FINDING 2024-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY22-23, FY23-24 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and the Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods 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. The 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 effective controls in place to ensure that an adequate number of price or rate quotations were obtained for all small purchases. The School Corporation did not obtain price or rate quotations from an adequate number of sources for all three vendors that were tested that met the small purchase threshold. Suspension and Debarment Prior to entering into subawards and covered transactions with the Child Nutrition Cluster (CNC) 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transactions with that vendor. The School Corporation did not have effective controls in place to ensure that the verification was completed for all contractors prior to entering into covered transactions. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause Management had not established a system of internal controls to ensure documentation was obtained and retained to demonstrate they had properly procured all small purchases. Management had not established a system of internal controls to ensure that the School Corporation's procedures for verifying a contractor's suspension and debarment status was followed for all contractors. Effect Without a proper design or implementation of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in the School Corporation overpaying for goods or services or paying a contractor who has been suspended or debarred, which would be unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for all small purchases and that suspension and debarment is verified for all covered transaction of $25,000 or more. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY22-23, FY23-24 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and the Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods 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. The 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 effective controls in place to ensure that an adequate number of price or rate quotations were obtained for all small purchases. The School Corporation did not obtain price or rate quotations from an adequate number of sources for all three vendors that were tested that met the small purchase threshold. Suspension and Debarment Prior to entering into subawards and covered transactions with the Child Nutrition Cluster (CNC) 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transactions with that vendor. The School Corporation did not have effective controls in place to ensure that the verification was completed for all contractors prior to entering into covered transactions. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause Management had not established a system of internal controls to ensure documentation was obtained and retained to demonstrate they had properly procured all small purchases. Management had not established a system of internal controls to ensure that the School Corporation's procedures for verifying a contractor's suspension and debarment status was followed for all contractors. Effect Without a proper design or implementation of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in the School Corporation overpaying for goods or services or paying a contractor who has been suspended or debarred, which would be unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for all small purchases and that suspension and debarment is verified for all covered transaction of $25,000 or more. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY22-23, FY23-24 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and the Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods 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. The 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 effective controls in place to ensure that an adequate number of price or rate quotations were obtained for all small purchases. The School Corporation did not obtain price or rate quotations from an adequate number of sources for all three vendors that were tested that met the small purchase threshold. Suspension and Debarment Prior to entering into subawards and covered transactions with the Child Nutrition Cluster (CNC) 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transactions with that vendor. The School Corporation did not have effective controls in place to ensure that the verification was completed for all contractors prior to entering into covered transactions. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause Management had not established a system of internal controls to ensure documentation was obtained and retained to demonstrate they had properly procured all small purchases. Management had not established a system of internal controls to ensure that the School Corporation's procedures for verifying a contractor's suspension and debarment status was followed for all contractors. Effect Without a proper design or implementation of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in the School Corporation overpaying for goods or services or paying a contractor who has been suspended or debarred, which would be unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for all small purchases and that suspension and debarment is verified for all covered transaction of $25,000 or more. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: N/A Federal Award Year: 2023/2024 Pass Through Entity: Chicago Cook Workforce Partnership Criteria: In accordance with 2 CFR 200.303, the 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. Condition: The Organization is either lacking or has nonconforming written policies and procedures for the following administrative functions, required by0 the Uniform Guidance: 1. Financial management - 2 CFR 200.302(b)(6) - spacing 2. Allowable Costs - 2 CFR 200.302(b)(7) 3. Federal payment - 2 CFR 200.305(b)(1) 4. Procurement - 2 CFR 200.318(a) and 2 CFR 200.318(c)(1) 5. Competition - 2 CFR 200.319(d) 6. Methods of procurement to be followed - 2 CFR 200.320 7. Compensation (Personal Services) - 2 CFR 200.430(a)(1) 8. Compensation (Fringe Benefits - Leave) - 2 CFR 200.431(b)(1) 9. Relocation costs of employees - 2 CFR 200.464(a)(2) 10. Travel costs - 2 CFR 200.474 Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our review of the Organization’s policies and procedures, which were found to be not in accordance with Uniform Guidance. Cause: The Organization was not aware of the specific Uniform Guidance requirements for certain written policies and procedures. Effect: The Organization did not have these policies and procedures in place to reasonably ensure that program functions are achieved effectively, efficiently and in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Organization was not in compliance with the administrative requirements set forth in the Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization design procedures and implement internal control procedures to ensure that the Uniform Guidance administrative requirements are met. Views of Responsible Officials and Corrective Action Plan: See corrective action plan attached to financial statements.
2024-002 – Material Weakness in Compliance and Internal Control over Procurement and Suspension and Debarment Identification of federal programs: U.S. Department of Housing and Urban Development: #14.251 Economic Development Initiative, Community Project Funding, and Misc. Grants, #B-22-CP-AK-0003 Criteria: Part 3 Compliance Supplement Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. § 200.318(a) Documented procurement procedures – The recipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. § 200.318(i) Procurement records - The recipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. § 200.320 Procurement methods – There are three types of procurement methods described: 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 must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. § 200.214 Suspension and debarment – When a non-federal entity enters into a covered transaction, the non-federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization procured certain goods or services from vendors but did not maintain evidence that they followed their procurement policy or the procurement requirements of the federal program. Cause: The Organization’s purchasing policy does not address all of the procurement requirements of Uniform Guidance. The Organization did not maintain sufficient documentation supporting purchases greater than the micro-purchase threshold or relating to suspension and debarment on certain covered transactions. In the period after year end and before the date of fieldwork, there was turnover in management in the Executive Director position so it is possible that competitive bidding was sought, but that the knowledge and communications have been lost during the transition. Effect or potential effect: The Organization is not in compliance with the procurement requirements of the Uniform Guidance. Questioned Costs: None Context: During the course of the audit of the major program, auditors requested copies of the required support for purchases from three vendors. Support was provided for one of the purchases but could not be located for two of the purchases. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Organization reviews and revises their procurement policies and procedures to ensure that they align with the requirements of Uniform Guidance. We also recommend that as part of the Organization’s internal control structure over compliance with procurement requirements, to establish monitoring procedures or checklists to ensure that support is obtained from a sufficient number of qualified sources depending on the purchasing threshold and method required to be used, and that evidence is retained to show that vendors were not suspended or debarred before entering into a transaction with them. Views of Responsible Officials: See Corrective Action Plan
2024-002 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Three vendors were awarded a contract without a competitive procurement process or documentation to support the rationale to limit competition. Cause: The District relied on State procurement exemptions which do not apply to Federal procurements. Effect: The District is not in compliance with Federal procurement requirements. Questioned Costs: $80,139 Repeat Finding from Prior Year: No. Recommendation: The District should implement procedures to perform procurement procedures on all applicable contracts for goods and services. Views of Responsible Official: Management agrees with the finding.
2024-002 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Three vendors were awarded a contract without a competitive procurement process or documentation to support the rationale to limit competition. Cause: The District relied on State procurement exemptions which do not apply to Federal procurements. Effect: The District is not in compliance with Federal procurement requirements. Questioned Costs: $80,139 Repeat Finding from Prior Year: No. Recommendation: The District should implement procedures to perform procurement procedures on all applicable contracts for goods and services. Views of Responsible Official: Management agrees with the finding.
2024-002 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Three vendors were awarded a contract without a competitive procurement process or documentation to support the rationale to limit competition. Cause: The District relied on State procurement exemptions which do not apply to Federal procurements. Effect: The District is not in compliance with Federal procurement requirements. Questioned Costs: $80,139 Repeat Finding from Prior Year: No. Recommendation: The District should implement procedures to perform procurement procedures on all applicable contracts for goods and services. Views of Responsible Official: Management agrees with the finding.
2024-002 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Three vendors were awarded a contract without a competitive procurement process or documentation to support the rationale to limit competition. Cause: The District relied on State procurement exemptions which do not apply to Federal procurements. Effect: The District is not in compliance with Federal procurement requirements. Questioned Costs: $80,139 Repeat Finding from Prior Year: No. Recommendation: The District should implement procedures to perform procurement procedures on all applicable contracts for goods and services. Views of Responsible Official: Management agrees with the finding.
2024-001 U.S. Department of Agriculture Water and Waste Disposal Systems for Rural Communities – ALN 10.760 Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: The Town was unable to provide documentation to support a competitive procurement process for one vendor. Cause: The Town had a significant amount of turnover in managerial positions and procurement documentation was not filed in an organized manner. Effect: The Town is not in compliance with Federal procurement requirements. Questioned Costs: $243,488 Repeat Finding from Prior Year: No. Recommendation: The Town should implement procedures to ensure that all procurement actions are properly documented in the Town’s contract files. Views of Responsible Official: Management agrees with the finding.
Under 2 CFR 200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restrict competition (2 CFR 200.319(a)). - Documentation of Procurement History: Entities must maintain records that detail the procurement history, including the 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)). - Use of Non-Competitive Procurement: Non-competitive procurement is only allowed under limited circumstances, such as when the item is available from a single source, there is a public emergency, or after solicitation of multiple sources, competition is deemed inadequate (2 CFR 200.320(c)).The Organization incurred expenditures of approximately $620,000 for the renovation of a community center using federal funds under the SLFRF program. The Organization received two bids for the renovation project. However, full documentation of the process was not maintained. Cause: The Organization did not establish or follow sufficient internal controls to ensure compliance with federal procurement requirements, including maintaining the required documentation for procurement activities. Possible effect: The lack of procurement documentation creates a significant risk that noncompliant practices occurred, such as non-competitive procurement or payments exceeding fair market value.
2024-001 U.S. Department of the Treasury Passed-through the County of Plymouth, 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: One vendor was awarded four contracts without a competitive procurement process. Cause: The Town relied on State procurement exemptions which do not apply to Federal procurements. Effect: The Town is not in compliance with Federal procurement requirements. Questioned Costs: $509,016 Repeat Finding from Prior Year: No. Recommendation: The Town should implement procedures to perform competitive procurement procedures 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 the Treasury Passed-through the County of Plymouth, 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: One vendor was awarded four contracts without a competitive procurement process. Cause: The Town relied on State procurement exemptions which do not apply to Federal procurements. Effect: The Town is not in compliance with Federal procurement requirements. Questioned Costs: $509,016 Repeat Finding from Prior Year: No. Recommendation: The Town should implement procedures to perform competitive procurement procedures on all applicable contracts for goods and services charged to Federal awards. Views of Responsible Official: Management agrees with the finding.
Federal Agency: U.S. Department of Transportation Federal Program Name: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: 2024; FAIN not available. Pass-Through Agency: State of Vermont Agency of Transportation Pass-Through Number(s): EA#COVIDFTA-934 EA#FT202201-704 EA#FT24FLEX-454 EA#CRRSAA22-934 EA#FT23FLEX-064 EA#FT24FLEX-554 EA#FT201806-454 EA#FT23FLEX-454 EA#FT24FLEX-854 EA#FT201806-554 EA#FT23FLEX-554 EA#FT24FLEX-954 EA#FT201806-954 EA#FT23FLEX-954 EA#FT24FORM-454 EA#FT201903-704 EA#FT23FORM-064 EA#FT24FORM-924 EA#FT202104-704 EA#FT23FORM-934 EA#FT24FORM-934 EA#FT202104-954 EA#FT24FLEX-064 Award Period: July 1, 2023 through June 30, 2024 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material weakness in internal control over compliance and material noncompliance (modified opinion) Criteria or specific requirement: The United States Code of Federal Regulations (CFR) Title 2, Part 200.319 indicates procurement transactions under the Federal award must be conducted in a manner that provides full and open competition. Additionally, 2 CFR Part 200.320 indicates that for any allowable method chosen, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the requirements of 2 CFR Part 200, Subpart D. 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 Part 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR Part 180.300). 2 CFR Part 200.303 indicates that non-Federal entities receiving Federal awards 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. Condition: For a sample of five (5) procurement transactions above the micro-purchase threshold, documentation was not maintained to support the procurement, suspension and debarment procedures performed in order to demonstrate compliance with 2 CFR Part 180 and 2 CFR Part 200. Questioned costs: Unknown. Context: Five of five transactions selected for testing in our sample. Cause: Procedures were not designed or implemented to maintain documentation to support compliance with the standards of procurement, suspension and debarment contained in 2 CFR Part 180 and 2 CFR Part 200. Effect: Compliance with the requirements of the federal award could not be demonstrated. Additionally, the lack of internal controls presents additional risk of noncompliance in circumstances where federal expenditures are made to ineligible entities. Repeat Finding: No. Recommendation: We recommend management enhance procedures and controls to ensure documentation is maintained to support all procurements and suspension and debarment verifications related to expenditures from federal award programs. Justification for noncompetitive procurements (i.e., sole source, public exigency, or consent of the awarding agency), should also be documented. Such documentation should be consolidated and maintained in a secure, accessible location. Views of responsible officials: Management agrees with the finding.
2 CFR § 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR § 200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR § 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. 2 CFR §200.320(2)(a) states for 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. Ohio Rev. Code § 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code § 167.081. Purchases under a contract entered into under Ohio Rev. Code § 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. Furthermore, the District’s Procurement – Federal Grants/Funds Policy (#6325) details the District’s procedures for procurement with federal funds. Specifically, Maintenance of Procurement Records: The District shall maintain records sufficient to detail the history of all procurements. 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 (including a cost or price analysis). The District participated in The Ohio Purchasing Council’s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and Lighting project, pursuant to Ohio Rev. Code § 167.081. The School District utilized ESSER grant funds for parts of these projects. The School District did not maintain documentation that Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to O.R.C. 167.081 when awarding the unit price contract to Prodigy Building Solutions respectively, failing to meet the documentation requirements of 2 CFR § 200.320(b) and 2 CFR § 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance Requirements and the Ohio Revised Code could result in misuse of public funds, potential questioned costs, and/or potential loss of grant funding. The District should review its policy, Uniform Guidance requirements, and the Ohio Revised Code before entering into any contracts that require competitive bidding. In addition, the District should fully implement its procurement policy.
2 CFR § 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR § 200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR § 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. 2 CFR §200.320(2)(a) states for 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. Ohio Rev. Code § 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code § 167.081. Purchases under a contract entered into under Ohio Rev. Code § 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. Furthermore, the District’s Procurement – Federal Grants/Funds Policy (#6325) details the District’s procedures for procurement with federal funds. Specifically, Maintenance of Procurement Records: The District shall maintain records sufficient to detail the history of all procurements. 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 (including a cost or price analysis). The District participated in The Ohio Purchasing Council’s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and Lighting project, pursuant to Ohio Rev. Code § 167.081. The School District utilized ESSER grant funds for parts of these projects. The School District did not maintain documentation that Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to O.R.C. 167.081 when awarding the unit price contract to Prodigy Building Solutions respectively, failing to meet the documentation requirements of 2 CFR § 200.320(b) and 2 CFR § 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance Requirements and the Ohio Revised Code could result in misuse of public funds, potential questioned costs, and/or potential loss of grant funding. The District should review its policy, Uniform Guidance requirements, and the Ohio Revised Code before entering into any contracts that require competitive bidding. In addition, the District should fully implement its procurement policy.
2 CFR § 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR § 200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR § 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. 2 CFR §200.320(2)(a) states for 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. Ohio Rev. Code § 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code § 167.081. Purchases under a contract entered into under Ohio Rev. Code § 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. Furthermore, the District’s Procurement – Federal Grants/Funds Policy (#6325) details the District’s procedures for procurement with federal funds. Specifically, Maintenance of Procurement Records: The District shall maintain records sufficient to detail the history of all procurements. 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 (including a cost or price analysis). The District participated in The Ohio Purchasing Council’s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and Lighting project, pursuant to Ohio Rev. Code § 167.081. The School District utilized ESSER grant funds for parts of these projects. The School District did not maintain documentation that Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to O.R.C. 167.081 when awarding the unit price contract to Prodigy Building Solutions respectively, failing to meet the documentation requirements of 2 CFR § 200.320(b) and 2 CFR § 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance Requirements and the Ohio Revised Code could result in misuse of public funds, potential questioned costs, and/or potential loss of grant funding. The District should review its policy, Uniform Guidance requirements, and the Ohio Revised Code before entering into any contracts that require competitive bidding. In addition, the District should fully implement its procurement policy.
2 CFR § 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR § 200.320(b) states in part that when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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. 2 CFR § 200.318(e) states to foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. 2 CFR §200.320(2)(a) states for 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. Ohio Rev. Code § 167.081, states that a regional council may enter into a unit price contract for materials, labor, services, overhead, profit, and associated expenses for the repair, enlargement, improvement, or demolition of a building or structure if the contract is awarded pursuant to a competitive bidding procedure of a county, municipal corporation, or township or a special district, school district, or other political subdivision that is a council member. A political subdivision that is a member of a regional council may participate in a contract entered into under Ohio Rev. Code § 167.081. Purchases under a contract entered into under Ohio Rev. Code § 167.081 are exempt from any competitive selection or bidding requirements otherwise required by law. Furthermore, the District’s Procurement – Federal Grants/Funds Policy (#6325) details the District’s procedures for procurement with federal funds. Specifically, Maintenance of Procurement Records: The District shall maintain records sufficient to detail the history of all procurements. 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 (including a cost or price analysis). The District participated in The Ohio Purchasing Council’s unit price contract with Prodigy Building Solutions, LLC., for the School District's roofing, HVAC, and Lighting project, pursuant to Ohio Rev. Code § 167.081. The School District utilized ESSER grant funds for parts of these projects. The School District did not maintain documentation that Ohio Purchasing Council followed competitive bidding procedures of a council member pursuant to O.R.C. 167.081 when awarding the unit price contract to Prodigy Building Solutions respectively, failing to meet the documentation requirements of 2 CFR § 200.320(b) and 2 CFR § 200.318(e) noted above. Failure to comply with the applicable Uniform Guidance Requirements and the Ohio Revised Code could result in misuse of public funds, potential questioned costs, and/or potential loss of grant funding. The District should review its policy, Uniform Guidance requirements, and the Ohio Revised Code before entering into any contracts that require competitive bidding. In addition, the District should fully implement its procurement policy.
Lack of Adherence to Procurement Policy Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No. – 21.027 Compliance Requirement – Procurement Criteria: Per Uniform Guidance 2 CFR 200.319, procurement methods are required to promote full and open competition, with appropriate records maintained to justify procurement decisions. Condition: The County failed to adhere to established procurement policies in place during the acquisition of goods and services under federally funded programs. Multiple transactions lacked required documentation, such as documentation of three quotes obtained or requests for bids. Cause: Expenditures were not routed through the procurement department due to insufficient coordination between departments. Decentralized processes allowed individual departments to make purchases independently, bypassing established procedures. Effect: Non-compliance with procurement policies increases the risk of improper expenditures and may result in repayment obligations to the grantor agency. Recommendation: Properly follow existing procurement policies in place, including mandatory documentation of quotes and requests for bids. Provide staff training on federal procurement requirements and establish periodic internal audits to ensure compliance. View of Responsible Officials: See management’s corrective action plan.
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.
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: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, 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. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.
Procurement Federal Agency: U.S. Federal Government Federal Program Title: Integrative Activities, Research and Development Cluster Assistance Listing Number: 47.083 Federal Award Identification Number and Year: CE2559-SB-873905 A2, A3 - 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Other Matters • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Federal Government requires that 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 2 CFR section 200.319 and 2 CFR section 200.320. In addition, per the Uniform Guidance CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not complete documentation for reasonings of why they did not obtain price quotes or competitive bids prior to entering the transaction. Context: During our testing we identified 1 of the 5 contracts tested did not include adequate documentation to award the contracts without price quotations or a competitive bid process. Questioned costs: $39,160 Cause: Lack of training for procurement personnel regarding federal funds passed through State agencies to the University. Effect: Documentation for why the University did not obtain price quotes or competitive bids was not documented in a timely manner. Repeat finding: Yes, 2023-003 Recommendation: We recommend the University evaluate its procedures and implement an additional control to document reasons for not obtaining price quotes or competitive bids prior to entering the transaction. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled four contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting any of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with the Code of Federal Regulations and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in all four contracts tested. Effect/Questioned Cost: This resulted in roughly $122,215 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: The Purchasing department will develop and maintain procurement procedures requiring that “small purchases” of equipment or services made under a Federal award or sub-award above the micropurchase threshold require multiple quotes and that those quotes are properly documented as evidence.
Finding 2024-001: Procurement (50000) Assistance Listing # 10.553, 10.555 – U.S. Department of Agriculture, California Department of Education, Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled three contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtain prior to selecting one of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with CFR and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in one of three vendors tested. Effect/Questioned Cost: This resulted in roughly $53,291 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: To correct the finding Nutrition Services will do the following: (1) request piggybackable formal bid options from US Foods (2) take necessary steps to increase micropurchase threshold to $50,000 (3) consider opening a Purchase Order with Sysco Foods to spread the micropurchases to another online retailer, thus mitigating the issue of in-person shopping and price comparisons (4) work with purchasing department to ensure open purchase orders do not exceed $50,000 for any vendor that does not have formal procurement in place.
Finding 2024-001: Procurement (50000) Assistance Listing # 10.553, 10.555 – U.S. Department of Agriculture, California Department of Education, Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled three contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtain prior to selecting one of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with CFR and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in one of three vendors tested. Effect/Questioned Cost: This resulted in roughly $53,291 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: To correct the finding Nutrition Services will do the following: (1) request piggybackable formal bid options from US Foods (2) take necessary steps to increase micropurchase threshold to $50,000 (3) consider opening a Purchase Order with Sysco Foods to spread the micropurchases to another online retailer, thus mitigating the issue of in-person shopping and price comparisons (4) work with purchasing department to ensure open purchase orders do not exceed $50,000 for any vendor that does not have formal procurement in place.
Finding 2024-001: Procurement (50000) Assistance Listing # 10.553, 10.555 – U.S. Department of Agriculture, California Department of Education, Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled three contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtain prior to selecting one of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with CFR and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in one of three vendors tested. Effect/Questioned Cost: This resulted in roughly $53,291 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: To correct the finding Nutrition Services will do the following: (1) request piggybackable formal bid options from US Foods (2) take necessary steps to increase micropurchase threshold to $50,000 (3) consider opening a Purchase Order with Sysco Foods to spread the micropurchases to another online retailer, thus mitigating the issue of in-person shopping and price comparisons (4) work with purchasing department to ensure open purchase orders do not exceed $50,000 for any vendor that does not have formal procurement in place.
Finding 2024-001: Procurement (50000) Assistance Listing # 10.553, 10.555 – U.S. Department of Agriculture, California Department of Education, Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, require the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: During our testing of procurement, we sampled three contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtain prior to selecting one of the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with CFR and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in one of three vendors tested. Effect/Questioned Cost: This resulted in roughly $53,291 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: To correct the finding Nutrition Services will do the following: (1) request piggybackable formal bid options from US Foods (2) take necessary steps to increase micropurchase threshold to $50,000 (3) consider opening a Purchase Order with Sysco Foods to spread the micropurchases to another online retailer, thus mitigating the issue of in-person shopping and price comparisons (4) work with purchasing department to ensure open purchase orders do not exceed $50,000 for any vendor that does not have formal procurement in place.
2024-003: Procurement Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 10.760, U. S Department of Agriculture - Water and waste disposal systems for rural communities Federal Award Identification Number and Year: RD Loan 92-12 Loan Period 9/6/23 - 9/1/2063, RD Loan 10 Loan and RD Loan 13 Loan period 1/1/24 - 1/1/2064 Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.318 (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. In addition, per 2 CFR 200.318(i), the non-Federal entity must maintain records sufficient to detail the history of procurement. Condition: The Village did not utilize federal procurement requirements cited above for the engineering services for the Water and Sewer Fund project. Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the July 6, 2018 through June 30, 2024 period as summarized from the request for disbursement of funds submitted. Known Questioned Costs: $562,676 Context: We tested the procurement of three contracts and identified one contract that did not follow federal procurement requirements. Cause/Effect: The Village's controls were not adequate to ensure it followed the federal requirement for procurement process. As a results, there was one instance of noncompliance related to procurements. Recommendation: We recommend the Village follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds. View of responsible officials and planned corrective action plan: See attached corrective action plan.
FINDING 2024-001 Information on the federal program: Subject: Child Nutrition Cluster – Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Program, School Summer Food Service Program Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. 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 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. The School Corporation’s policy states that the small purchase threshold is between $10,000 and $150,000. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2023, two vendors, totaling $109,657 and $53,441, were selected for testing at the small purchase threshold. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance was isolated to fiscal year 2023. 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were ten vendors identified which exceeded $25,000 in disbursements on an annual basis. Six vendors were selected for testing. In one instance, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Child Nutrition Cluster grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-001 Information on the federal program: Subject: Child Nutrition Cluster – Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Program, School Summer Food Service Program Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023, FY 2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. 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 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. The School Corporation’s policy states that the small purchase threshold is between $10,000 and $150,000. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2023, two vendors, totaling $109,657 and $53,441, were selected for testing at the small purchase threshold. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance was isolated to fiscal year 2023. 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were ten vendors identified which exceeded $25,000 in disbursements on an annual basis. Six vendors were selected for testing. In one instance, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Child Nutrition Cluster grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.