was determined that none of the three vendors were suspended or debarred from federal awards. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2023-001 Recommendation: The District should obtain individual contracts with vendors that were competitively procured by the Collaborative and require those vendors to attest on suspension and debarment certifications, for all applicable purchases of goods and services. Views of Responsible Official: Management agrees with the finding.
2024-001 U.S. Department of the Treasury Passed-through Bristol County, Massachusetts COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: The Town’s procurement files did not contain documentation regarding competitive procurement procedures for one contract. The Town, through the Raynham Center Water District, awarded a contract for final design services for two water treatment plants to a vendor that had previously provided preliminary evaluations for the plants, without performing competitive procurement procedures. Context: Procurement was not documented for one of the four contracts selected. The sample was not a statistically valid sample. Cause: The Town did not follow its established policy regarding federal procurement as the Town relied on State procurement exemptions which do not apply to this award. Effect: The Town charged $425,000 to the grant award from this contract that did not adhere to federal procurement requirements which could result in unallowable costs. Questioned Costs: Not determined, as the Town has not performed a cost analysis of the contract. Repeat Finding from Prior Year: No. Recommendation: The Town should adhere to its grant award procedures to perform competitive procurement procedures on all applicable contracts for goods and services charged to Federal awards. The Town should also complete a cost analysis to justify the amount charged to the award and adjust costs if necessary. Alternatively, the Town could contact the pass-through agency to re-allocate these expenditures to other properly procured and obligated project expenditures. Views of Responsible Official: Management agrees with the finding.
FINDING 2024-010 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, 21619-045-PN01, 22619-045-PN01, 22619-045-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The population for those procurements that fell within the small purchase range consisted of three vendors with a total purchased amount from those vendors of $75,284. The School Corporation did not provide adequate documentation detailing the history of procurement, which must include the reason for the procurement method used, for all three vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. One vendor provided contracted services paid with Special Education Grant funds during the audit period totaling $44,827. Upon inquiry of the School Corporation, it was determined that the School Corporation did not verify that the contractor was not suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 36 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 37 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-3 states in part: "(a) . . . if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) . . . the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect 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, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 38 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Condition Upon inquiry of county personnel and a test of four (4) disbursements totaling $452,184, the following instances of noncompliance were noted: • The County failed to document suspension and debarment of vendors for purchases over $25,000. • The County failed to have written standards of conduct that cover conflicts of interest and that govern the performance of its employees engaged in the selection, award, and administration of contract. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal disbursements are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements and could result in a loss of federal funds. Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: These procurement issues originated during the prior County Clerk’s administration, but the current leadership is focused on corrective measures. Together, we are: • developing a SOP to ensure vendor checks for suspension and debarment are conducted on all purchases over $25,000, • establishing written standards of conduct to address conflicts of interest and set clear procurement guidelines, • and enhancing oversight and review to ensure all procurement processes are fully compliant with federal regulations. Our goal is to build a consistent, transparent procurement framework that safeguards both compliance and public trust. County Clerk: I was not the County Clerk in Office at this time. To correct this issue, the County plans to develop a SOP to timely and accurately track and report on the SEFA. The SOP will be reviewed, adopted, and monitored by the Board of County Commissioners. Criteria: Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (8. Procurement, Suspension & Debarment.) reads as follows: Recipients are responsible for ensuring that any procurement using SLFRF funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327, unless stated otherwise by Treasury. As outlined in FAQ 13.15, only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart D (Post Federal Award Requirements) applies to recipients’ use of funds in the revenue loss eligible use category. The procurement standards set forth in the Uniform Guidance at 2 CRF 200.317 through 2 CRF 200.327 are not included in FAQ 13.15’s list of applicable Subpart D requirements that apply to recipients’ use of funds in the revenue loss eligible use category. The Uniform Guidance establishes in 2 CFR 200.319 that all procurement transactions for property or services must be conducted in a manner providing full and open competition, consistent with standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only in certain circumstances. Recipients must have and use documented procurement procedures that are consistent with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. In addition, the Uniform Guidance at 2 CFR 200.214, 2 CFR Part 180, and Treasury’s implementing regulations at 31 CFR Part 19, prohibit recipients from entering into contracts with suspended or debarred parties. The procurement standards outlined in the Uniform Guidance require an infrastructure for competitive bidding and contractor oversight, including maintaining written standards of conduct. Your organization must ensure adherence to all applicable local, State, and federal procurement laws and regulations. Further, 2 CFR § 200.319 Competition (d) reads as follows: The non-Federal entity must have written procedures for procurement transactions.
Finding 2024-005 – Inadequate Procurement Documentation (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation Service Assistance Listing Numbers: 10.905 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the InteriorFederal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Federal procurement standards require non-Federal entities to maintain records sufficient to detail the history of procurement, including the method of procurement, selection of contract type, contractor selection or rejection, and basis for the contract price. Competitive procurement must follow the entity’s written procedures consistent with 2 CFR §§200.317-200.327, including: Written procedures for procurement (§200.318(a)). Full and open competition requirements (§200.319). Methods of procurement (sealed bids, proposal requirements, and required documentation (§200.320). Contract cost and price justification, (§200.324). Suspension/debarment verification for covered transactions (§200.214; §200.213). Condition: During the audit period, the Entity did not retain sufficient procurement documentation for several contracts funded under the above Assistance Listings. Specifically, files lacked one or more of the following: Evidence of the procurement method used. Price or cost analysis. Suspension/debarment checks for vendors where required. Documentation of competition. Conflict-of-interest attestations. Cause: Partnership for the Umpqua Rivers procurement procedures were not sufficiently detailed or consistently applied to federal purchases. No evidence of procedures or review for procurement or suspension / debarment was provided to auditors. Turnover and limited training on Uniform Guidance procurement standards contributed to the inconsistent file completeness. Effect or Potential Effect: Without complete procurement documentation, the Entity cannot demonstrate compliance with federal procurement requirements, increasing the risk of: Noncompetitive awards or unreasonable prices. Unallowable costs for the award requirements. Potential disallowance or repayment of federal funds. Findings in federal or pass-through monitoring and future audits. Questioned Cost: Yes, $902,496 related to expenditures that had no procurement support or detail. Context: During our audit, it was found that the Partnership for the Umpqua Rivers had experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. Award files provided to auditors did not contain information related to procurement, suspension or debarment procedures or processes. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit. Recommendation: We recommend that Partnership for the Umpqua Rivers: Update Written Procurement Procedures o Incorporate Uniform Guidance thresholds and methods (§200.320), competition requirements (§200.319), and documentation expectations (history of procurement). o Embed steps for suspension / debarment checks and Appendix II Contract clauses. Standardized Procurement Checklist o Pre-award checklist that verifies: method, competition evidence, cost/price analysis, conflict of interest attestations, SAM exclusion check, and required federal clauses. o Post -award checklist ensuring complete contract file (award memo, bid tab / evaluation, signed agreement, clause verification). Cost/Price Analysis Guidance o Require documented price reasonableness for small purchases, formal cost or price analysis for larger or sole-source awards, per (§200.324). Training & Accountability o Provide targeted training to procurement and program staff on 2 CFR §§200.317- 20.327 and Assistance Listing award conditions. o Implement supervisory pre-award review and periodic file audits. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: ____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: _____________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Finding Reference: 2024-006 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Treasury Awards: Assistance Listing 21.027 – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Periods: July 1, 2023 – December 31, 2026 Description: Incomplete Federal Requirements within Procurement Policies Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “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).” Part 200.320 Methods of procurement to be followed states the following: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for our major programs, we noted that the Corporation did not have a procurement policy that conforms to all applicable standards contained in the Uniform Guidance, when purchasing goods or services with the federal funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to their federal programs. Effect or potential effect Purchasing of goods and/or servicing with the major federal programs may not be in compliance with the Uniform Guidance. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2023-001. Context Management has not established a procurement policy in line with the applicable standards contained in the Uniform Guidance based on review of the existing policy and discussions with management, however, no other instances of noncompliance with procurement standards identified in 2 CFR part 200 were noted as the amount of purchases exceeding the micro-purchase threshold was not direct and material to this program and therefore no further testing over procurement was performed. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials There is no disagreement with the audit finding.
Finding 2024-016: Material Weakness in Internal Control and Material Noncompliance – Procurement and Suspension and Debarment Assistance Listing Program Title and Number: Special Education (IDEA) Cluster (84.027, 84.173), COVID 19-Coronavirus State & Local Fiscal Recovery Funds (21.027) Federal Agency: U.S. Department of Education, U.S. Department of Treasury Pass-through Entity: State of Connecticut Department of Education, State of Connecticut Department of Emergency Services and Public Protection Award year: 2023 – 2024 Criteria or specific requirement: The City, which includes Danbury Public Schools (DPS), must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Additionally, 2 CFR Section 180 requires that recipients of federal awards have policies and procedures in place to verify contracted vendors are not on the federal suspended or debarred parties list. Condition: The DPS Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, DPS did not follow their own procurement policy in certain instances which consists of obtaining three quotes for a small purchase procurements and advertising for bids publicly for large >$5,000 purchase procurements. They only obtained one quote for small purchases, and they did not use a public bid process for expenditures over $5,000. Additionally, DPS did not have internal controls in place to ensure vendor eligibility was verified prior to entering into a covered transaction with them. Cause: While DPS has a formal policy around required bids, the thresholds have not been updated in several years and there was a lack of controls that ensured the DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Finally, the policy did not address verifying vendors were neither suspended nor debarred. Effect: Possible effects include not awarding the purchase to the lowest qualified bidder or to a vendor on the suspended or debarred parties list. Context: For the Coronavirus State and Local Fiscal Recovery Funds program, there was a population of 183 procurements during the audit period. Of these procurements, there were 29 vendors that were subject to the rules on suspension and debarment. Of those 29 vendors, we sampled eight for testing. Two out of eight vendors tested did not have documentation that DPS verified the vendors were not suspended or debarred prior to entering into a covered transaction with them. The total amount of the two was $438,885 out of the total sample of $996,779. We also selected a sample of 23 procurements totaling $2,698,309 for testing. One sample was a small purchase totaling $2,550 which required three quotes however only one quote was obtained. The sample was not intended to be, and was not, a statistically valid sample. For the IDEA Cluster, there was a population of 251 procurements during the audit period. We sampled 31 procurements for testing totaling $659,075. Three of the procurements tested totaling $293,692 did not follow the DPS procurement policy. Two exceptions (totaling $290,722) were for large purchases which did not follow the policy for procurement through a formal bid process. The other exception was a small purchase totaling $2,970 which did not follow the requirement of obtaining three or more quotes. The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: For procurement under the Coronavirus State and Local Fiscal Recovery Program- $2,550 For procurement under the IDEA Cluster- $293,692 Repeat Finding: 2023-007 Recommendation: We recommend DPS implement controls that require review of each procurement to ensure DPS obtained the adequate number of quotes or bids for each expenditure. Additionally, we recommend DPS update their procurement thresholds to be more consistent with the compliance minimum requirements. Finally, we recommend DPS modify their policy to address suspension and debarment requirements to ensure they don’t enter into a covered transaction with a suspended or debarred vendor. The policy should require documentation of the search performed. Views of Responsible Officials: Management agrees with the finding.
Information on the Federal Program(s): 14.228 Community Development Block Grants/State’s Program Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Finding 2024-003: Documentation of Procurement and Competitive Bidding Procedures Condition During testing of procurement transactions, we noted that a vendor was selected for services without documented evidence that competitive bidding or price quotations were obtained, and the procurement file did not include documentation describing the basis for vendor selection. While Home Start, Inc.’s fiscal policies allow for the use of oral quotes and permit vendor selection based on responsiveness and advantage to the Organization considering factors such as price, quality, and other relevant considerations, the procurement documentation maintained by the Organization did not include evidence that quotes were obtained or documentation supporting the basis for vendor selection. Criteria Under 2 CFR §200.318(a), non-federal entities must establish and maintain effective internal controls over the procurement process to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. Additionally, 2 CFR §200.318(i) requires non-federal entities to maintain records sufficient to detail the history of procurement, including documentation of the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, 2 CFR §§200.319–200.320 require that procurements be conducted in a manner providing full and open competition, and that appropriate price or rate quotations be obtained depending on the procurement method. Cause The Organization did not consistently maintain documentation supporting the procurement process, including evidence of quotes obtained or documentation explaining the basis for vendor selection when competitive quotes were not documented. Effect The absence of procurement documentation reduces the Organization’s ability to demonstrate compliance with Uniform Guidance procurement requirements and increases the risk that procurements funded with federal awards may not meet federal competition standards. Recommendation We recommend that management strengthen procurement documentation procedures to ensure that procurement files include sufficient documentation of the competitive bidding or quotation process, including: • Evidence of quotes or bids obtained, including oral quotes where permitted by policy. • Documentation supporting the evaluation and selection of vendors. • Written justification when competitive bids or quotes are not obtained, consistent with both Uniform Guidance requirements (2 CFR §200.318(i)) and the Organization’s fiscal policies. Implementing these procedures will help ensure that procurement activities funded by federal awards are adequately documented and compliant with Uniform Guidance procurement standards.
Finding #SA2024-003: Procurement Documentation Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Pass Through Entity: County of San Mateo Federal Award Identification Number: SFLRP0201 Criteria: Procurements must “provided full and open competition” as required by 2 CFR section 200.319 and 48 CFR section 52.244-5 of the Uniform Guidance. In the event the procurement is noncompetitive, it can only be awarded if five specific circumstances apply, such as the item or service only being available from a single source. For purchases that meet the criteria to use the “Simplified Purchase Procedures” method under the Uniform Guidance procurement standards, “price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We selected two of the thirteen vendors used for the Opportunity Center of the Coastside project during fiscal year 2024 for testing of compliance with the procurement standards of the Uniform Guidance. Both contracts appear to meet the criteria under the Simplified Purchase Procedures method, however we noted the following: • American Energy Society contract in the amount of $200,000 – The City Council authorized the development and release of an a RFQ to identify and retain a qualified entity to launch and operate an incubator to be located at the Opportunity Center of the Coastside for an amount not to exceed $200,000. We understand American Energy Society was the only response and City staff did not return to City Council to approve the sole-source contract. • William Duff Architects contract in the amount of $75,000 – We understand the City did not obtain price quotations from multiple sources and only approached William Duff Architects. The City awarded the contract under a sole-source purchase, however, the information related to the sole source documentation was only included in the staff report to the City Council. The Resolution approving the award of the contract did not include any information related to the award being a sole-source purchase and that it met one of the five criteria under the noncompetitive procurement requirements. Effect: The City is not in compliance with the Simplified Purchase Procedures or the Noncompetitive Procurement requirements of the Uniform Guidance. Cause: We understand the failure to complete the required documentation was due to staff oversight. Recommendation: The City should develop procedures to ensure compliance with the procurement standards under the Uniform Guidance for all contracts funded by federal awards. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
FINDING 2024-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 22-23, FY 23-24 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the objectives of the entity will be achieved. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not one event or circumstance, but a dynamic and continual process. The process is based on fundamental principles that operate as whole. The fundamental principles are related to five components of internal controls which are as follows: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. If a component is not effective, or the components are not operating together in an integrated manner, then an internal control system cannot be effective. Deficiencies as noted below were identified in all five of the components. INDIANA STATE BOARD OF ACCOUNTS 35 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities - Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. We identified three vendors in fiscal year 2022-2023 and three vendors in 2023-2024 that fell within the small purchase threshold. All vendors were selected for testing. The School Corporation did not obtain price or rate quotes for any of the vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Additionally, the School Corporation did not enter into a contract for two of the six vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of the procurement, which must include the reason for the procurement method used, was not available for audit. We identified 125 micro-purchases for the audit period. Of the 125 micro-purchases, 25 were selected for testing. Documentation detailing the history of the procurement, which must include the reason for the procurement method used, was not available for audit for all 25 micro-purchases tested. Control Activities - Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 36 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. We identified two vendors in 2022-2023 and two vendors in 2023-2024 for which suspension and debarment procedures should have been performed. All vendors were selected for testing. For all vendors, the School Corporation did not perform procedures to ensure the vendors paid with federal grant funds were not suspended or debarred prior to entering into the covered transaction. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 37 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal Entity must have and use documented procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (1) Micro-purchases– . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (2) Small purchases– (i) Small Purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained form an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3(d) states in part: ". . . the purchasing agent shall award a contract to the lowest responsible and responsive offeror . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Policies and procedures were not properly implemented to ensure that appropriate procurement methods were used, histories of procurements were documented, and price or rate quotes for small purchases were obtained. Additionally, vendors' suspension and debarment statuses were not being verified. INDIANA STATE BOARD OF ACCOUNTS 38 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Furthermore, by not properly completing the procurement process the School Corporation could have overpaid for goods or services. Additionally, the School Corporation could have made payments to a vendor that was suspended or debarred. Payments to a suspended or debarred vendor are unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. Additionally, we recommended that the School Corporation's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method. Finally, we recommended that the School Corporation's management verify applicable vendors are not suspended or debarred prior to making payment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024 – 012 - Procurement and Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Public Housing Authorities (PHAs) that expend federal funds under the Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: Maintain and follow documented procurement procedures for all procurement transactions that expend federal funds. The Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: • Maintain and follow documented procurement procedures for all procurement transactions under federal awards, consistent with applicable State and local laws and the Uniform Guidance procurement standards (2 CFR § 200.318(a)). • Conduct procurements in a manner that provides for full and open competition, using only allowable procurement methods and avoiding practices that unnecessarily restrict competition (2 CFR §§ 200.318(d) and 200.319). 2024 – 012 - Procurement and Suspension and Debarment Procurement Requirements • Maintain written standards of conduct governing conflicts of interest (2 CFR § 200.318(c)). • Maintain oversight of contractors to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders (2 CFR § 200.318(b)). • Maintain records sufficient to detail the history of procurement, including rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR § 200.318(i)). • For procurements exceeding the Simplified Acquisition Threshold, perform a cost or price analysis in connection with every procurement action (2 CFR § 200.324). Suspension and Debarment Requirements HUD has adopted the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as supplemented by 2 CFR Part 2424, which apply to PHAs as participants in HUD covered transactions. Accordingly, the PHA must: • Ensure that federal funds are not used to enter into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in federal programs (2 CFR Parts 180 and 2424). • Establish and follow procedures to verify vendor eligibility, including consideration of the System for Award Management (SAM) exclusions framework, prior to entering into procurement transactions subject to the suspension and debarment requirements (2 CFR §§ 180.300, 180.320 and 2 CFR § 2424.300). Condition: During the testing of the Public Housing Program procurement and suspension and debarment activity, the following compliance and internal control deficiencies were noted: Procurement Of the 8 procurement transactions selected for testing: • 3 instances where the Authority was unable to provide or locate any documentation related to the contract, the payee, or the associated procurement process. • 1 instance where the client used MRO Cooperative Purchasing to select the vendor; however, the client did not download or retain the RFP, Addendum, Contracts, or SAM documentation, and the information is no longer available. Suspension and Debarment Of the 5 covered transactions (procurements ≥ $25,000) selected for testing: • 3 instances where the Authority did not have the supporting suspension and debarment (SAM) verification documentation evidencing that vendor eligibility was verified prior to entering into the covered transaction. • 1 instance where the verification date was not documented in the file Questioned costs: N/A 2024 – 012 - Procurement and Suspension and Debarment Context: Procurement Out of 8 procurement transactions tested, 5 contained errors as noted above. Suspension and Debarment Out of 5 suspension and debarment transactions tested, 3 contained errors as noted above. Cause: The Authority failed to retain and maintain adequate procurement documentation and did not have adequate internal controls in place to ensure that suspension and debarment verification procedures were consistently performed and documented prior to entering into covered transactions, in accordance with HUD rules and regulations and the Authority's procurement policy. Effect: The Authority is not in compliance with federal regulations regarding procurement and suspension and debarment requirements under the Uniform Guidance. The lack of documentation prevents verification that procurements were conducted competitively, that costs were reasonable, and that federal funds were not used to enter into covered transactions with suspended or debarred parties. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to maintain and retain all procurement documentation (including RFPs, addenda, contracts, cost analyses, and SAM exclusion searches) in a centralized file for each vendor, and to review each covered transaction prior to contract execution to confirm that suspension and debarment verification has been performed and documented in accordance with 2 CFR Part 200, Subpart D and 2 CFR Part 180. Views of responsible officials: There is no disagreement with the audit finding.
Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 U.S. Department of Treasury Missouri Primary Care Association Criteria or specific requirement – Procurement (2 CFR 200.319 and 2 CFR 200.320) Condition – The Organization’s internal controls over compliance were not sufficient to ensure the appropriate procurement method was utilized based on the value of the procurement transaction or to ensure procurement transactions were conducted in a manner that provided full and open competition. Cause – The Organization did not follow its policy when procuring services during the pre-construction phase of a project later funded by federal grants. Effect or potential effect – A contract for services was entered into during 2022 with estimated fees in excess of the threshold requiring a formal procurement method. The request for proposal did not allow for full and open competition as the Organization did not publicly request proposals or bids and only one proposal was obtained. Services purchased in 2024 under this contract may not have been obtained in the most effective manner. Questioned costs – Unknown Context – A sample of one procurement totaling $336,274 was tested out of a population of three procurements. The sample was not, and is not intended to be, statistically valid. The Organization’s procurement records were insufficient in accordance with the Organization’s procurement policy and Uniform Guidance. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should educate employees on its procurement policy, which is compliant with Uniform Guidance. The Organization should also implement additional internal controls, such as the creation of a standard form or template for purchase orders, contracts, requests for proposals/bids, cost/price analyses, bid evaluation, etc., to ensure compliance with its procurement policy and that procurement records sufficient to detail the history of each procurement transaction are maintained. Views of responsible officials and planned corrective actions – This error occurred during fiscal year 2022, when the architect for an upcoming project was chosen. We are in a very rural area, where architects are not easy to come by. For this project, we had decided to utilize a local firm we had a good track record with. We presented it to our board for approval, and it was approved by them at that time so we originally had thought we could justify with having them as a sole source vendor. At the time, the total amount of the project was unknown, and has even changed significantly since that date. However, come to find out, due to the size of the project it should have been bid out. We have revised our procurement policy since this date and have educated all staff on proper procurement procedures.
Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 U.S. Department of Treasury Missouri Primary Care Association Criteria or specific requirement – Procurement (2 CFR 200.319 and 2 CFR 200.320) Condition – The Organization’s internal controls over compliance were not sufficient to ensure the appropriate procurement method was utilized based on the value of the procurement transaction or to ensure procurement transactions were conducted in a manner that provided full and open competition. Cause – The Organization did not follow its policy when procuring services during the pre-construction phase of a project later funded by federal grants. Effect or potential effect – A contract for services was entered into during 2022 with estimated fees in excess of the threshold requiring a formal procurement method. The request for proposal did not allow for full and open competition as the Organization did not publicly request proposals or bids and only one proposal was obtained. Services purchased in 2024 under this contract may not have been obtained in the most effective manner. Questioned costs – Unknown Context – A sample of one procurement totaling $336,274 was tested out of a population of three procurements. The sample was not, and is not intended to be, statistically valid. The Organization’s procurement records were insufficient in accordance with the Organization’s procurement policy and Uniform Guidance. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should educate employees on its procurement policy, which is compliant with Uniform Guidance. The Organization should also implement additional internal controls, such as the creation of a standard form or template for purchase orders, contracts, requests for proposals/bids, cost/price analyses, bid evaluation, etc., to ensure compliance with its procurement policy and that procurement records sufficient to detail the history of each procurement transaction are maintained. Views of responsible officials and planned corrective actions – This error occurred during fiscal year 2022, when the architect for an upcoming project was chosen. We are in a very rural area, where architects are not easy to come by. For this project, we had decided to utilize a local firm we had a good track record with. We presented it to our board for approval, and it was approved by them at that time so we originally had thought we could justify with having them as a sole source vendor. At the time, the total amount of the project was unknown, and has even changed significantly since that date. However, come to find out, due to the size of the project it should have been bid out. We have revised our procurement policy since this date and have educated all staff on proper procurement procedures.
Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - Collaborative Research: Phenobase: Community, Infrastructure, and Data for Global Scale Analyses of Plant Phenology; ALN 47.074, National Science Foundation, Biological Sciences - REU Site: Plant Biology and Conservation Research Experiences for Undergraduates Federal Award Identification Number and Year - DBI-2223510, DBI2149888 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 180.300 - 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 of disqualified. You do this by: (a) checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.318(i) - The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR 200.319(a) - All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR 200.320(a)(2)(i) - If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non Federal entity. Condition - The Society did not have documentation to support that two covered transactions were checked for potential suspension or debarment before entering into the transaction. There was one covered transaction where the Society did not have documentation to support the procurement process followed or that more than one vendor was reviewed for pricing before selecting the vendor chosen. Questioned Costs - The Society charged a total of $31,000 to grant DBI-2223510 during 2023 for a covered transaction in which there was not supporting documentation that the service was procured under the requirements above. Identification of How Questioned Costs Were Computed - The amount of the covered transaction that was submitted for reimbursement during 2023. Context - Two covered transactions with total expenditures charged to the grants of $85,735 were reviewed. The population subject to testing included a total of three covered transactions. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. Recommendation - The Society should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Planned Corrective Actions - Staff turnover in early 2023 resulted in limited capacity for dedicated staff to check for potential suspension or debarment before adding vendors to the system. We have dedicated staff who will be managing this process going forward. The Society has written procurement policies and procedures. Key leadership stakeholders have been apprised of our policies and procedures. The Society will be implementing a training series for government funded procurement stakeholders within the Society to ensure compliance.
Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - Collaborative Research: Phenobase: Community, Infrastructure, and Data for Global Scale Analyses of Plant Phenology; ALN 47.074, National Science Foundation, Biological Sciences - REU Site: Plant Biology and Conservation Research Experiences for Undergraduates Federal Award Identification Number and Year - DBI-2223510, DBI2149888 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 180.300 - 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 of disqualified. You do this by: (a) checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.318(i) - The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR 200.319(a) - All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR 200.320(a)(2)(i) - If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non Federal entity. Condition - The Society did not have documentation to support that two covered transactions were checked for potential suspension or debarment before entering into the transaction. There was one covered transaction where the Society did not have documentation to support the procurement process followed or that more than one vendor was reviewed for pricing before selecting the vendor chosen. Questioned Costs - The Society charged a total of $31,000 to grant DBI-2223510 during 2023 for a covered transaction in which there was not supporting documentation that the service was procured under the requirements above. Identification of How Questioned Costs Were Computed - The amount of the covered transaction that was submitted for reimbursement during 2023. Context - Two covered transactions with total expenditures charged to the grants of $85,735 were reviewed. The population subject to testing included a total of three covered transactions. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. Recommendation - The Society should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Planned Corrective Actions - Staff turnover in early 2023 resulted in limited capacity for dedicated staff to check for potential suspension or debarment before adding vendors to the system. We have dedicated staff who will be managing this process going forward. The Society has written procurement policies and procedures. Key leadership stakeholders have been apprised of our policies and procedures. The Society will be implementing a training series for government funded procurement stakeholders within the Society to ensure compliance.
Finding 2023-001: Procurement Policy Information on the Federal Program: All Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions." Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. Condition: During our testing performed over procurement and through inquiries with management, we noted the Organization does not have a formally documented procurement policy in place that is consistent with 2 CFR §200.318(a). Cause: Management has not formalized and implemented an official organizational procurement policy. Effect or Potential Effect: An official procurement policy will outline specified thresholds for which procurement is required, required documentation needed for each threshold, and individuals responsible for ensuring procurement is performed in all required circumstances. When no policy is in place, there is a risk that procurement would not be performed, or adequate documentation would not be obtained, when required. Questioned Costs: None noted. Context: We noted that the Organization does not have a documented procurement policy in effect.Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formalize and implement an official procurement policy. This policy should include thresholds for which various levels of procurement are required. The policy should also include what documentation is required for each level of procurement. Additionally, the policy should specify individuals responsible for conducting procurement, and approving the final selection.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Procurement, Suspension and Debarment Identification of the federal program: Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense Federal Cluster: Research and Development (R&D) Pass-Through Entity: The University of Texas Health (93.853, NS119834) Assistance Listing Nos.: 12.420, 93.310, 93.353, 93.393, and 93.853 Award Numbers: W81XWH-15-1-0292 (12.420), OD23121 (93.310), CA246568 (93.353), CA259201 (93.393), NS119834 (93.853), NS122096 (93.853) Award Periods: Various Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Section 200.320(a)(2)(i) of the Uniform Guidance states the following regarding small purchases: “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Section 200.320(b) of the Uniform Guidance states the following regarding formal procurement methods to be followed: “When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold (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.” Section 200.214 of the Uniform Guidance 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.” The Clinic procurement justification form for procurements more than $25,000 requires completion of the rationale for the procurement and a search of the federal government’s exclusion list to be performed and documented at the time of the procurement. On a monthly basis, Supply Chain Management performs a review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures. Condition: Internal Control For five (56%) of nine procurement transactions tested for operating effectiveness of internal controls, the procurement justification form used by the Clinic to document the history of the procurement and compliance with Uniform Guidance CFR 200.303, was not completed until after the purchase order was created and/or invoice received from the vendor. In addition, for these same five procurement transactions, the Clinic did not timely document its suspension and debarment check at the time of procurement as required by its procurement justification form. In addition, for four (44%) of nine procurement transactions tested for operating effectiveness of internal controls (two of which relate to the five cited above), the procurement justification form used by the Clinic to document the procurement transaction’s compliance with policies, procedures and the Uniform Guidance was outdated. Furthermore, the monthly review of completed procurement justification forms related to procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures was not operating effectively. Compliance For one (9%) of 11 procurement transactions tested for compliance, the procurement was an add-on purchase related to a larger procurement of the same product under a prior purchase order. The prior procurement was above the simplified acquisition threshold and the Clinic’s competitive bid threshold. The Clinic did not complete a procurement justification form for the add-on purchase (which was a small purchase), and the original procurement did not have adequate support to evidence that it had been competitively bid. As such, adequate documentation did not exist for the procurement in accordance with Uniform Guidance Section 230.320(a)(2)(i) and(b). In addition, for five procurement transactions, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Cause: While management has internal controls in place to review procurements > $25,000 to ensure they are documented in accordance with the Clinic’s procurement, suspension and debarment policies and procedures and Uniform Guidance CFR 200.320, the review of the procurement justification form is not robust enough to identify errors and there is not a process in place to ensure the form is completed prior to the purchase. Effect or potential effect: The Clinic’s internal controls over procurement were not properly followed during the fiscal year. In addition, the Clinic did not follow the Uniform Guidance requirements related to small purchases and noncompetitive procurements. Questioned costs: $53,482, determined as the amount of the procurement expenditures included in the schedule of expenditures of federal awards for the year ended December 31, 2023, for the one procurement transaction that had inadequate support for compliance with CFR 200.320 at the time of procurement, as follows: • Assistance Listing No. 93.310, OD023121 – $53,482 Context: Internal Control We sampled nine federal procurements over $25,000 to test operating effectiveness of internal controls, totaling $962,393, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For seven of the 11 federal procurements tested totaling $770,093, procurement controls were not operating effectively. • For five of 11 procurement transactions tested totaling $529,273, the independent suspension and debarment check to be performed at the time of procurement was not performed until approximately two to eight months later. Compliance We sampled 11 federal procurements over $25,000 to test compliance, totaling $1,736,844, from a population of 74 federal procurements over $25,000, totaling $5,400,242 and noted the following: • For one of 11 federal procurements tested totaling $53,482, documentation retained was not adequate to support that the procurement transaction was executed in accordance with the Uniform Guidance Sections 200.320(a)(2)(i) and (b). • For five of 11 procurement transactions tested totaling $529,273, the Clinic did not follow its suspension and debarment procedures as required by its procurement justification form. Procurement-related expenditures are approximately 9% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023. Identification as a repeat finding, if applicable: The finding is not a repeat of the finding of the prior year. Recommendation: The Clinic should ensure that all R&D awards that require procurement of goods and services follow established policies, procedures, and internal controls to comply with the Uniform Guidance procurement standards and that the procurement justification form is reviewed prior to entering into the purchase transaction. The Clinic should ensure that independent checks for suspension and debarment should be timely completed at the time of procurement in accordance with the Clinic documented policies, procedures, and internal controls. Views of responsible officials: Management will reinforce education and training to the research community and procurement teams regarding the procurement requirements, Justification of Source Selection Checklist/Form, and timely completion of the required documentation. The Clinic utilizes a third party, Visual Compliance, to execute daily supplier sanction and debarment checks for all Mayo Clinic vendors. All third party suspension and debarment match alerts are reviewed and adjudicated as needed. Going forward, the Clinic will supplement this daily review by periodically validating a sample of vendors who are not flagged with an alert by Visual Compliance.
Finding 2023-002: Procurement Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that ASCB did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as ASCB's internal procurement policy. Questioned Costs: None. Context: We noted one item selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend ASCB retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Finding 2023-002: Procurement Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that ASCB did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as ASCB's internal procurement policy. Questioned Costs: None. Context: We noted one item selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend ASCB retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
FINDING 2023-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is set at $250,000 unless a lower more restrictive threshold is set by a nonfederal entity. As Indiana Code has a more restrictive threshold of $150,000, this threshold and formal procurement methods must be used when procuring goods and services in excess of $150,000. Formal procurement methods require following documented procedures and obtaining sealed bids or proposals. The Town had a documented procurement policy; however, the Town did not follow its policy for one of the two vendors that exceeded the simplified acquisition threshold. The vendor, paid $2,419,821, was chosen without obtaining sealed bids or proposals, nor was a formal contract entered into with the vendor. Furthermore, there was no documentation detailing the history of the procurement or the Town's justification for limiting competition. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. INDIANA STATE BOARD OF ACCOUNTS 15 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. The Town's policies related to the SLFRF suspension and debarment requirements included a clause or condition added to covered transactions expected to equal or exceed $25,000 with that vendor. Three vendors were identified as having transactions that equaled or exceeded $25,000. All three vendors were selected for testing. The three vendors, with total expenditures of $4,333,484, were reviewed. For all three vendors, the Town did not have documented evidence that the clause was included in the contract with the vendor nor that any other methods were employed to verify the vendor was not suspended, debarred, or other excluded prior to entering into the transactions. The lack of internal controls and noncompliance were systematic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.324(a) states: "The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals." 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS, or (b) Collecting a certification from that person if allowed by this rule, or (c) Adding a clause or condition to the covered transaction with that person." Cause The Town did not adhere to its procurement policy as written. Instead, a vendor was selected based on factors other than solicited bids. In addition, the Town was unable to provide documentation to demonstrate they included a clause in contracts or otherwise verified contractors were not suspended, debarred, or otherwise excluded prior to entering into the transaction as a direct result of the Town's policy not addressing those vendors not requiring a contract and not following the policy for those vendors who had a contract. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure goods and services were properly procured. As a result, one vendor paid did not have adequate documentation to support that the appropriate bid process was followed or that nonprocurement procedures were permissible. Furthermore, without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the Town 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 contracts or subawards, and document reasons for vendors that are chosen without adhering to formal procurement methods. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report for suspension and debarment. The prior audit finding number was 2022-003. Condition and Context Procurement - Policy The County did not have a County Council approved procurement policy that would reflect applicable state laws and regulations, including procedures to avoid acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 25 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County had five vendors that qualified for testing under small purchase procurement requirements (vendors paid $10,000-$150,000). Of the two chosen for testing, one was awarded a contract without the County obtaining quotes. The contract awarded was $31,000 for engineering services related to drain construction. The lack of effective internal controls and noncompliance was isolated to the small purchase identified above. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's (Treasury) 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, in order to review the 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, the County explained they were aware of the suspension and debarment requirements related to the SLFRF awards; however, the County did not retain documentation of SAMs.gov checks nor was a clause always included in a contract. A population of ten covered transactions for goods or services, totaling $2,371,047, that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified. A sample of three transactions, totaling $1,473,295, was selected for testing. For each of the three transactions, the County did not verify the vendors' suspension and debarment status prior to payment. Due to the number and magnitude of exceptions identified, per auditor judgment, we concluded it would not be appropriate to expand the sample size or perform any additional audit procedures. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or INDIANA STATE BOARD OF ACCOUNTS 27 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states in part: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by the management of the County. The County was unable to provide documentation to demonstrate it checked SAM.gov to verify that contractors and vendors were not suspended or debarred. The County was also unable to provide documentation explaining the rationale behind decisions to offer contracts without obtaining an adequate number of bids or quotes. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, one small purchase did not have an adequate number of quotes. In addition, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Water and Wastewater Disposal Systems for Rural Communities - Procurement Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Numbers or Years (or Other Identifying Numbers): EDA Grant / 06-79-06190, RD Loan 01 / 06-79-06190 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF PETERSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the City had five vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Only one vendor was selected for testing due to the procurement requirements being tested on the other four vendors during the prior audit. For the one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with this vendor during 2023 was $414,465. The lack of internal controls and noncompliance were isolated to the one vendor noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF PETERSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The City was unable to provide documentation to demonstrate they had properly procured services. A proper system of internal controls was not designed by management of the City. Embedded within a properly designed or implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the City could have overpaid for the services obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards 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.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Finding 2023-005: Procurement Federal Program: 19.124 Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that the Center did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, for noncompetitive procurements, there was no documentation to support which of the five criteria was met to allow for the noncompetitive procurement. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of the compliance requirement. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Center's internal procurement policy. Questioned Costs: None noted. Context: We noted one item selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that the item selected for testing for noncompetitive procurements did not maintain documentation of which of the five criteria were met to allow for the noncompetitive procurement. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Center retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Finding 2023-001 – Internal control deficiency and noncompliance over Procurement. Identification of the federal program: Assistance Listing Number 93.738: • PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • COVID-19 – PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • U.S. Department of Health and Human Services • Federal Award Identification Number – NU58DP006604 • Federal Award Year – September 30, 2018 to September 29, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards. 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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements and noncompetitive procurements were not supported by effective internal controls and could potentially include unreasonable prices or rates. Questioned costs: $43,694 – Assistance Listing Number 93.738, Award Identification Number – NU58DP006604 Questioned costs were computed by taking the total small purchase procurements that were not supported by adequate documentation of $43,694. Context: During our testing over small purchase procurements, we obtained a listing of small purchase procurements and selected a sample of 6 which represented the entire population. The total value of the small purchase procurements was $236,269. There were 2 ($43,694) out of 6 ($236,269) selections where management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Identification as a repeat finding, if applicable: No. Recommendation: We recommend management develop and implement effective internal controls to ensure the compliance requirements over procurements are performed. In addition, management should review the items identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: This finding was due to two process failures. The first relates to a lack of adequate documentation whereby PHS entered into a contract with the New Mexico Department of Health to provide services under the REACH immunization program as a sole source procurement. The allowability of this cost is not in question. The scope of work was presented to and approved by the CDC before the procurement was initiated. However, the justification for use of the New Mexico Department of Health as a sole source contractor was not adequately documented. The second failure was due to a lack of awareness and ineffective communication regarding the applicability of Federal procurement requirements to certain advertising services procured for the REACH immunization program. This breakdown occurred as the PHS Communications and Brand Management Department coordinating the procurement of the services does not typically engage with Federally funded projects and was not made aware of the applicable requirements by the Community Health department who had received the funding and was requesting the services. The realization that advertising needs for the REACH immunization project would exceed the micro purchase threshold and trigger the need for a different process for the Communications department was overlooked and not communicated effectively. The advertising costs included in this finding are allowable. The finding occurred because the costs exceeded the micro purchase threshold and were not competitively bid. Presbyterian agrees that the lack of awareness in this situation created a scenario where the required efforts and documentation necessary to justify a sole source procurement were not met. It should be noted, however, that Presbyterian has awareness of the procurement requirements in the code of federal regulations governing such matters and strives to be compliant with those requirements. This is evidenced by the following: • A robust policy governing procurements under federal awards that aligns with the procurement requirements within 2 CFR 200. • Annual required training for all Leaders (Directors and above) that includes risks associated with grant funding and incorporates a link to the federal procurement policy. • A Federal Conflict of Interest policy to mitigate and remediate conflicts of interest that would be associated with procurements under federal awards. • A rigorous process to ensure compliance with subaward and contractual agreements. • No fraud has ever been detected or suspected with any of Presbyterian’s federal awards. • Internal processes in place to approve purchases made directly by programs with grant funding. • Monthly transactions reviews performed to confirm appropriateness and identification of any necessary corrections prior to closing the accounting period as well as budget to actual tracking. Presbyterian acknowledges that despite the processes and policies listed above, additional education and ongoing training and communication of Federal procurement requirements are necessary to mitigate future procurement issues. Presbyterian believes that enhancing training, education and communication as well as process revisions and written procedures will effectively mitigate this risk. A corrective action plan has been developed that will focus on four specific areas: 1) Communication & Awareness of process failures that led to the finding. 2) Training & Education, broadly at an enterprise level and targeted to areas engaged in federal funding. 3) Written Procedures and Toolkits to facilitate actions that result in compliant procurements under Federal funding and updates to the existing policy governing procurements under Federal funding to clarify the responsibilities for communication of applicability of Federal procurement requirements. 4) Collaboration with the Communications department to ensure processes exist to support competitive bids for advertising services as needed.
2023-002: U.S. Department of Environment Protection – Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures – Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: The Authority has not had any significant federal grant funding in many years. The current federal project is the first time that the Authority has been subject to the requirements of the Uniform Guidance. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however, the Authority was not aware that the Uniform Guidance requires these policies and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understands the potential effects of the condition described above and is currently consulting with their attorney to draft written policies and procedures as they relate to federal programs that are required by the Uniform Guidance.
FINDING 2023-003 Subject: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number (or Other Identifying Number): DW22168902 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The Town did not obtain price or rate quotes for the two vendors identified and tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the Town did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF CAMBRIDGE CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had properly procured services. The Town noted they were unaware professional services agreements for consultants were required to follow small purchase procurement guidelines. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not demonstrate it had obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the Town strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City did not obtain price or rate quotes for the one vendor tested that was less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to covered transactions. A population of nine covered transactions for goods or services were paid from SLFRF award funds during the audit period. A sample of three transactions were selected for testing. Of the three transactions tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of effective internal controls and noncompliance were isolated to the small purchase noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The system of internal controls as established by management of the City was not effective at ensuring all required aspects of a procurement policy were included and that small purchases adhered to the procurement requirements. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure their policy includes all the necessary elements and that the detailed history of procurement including the method utilized are retained for audit. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended management of the City establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the City adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2022-002) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement 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. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control Additionally, in accordance with Federal requirements, a non Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures were based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $10K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management’s review of the submitted quarterly report of expenditures did not identify the need for a reconciliation of incurred expenditures and purchase order balances reported to the Department and as such, as there is a variance between the amounts reported on the SEFA and the amounts reported to the Department on the quarterly reports of approximately $458 thousand. We noted, however that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure the tracking of each report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period based upon the general ledger and accounting records, used to prepare the annual SEFA, as compared to the purchase order balances. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor's recommendations and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation fro each bidding threshold in accordance with the Uniform Guidance.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FR-2023-ILBC-00004 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases for body cameras and associated equipment/accessories to the vendor totaled $117,144, of which $7,144 was paid from the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds received from the Indiana Department of Homeland Security. As a portion of the purchases to the vendor were paid with federal funds subject to procurement requirements, the entirety of purchases with the vendor was required to follow applicable procurement requirements. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the County did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 18 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.