Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Department of Health and Human Services Federal Assistance Listing No. 93.185 Community-Based Workforce to Build COVID-19 Vaccine Confidence and Health Resources and Service Administration. Federal Assistance Listing No. 93.011 CDC Communities RISE Noncompliance and significant deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our audit we noted that procurement documentation was not available to support the selection of the vendors. Also, we were unable to obtain documentation to support the Institute entered into contractual agreements with vendors who were not suspended or debarred from doing business with the Federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Finding 2023-01 (continued) Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Cause: The Institute did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Institute does not maintain adequate documentation on whether they have entered into transactions with eligible entities and is in compliance with Federal procurement guidelines. Questioned Costs: Unknown Recommendation: We recommend the Institute maintain adequate documentation to support the procurement process followed when awarding the Federal contract. We also recommend the Institute follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Views of Responsible Officials: See schedule of corrective action plan.
Finding 2023-002: Material Weakness - Internal Control Over Procurement, Suspension and Debarment Program: COVID-19 State & Local Fiscal Recovery Funds Grantor Agencies: U.S. Department of Treasury & WI Department of Health Services Assistance Listing Number: 21.027 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted that the Village did not have a written procurement policy to conform with Uniform Guidance requirements. There was not a system in place to track and document the procurement process and support the contracting decisions made. As a result, we were unable to verify if the Village followed the necessary federal procurement standards. Cause: The Village was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. The Village should also create a system to track projects that were procured during the year to ensure they are in compliance with their policy. Management response and Corrective Action Plan: Management agrees with the finding. A tracking procedure has been developed and a written procurement policy will be approved prior to the end of fiscal 2024 to further define procurement processes to align with Federal program standards and Village ordinance to address this deficiency.
Finding 2023-002: Material Weakness - Internal Control Over Procurement, Suspension and Debarment Program: COVID-19 State & Local Fiscal Recovery Funds Grantor Agencies: U.S. Department of Treasury & WI Department of Health Services Assistance Listing Number: 21.027 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted that the Village did not have a written procurement policy to conform with Uniform Guidance requirements. There was not a system in place to track and document the procurement process and support the contracting decisions made. As a result, we were unable to verify if the Village followed the necessary federal procurement standards. Cause: The Village was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. The Village should also create a system to track projects that were procured during the year to ensure they are in compliance with their policy. Management response and Corrective Action Plan: Management agrees with the finding. A tracking procedure has been developed and a written procurement policy will be approved prior to the end of fiscal 2024 to further define procurement processes to align with Federal program standards and Village ordinance to address this deficiency.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FR-2023-ILBC-00004 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases for body cameras and associated equipment/accessories to the vendor totaled $117,144, of which $7,144 was paid from the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds received from the Indiana Department of Homeland Security. As a portion of the purchases to the vendor were paid with federal funds subject to procurement requirements, the entirety of purchases with the vendor was required to follow applicable procurement requirements. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the County did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 18 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY23 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold, with total purchases of $33,100. Price or rate quotations were not obtained, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the threshold the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. One vendor was identified that fell within the SAT, with total purchases of $213,734. Sealed bids or competitive proposals were not obtained, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. INDIANA STATE BOARD OF ACCOUNTS 20 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have any policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population of six covered transactions, totaling $470,435, that equaled or exceeded $25,000 paid from SLFRF award funds was identified. Four of the six covered transactions, totaling $312,745, were selected for testing. For each of the four transactions, the County did not verify the vendors' suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . INDIANA STATE BOARD OF ACCOUNTS 21 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 22 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-003, Procurement, Suspension and Debarment, Internal Control and Noncompliance Identification of the federal program Assistance listing number and title: 93.493 Congressional Directives Agency: U.S. Department of Health and Human Services Federal award identification number (FAIN): H79FG000996 Federal Award Year: 2023 Criteria or specific requirement (including statutory, regulatory or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls would be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 states that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327. 2 CFR 200.320 discusses the methods of procurement to be followed for the acquisition of property or services required under a Federal award or sub-award. Part 3-I-1 of the 2023 OMB Compliance Supplement summarizes the regulation as follows: • Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). Criteria or specific requirement (including statutory, regulatory or other citation), continued • For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). 2 CFR 200.214 provides that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition The System’s procurement policies did not conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200.320, and the suspension and debarment requirements in 2 CFR Part 180. Cause The System’s procurement policies lack certain elements of federal procurement, suspension and debarment standards. Effect or potential effect Not having policies that are consistent with federal requirements could lead to procurements under federal awards being inappropriate, not adequately documented or entered into with covered entities. Questioned costs None. Context The System’s procurement policies did not conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200.320. Specifically, the System’s procurement policies did not include a discussion of the criteria, thresholds and procedures to be followed for formal procurement methods (such as sealed bids and proposals), and for noncompetitive procurement. Further, the System’s vendor credentialing policy that is meant to address suspension and debarment requirements, includes a list of certain entities (such as academic institutions) that are exempted from the screening process. No such exemptions are provided for in 2 CFR Part 180. Identification as a repeat finding, if applicable Not a repeat finding. Recommendation: Management should enhance its procurement policies to ensure that all Federal requirements on procurement, suspension and debarment are incorporated. Management must ensure that the policies are supported by effective internal control activities to ensure compliance with Federal requirements. Views of responsible officials Vendor review for suspension and disbarment was performed monthly for all but one vendor in accordance with current CHST policies and management was informed of any vendors with issues; however, documentation of clean vendors was not provided. Management will coordinate with appropriate departments to review federal provisions for grant procurement and adjust policies and procedures to comply. Management will work with appropriate departments and each grant team to document monthly suspension and disbarment review process. Grant teams will review all current sourcing and provide sole source documentation where applicable.
Criteria: 2 CFR 200.320 (a)(2)(i) notes, “… If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: For the one procurement selected for testing, ACT did not obtain multiple price or rate quotations. We consider this to be an instance of noncompliance relating to the Procurement, Suspension, and Debarment compliance requirement. Statistical sampling was not used in making sample selections. Questioned Costs: None Cause and Effect: Without multiple price or rate quotations being obtained, ACT may overspend on products or services when compared to other vendors and the environment. Recommendation: We recommend the evaluation policies and procedures to ensure all procurement requirements are followed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Criteria: 2 CFR 200.320 (a)(2)(i) notes, “… If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: For the one procurement selected for testing, ACT did not obtain multiple price or rate quotations. We consider this to be an instance of noncompliance relating to the Procurement, Suspension, and Debarment compliance requirement. Statistical sampling was not used in making sample selections. Questioned Costs: None Cause and Effect: Without multiple price or rate quotations being obtained, ACT may overspend on products or services when compared to other vendors and the environment. Recommendation: We recommend the evaluation policies and procedures to ensure all procurement requirements are followed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.550 & 93.623 Federal Program Titles: Transitional Living for Homeless Youth; Basic Center Grant Award Period: October 1, 2022 through September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318, General procurement standards, requires that non-Federal entities must have documented procurement procedures, consistent with State and local laws and regulations for the acquisition of property or services required under a federal award and subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.326. Condition: During our testing, we noted that the Organization’s procurement policy did not address all of the identified requirements in 2 CFR 200.318 through 200.326. Questioned Costs: None. Context: In our review of the current procurement policy, The Adams Group, LLC noted the following: The policy did not include documented procedures for purchases above the simplified acquisition threshold ($250,000) in accordance with 2 CFR 200.320b. The policy did not include documented procedures for the use and instances of noncompetitive procurement in accordance with 2 CFR 200.320c. The policy did not include documented procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded as outlined in 2 CFR sections 200.212 and 200.318. We also noted that the Organization did not verify that the entities with which it entered into contracts were not debarred, suspended, or otherwise excluded. Effect: The Organization’s procurement policy is not in compliance with general procurement standards, and proper verification procedures for potentially suspended or debarred entities were not performed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization update their procurement policy to address all requirements identified in 2 CFR 200.318 through 200.326. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.550 & 93.623 Federal Program Titles: Transitional Living for Homeless Youth; Basic Center Grant Award Period: October 1, 2022 through September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318, General procurement standards, requires that non-Federal entities must have documented procurement procedures, consistent with State and local laws and regulations for the acquisition of property or services required under a federal award and subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.326. Condition: During our testing, we noted that the Organization’s procurement policy did not address all of the identified requirements in 2 CFR 200.318 through 200.326. Questioned Costs: None. Context: In our review of the current procurement policy, The Adams Group, LLC noted the following: The policy did not include documented procedures for purchases above the simplified acquisition threshold ($250,000) in accordance with 2 CFR 200.320b. The policy did not include documented procedures for the use and instances of noncompetitive procurement in accordance with 2 CFR 200.320c. The policy did not include documented procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded as outlined in 2 CFR sections 200.212 and 200.318. We also noted that the Organization did not verify that the entities with which it entered into contracts were not debarred, suspended, or otherwise excluded. Effect: The Organization’s procurement policy is not in compliance with general procurement standards, and proper verification procedures for potentially suspended or debarred entities were not performed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization update their procurement policy to address all requirements identified in 2 CFR 200.318 through 200.326. Views of Responsible Officials: Management agrees with the finding.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $73,674,384 and chose to calculate its own revenue loss allowance, which totaled $35,932,557, to use for government services. Some SLFRF program funds expended in 2023 were expended under the revenue loss eligible use category. Additional program funds expended in 2023 were expended under the other eligible use categories. 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 $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. For funds expended under the revenue loss eligible use category, the above listed procurement requirements do not apply. During the audit period, the County had four vendors with purchases over the $10,000 micropurchase threshold which were expended under an eligible use category other than revenue loss and, as such, were considered small purchase procurements. The County did not provide competitive price quotations for the small purchase procurements for three of the four vendors, which totaled $257,038. Suspension and Debarment Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During the engagement, an employee of the Board of County Commissioners stated that verification was completed by checking the Excluded Parties List System when covered transactions were entered into by the County to verify that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $3,952,203, were paid from SLFRF funds to six different vendors for goods or services that equaled or exceeded $25,000 during the audit period. Three of the six covered transactions were selected for testing. For all three transactions tested, documentation was not provided that the vendor's suspension and debarment status was verified. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 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 The County was unable to provide documentation to demonstrate it had properly procured services. In addition, the County was unable to provide documentation to demonstrate it had checked the Excluded Parties List System, per the County's procedures, to ensure vendors were not suspended or debarred prior to entering into covered transactions that exceeded $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the County could have overpaid for the services obtained. Furthermore, without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchase procurements. Additionally, we recommended policies and procedures be strengthened to ensure appropriate supporting documentation for federal programs is retained. Lastly, we recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are 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." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.
2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are 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." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
Assistance Listing Number, Federal Agency, and Program Name - 20.507 and 20.526, U.S. Department of Transportation, Federal Transit Cluster, 20.509, Formula Grants for Rural Areas and Tribal Transit State Program: Program Section 5307 Urbanized Area Formula Program Federal Award Identification Number and Year - TX 2023 111, TX 2024 017, TX 2021 017, TX 2022 065, TX 2024 018, 5539 R 2022 HCTD 00027, TX 2020 031, 5311 2020 HCTD 00035, 5311 2022 HCTD 00096, 5311 2023 HCTD 00034 State Award Idenitification Number and Year:STATE U 2023 HCTD 00101, STATE U 2022 HCTD 00160, STATE U 2023 HCTD 00102, and STATE U 2022 HCTD 00159 Pass through Entity - Texas Department of Transportation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 and 200.324 outline the auditee responsibility to utilize the appropriate procurement method and comply with all related requirements of that selected procurement methodology. Also, 2 CFR 180.300 outlines the auditee responsibility related to suspension and debarment requirements for vendors with whom an entity contracts. Condition - HCTD did not have sufficient controls in place to ensure compliance with its procurement policy and that appropriate documentation is retained regarding the procurement methodology chosen and support for compliance with the suspension and debarment requirements. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Of the sample of 38 contracts procured this year that we selected for testing, 7 did not have the required support for the procurement method selected based on federal and state guidelines and HCTD's procurement policy, and none of the 3 contracts selected for suspension and debarment testing had the required support retained. Cause and Effect - HCTD did not retain support to show it obtained price quotes, as required by the small purchases provision; had the appropriate rationale, as required by the noncompetitive solicitation provision; or had support for proposals submitted, as required by the purchases over $250,000 provision. Support was not retained for 7 of the 24 samples selected during procurement testing; therefore, procurement methodology was not supported. Additionally, none of the 3 samples selected for suspension and debarment testing had the required support retained. Recommendation - We recommend HCTD implement internal control procedures to ensure that procurement policy is followed and the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy and federal and state regulations. Views of Responsible Officials and Corrective Action Plan - HCTD agrees with this finding and has begun implementing the corrective action as follows. Procurement support is currently provided to HCTD through a contract with Hendrickson Transportation Group. This contract began in January 2024. Under this contract, the Procurement Policies and Procedures Manual and Disadvantaged Business Enterprise (DBE) Program are being updated, procurement forms will be created, and training for HCTD staff will be conducted.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SWIF221677 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. INDIANA STATE BOARD OF ACCOUNTS 19 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement and Suspension and Debarment The County entered into an interlocal agreement with the City to procure services for a Sewer Lift Station Improvement/Line Extension to the New County Jail project. Per the agreement, the City would be responsible for all the procurement and suspension and debarment processes involved in the project, and the County would be responsible for the compliance with all grant funding for the project. On September 23, 2021, the County received notification that it was eligible to receive $1,900,000 from the Indiana Finance Authority (IFA) for a SWIF grant from SLFRF funds with the intention of using the funding for the Sewer project shared by the County and City. The notification stated that co-funding would be provided by the County and that the County could enter into the SWIF grant agreement with the IFA once the funding was secure. On February 24, 2022, the City's Common Council approved a bid with B & T Drainage for the project. On March 6, 2022, the County Council approved a $2,330,000 appropriation from its SLFRF funds for co-financing of the project and, on the same day, signed a grant agreement with the IFA for the SWIF grant funded with SLFRF funds totaling $2,300,000. The project was completed as of December 31, 2023. The County did not provide any of the following documentation requested to verify compliance with the procurement and suspension and debarment requirements for the SWIF funds spent on the project: Copy of the original contract for $3,965,507. Copy of any change orders. Copy of the Board minutes where the bid was awarded by the Common Council. Copy of the original bids made on the project. Copy of documentation that vendor was not suspended or debarred. The lack of internal controls and lack of appropriate supporting documentation was isolated to the project noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (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 the contract type, contractor selection of 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. . . . (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. INDIANA STATE BOARD OF ACCOUNTS 21 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County participated in a joint project with the City in which the City handled the procurement process. As the County was ultimately responsible for compliance, copies of the quotes or bids obtained by the City should have been obtained by the County; however, this documentation was not obtained or provided for audit. In addition, documentation to demonstrate the City checked the vendor was not suspended or debarred prior to entering into the contract should have been obtained by County. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. INDIANA STATE BOARD OF ACCOUNTS 22 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. We also recommended the County adhere to the procurement and suspension and debarment requirements and obtain required bids and verify that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Finally, we recommended the County obtain and retain appropriate documentation for all expenses paid with SLFRF funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Procurement, Suspension and Debarment (Repeat Finding 2022-001 and 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury’s Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury’s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal – micro purchases (any amount up to $10,000) (b) Informal – small purchases ($10,000.01 to $249,999.99) (c) Formal – sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: “The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.” Condition/Context: 1. We tested two purchase orders totaling $208,832.12. Our procedures revealed the following: a. Dated documentation that demonstrates suspension and debarment searches were performed prior to entering into a covered transaction were not retained in the respective procurement files. b. Documentation supporting multiple source solicitations was not available. Cause: 1. At the time these services were procured, the City of Evanston’s procurement policies requiring suspension and debarment checks were not implemented. 2. The City of Evanston’s procurement policies in relation to single source do not meet federal requirements. Effect: City of Evanston was not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Date or time stamp suspension and debarment searches when performed. b. Revise procurement policies to mirror federal guidelines and requirements in relation to single and sole source purchases. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Ensure all departments are following applicable procedure in a uniform manner. Views of Responsible Officials: The purchases in question were made in the Equipment Replacement Fund where debarment searches are not required. ARPA funds were transferred to the Equipment Replacement Fund after the vehicles were delivered. We supplied the list of exclusions issued by the Office of Inspector General, which, from a compliance standpoint, demonstrates that the vendors are not suspended or debarred before entering a covered transaction. The list covers a one-month window and does not provide an exact date for when the list is retrieved from the Office of Inspector General website. When performing debarment searches in SAM.gov, if a vendor opts not to register or does not complete full registration process, the search results will display no matches, rendering it inconclusive to determine their standing. To prevent any potential deficiencies in control procedures, we intend to adopt the supplementary risk-based assessments proposed by the firm.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): OMB Approval #1505-0271 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 21 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is 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 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 County had one vendor that was identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micro-purchase threshold. The one vendor was selected for testing. For the one vendor, the County 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. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction paid with SLFRF grant funds was identified during the audit period. The covered transaction totaled $66,000 with $46,752 paid in the audit period. The identified transaction was examined to determine if the County verified the suspension and debarment status of the vendor prior to payment. Upon review, the County had not performed procedures to ensure the vendor was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at any time during the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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." INDIANA STATE BOARD OF ACCOUNTS 23 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The County participated in a joint project with the City of Rochester (City) in which the City handled the procurement process. However, the County did not request copies of the quotes or bids obtained by the city, nor did the County document a sole source vendor situation. In addition, the County was unable to provide documentation to demonstrate they checked the vendor was not suspended or debarred prior to entering into the contract. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Pass-Through Entity: Indiana State Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Procurement The Indiana State Department of Health created the Health Issues and Challenges Grant Program to provide funding to local and statewide service providers and planning organizations through the American Rescue Plan Act. The funds were to be used to prevent or reduce the prevalence of health issues or improve the health and behavioral health of Indiana residents. The City applied for and was awarded the Health Issues and Challenges grant in the amount of $447,112. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. Four vendors fell within the small purchase threshold. Two of the four small purchases were selected for testing. For the two vendors tested, totaling $71,889, the City did not obtain price or rate quotes. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the rationale for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish documented procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In additions, we recommended the City adhere to the procurement policies. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: According to 2 CFR 200.320(a)(2) price quotations must be obtained from an adequate number of qualified sources for the acquisition of property or services for which the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. Condition: During our testing of vendor procurement compliance, we noted price quotations were not obtained for one of the three selected vendors with aggregate purchases exceeding the micro-purchase threshold. Cause: Per discussion with Management, they have been working with this vendor for years and when originally contracted, the amount was below the micropurchase threshold. Staff were not aware that they needed to monitor expenditures after the initial contract to ensure that once expenditures exceed this threshold, proper procurement policies are then followed. Effect: The auditee did not obtain price quotations for purchases from one vendor exceeding the micro-purchase threshold as required by 2 CFR 200.320(a)(2). Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization revisit its procurement policy and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of relevant procurement requirements. Staff should monitor vendors that start off as small purchases to ensure proper policies are followed once procurement thresholds are met.
Criteria: A nonfederal entity must meet the general procurement standards in 2 CFR section 200.320 relating to use of the micro-purchase method for procurements under $10,000, and section 180.220 relating to the prohibition of contracting with parties that are suspended or debarred if total annual transactions equal or are in excess of $25,000. Condition: Home Builders Care, Inc. does not have a policy or process to perform checks on suspension and debarment check for vendors they transact with and were unaware of this compliance requirement. In addition, Home Builders Care, Inc.'s procurement policy defines the micro-purchase threshold at $50,000 but does not qualify for raising this threshold from $10,000. As a result of this discrepancy, Home Builders Care, Inc. did not obtain price and rate quotations for two vendors from an adequate number of qualified sources to ensure the selection process was competitive. Cause: Home Builders Care, Inc. was not aware of the requirement to perform suspension and debarment checks. Also, Home Builders Care, Inc. was not aware of the requirements to be able to self-certify for an increased micro-purchase threshold to $50,000. Effect: There is a potential effect that Home Builders Care, Inc. could have utilized vendors that were suspended or debarred by the federal government. There is also a potential effect that Home Builders Care, Inc. could have utilized vendors that were not as competitive as others. Questioned Costs: None. Recommendation: We recommend that Home Builders Care, Inc. update its procurement policy as follows: (1) to state that the threshold for micro-purchases is $10,000; (2) to add wording relating to a required process to perform suspension and debarment checks on at least an annual basis; and (3) to add wording to describe the organization's process relating to purchases from Home Depot, Amazon, and other similar types of vendors. This description may, for example, state that for these types of vendors, at the time of purchase, organization personnel will perform online price checks prior to making purchases to ensure that the purchases are the most advantageous to the organization for price, quality and other factors considered. Views of responsible officials: Home Builders Care, Inc. concurs with the recommendation. See Corrective Action Plan.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Compliance Requirement: Procurement and Suspension and Debarment Information on the Major Federal Program: Federal agency: U.S. Department of Health and Human Services Pass-through entity: Council of Medical Specialty Societies Assistance listing number: 93.083 Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Award number: 1NH231P922656-01-00 Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies Award year: 9/30/2021 – 9/30/2026 Criteria – The Uniform Guidance in 2 CFR 200.320 sets forth the standards for procurement by non-federal entities. Specifically, for small purchases, which are defined as those that exceed the micro-purchase threshold but do 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. The entity must maintain records sufficient to detail the history of the procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, when the internal procurement thresholds set by the non-federal entity are lower than Uniform Guidance mandated thresholds, the more stringent or lower thresholds are to be followed. Condition – The College's federal procurement manual defines small purchases as acquisition of goods and services that exceed $3,000 but are under the simplified acquisition threshold of $150,000 in a fiscal year. It requires that for such purchases, the College must obtain current price and rate quotations from at least three or more adequate and qualified vendors/suppliers. However, for one procurement sample out of six tested, quotations were not obtained from at least three vendors and procurement was made based on prior experience with the chosen vendor. Cause – The College failed to comply with its internal control policies and procedures with regards to federal procurement, resulting in the College making a small purchase without ensuring that the procurement process was competitive and the best possible price was obtained for the purchase. Questioned Costs – There are $20,000 of known questioned costs related to the items presented in the condition above. Context – This is a condition identified per review of the College’s compliance with its federal procurement manual and requirements of procurement, suspension and debarment of the Uniform Guidance using a non-statistical sample. The prevalence of this finding is detailed in the condition section above. Effect – Failure to comply with the College’s internal procurement policies and with requirements under Uniform Guidance increases the risk of uncompetitive pricing and potential misuse of federal funds. Repeat Finding – This is not a repeat finding. Recommendation – The College should provide training to its procurement personnel on the requirements of the College’s own federal procurement manual as well as on the Uniform Guidance procurement requirements. Additionally, the College should implement a review process to ensure that all small purchases comply with the requirement to obtain price or rate quotations from an adequate number of qualified sources. Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will enhance federal grant personnel skills through re-training on procurement policies and Uniform Guidance. The Privacy and Research Compliance Officer will ensure quotes are obtained from qualified sources, and the Legal Department will draft contracts only after confirming compliance. These steps ensure informed purchasing and responsible use of federal funds.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". Furthermore, 2 CFR 200.320(b) states that "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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section.". Condition: During our testing, it was noted that the Organization was not performing suspension and debarment checks prior to entering into vendor contracts to ensure the vendor was not listed in the suspended or debarred database maintained by the General Services Administration. In addition, the Organization does not have an established procurement policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. Questioned costs: None. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: For procurement, a sample of 8 was made from a population of 30 procurement transactions charged to the major program that exceeded $3,000 (the Organization's procurement policy after 2023 and below the minimum micro-purchase threshold before it was increased by the FAR to $10,000 for those with a written established policy). Of the 8 sampled procurement selections, three did not retain an adequate number of price comparisons prior to exercising the procurement, four did not follow the formal procurement methods for proposals when required, and all lacked evidence of controls over procurement considerations. For suspension and debarment, a sample of 3 was made from a population of 3 (entire population) suspension and debarment transactions charged to the major program. Of the 3 sampled, all were not checked for suspension or debarment prior to entering into the transaction. Cause: Prior to completing the prior year’s audit, staff were not aware of the specific compliance requirements and procedures for procurement, suspension, and debarment status. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding number was 2022-002. Recommendation: We recommend the Organization ensure its current process to review potential contractors for suspension and debarment is taking place prior to entering into transactions with such entities. The Organization has already taken steps to address considerations around procurement by implementing a Procurement Approval form. CLA recommends the use of this form, including signature, and emphasizes the importance of retaining adequate price rate quotations, RFP documentation, sole-source evidence, and price analyses in accordance with their established thresholds. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-004 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… Section III – Federal Award Findings and Questioned Costs (Continued) Finding 2023-003 (Continued) (h) 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 section 200.320 states in part: (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The City entered into three contracts funded by the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant during the audit period. Two of those contracts were selected for testing and the City was unable to provide any procurement history. Upon inquiry of the City on their purchasing policies and procedures, it was verified the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. There were $237,044 in expenditures incurred on the contracts tested in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Compliance finding (Procurement and Suspension and Debarment) and Internal Controls over Compliance (Significant Deficiency over Procurement) Department of the Interior – Fish and Wildlife Coordination Act – Assistance Listing No. 15.517; Grant period: Year Ended December 31, 2023. Criteria – In accordance with 2 CFR 200.320, participants are required to perform an appropriate form of competition in their procurement process.Condition – Management did not perform an appropriate form of competition for a service contracted during the year ending December 31, 2023. The Trust did not solicit written responses from at least three vendors and if no such responses are available, a statement explaining the procurement. Questioned costs – There are known questioned costs of $27,386 representing the reimbursements claimed for the vendor during the audit period. No likely questioned costs are noted. Context – Inspection of procurement documentation showed one out of two vendors subjected to sampling required written responses from at least three vendors, consistent with Code of Federal Regulations; 2 CFR 200.320. Price or rate quotations were not obtained timely, nor formally documented and a formal assessment was not performed. Effect – By not obtaining price or rate quotations from qualified sources, this could result in the utilization of an unqualified vendor, an overspending of grant funding, and questioned costs. Cause – Management did not obtain rate quotations from an adequate number of vendors, and did not retain sufficient documentation nor perform a formal assessment to proceed with the contracted services. Repeat finding – First year program has been audited therefore this is not a repeat finding. Recommendation – We recommend management implement a control to ensure sufficient quotes are obtained and documentation is retained during the procurement of all vendors being reimbursed by federal awards and ensure compliance with the Uniform Guidance and other applicable procurement standards. Management's response – Management has implemented and adopted a new procurement policy effective May 2023 regardless of dollar value that will maximize open and free competition and that the Trust shall not engage in procurement practices which may be considered arbitrary or restrictive. Purchases will be reviewed by the Tule Trust Finance Committee to prevent duplication and to ensure that costs are reasonable.
Finding 2023-002 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Procurement, Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listing Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 2023 Compliance Requirement: Procurement, Suspension and Debarment Audit Findings: Material Weakness, Qualified Opinion 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) 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 section 200.320 states in part: (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The Town contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 nor did the City provide documentation supporting a noncompetitive procurement. There was no available history of the procurement process. Cause: The Town’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the Town does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The Town’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the Town at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The Town entered into three contracts funded by the Water and Waste Disposal Systems for Rural Communities (WWTP) grant during the audit period. Two of those contracts were selected for testing. For one of those contracts selected for testing, the Town was unable to provide any procurement history. There were $459,737 in expenditures incurred on the contract tested with exceptions in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the Town establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) 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 section 200.320 states in part: (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion 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 section 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. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) 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 section 200.320 states in part: (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 non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow specific procurement standards set out in 2 CFR sections 200.318 through 200.326, which includes documenting the procurement methods used for vendor selection. These procedures are designed to ensure fair competition, cost-effectiveness, and federal requirements. These procurement standards require, among other provisions, that a non-federal entity must: 1. Meet the general procurement standards in 2 CFR Section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to reliable contractors, and maintaining records to document the history of procurement. 2. Conduct all procurement transactions for the acquisition of property or services under a federal award in a manner providing full and open competition consistent with the standards of 2 CFR section 200.320. 3. Use documented procurement procedures, consistent with the standards of 2 CFR 200.317 to 320. 2 CFR 200.320 enumerates below the different procurement methods that a non-federal entity should use: a) The micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $50,000. b) Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. c) Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b) (1); the competitive proposals method under the conditions specified in 2 CFR section 200.320(b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” Condition During our audit, the Foundation was unable to provide supporting documentation to demonstrate that the required procurement methods under the Uniform Guidance were performed on three out of four vendors tested. The expenditures paid to these vendors ranged from $75,000 to $675,000 in 2023. Cause The lack of documentation is attributed to oversight in maintaining appropriate records of vendor selection and compliance with procurement standards. Effect The absence of procurement documentation raises the risk of non-compliance with federal regulations, which could lead to potential disallowances or unnecessary sanctions. Questioned Costs None Recommendation The Foundation should strengthen its internal controls over procurement by ensuring that all procurement activities, particularly significant expenditures, are properly documented. This includes retaining evidence that procurement methods required by the Uniform Guidance were followed, such as bids, contracts, or justifications for sole-source vendors. The Foundation should also conduct training for staff involved in procurement to ensure awareness and adherence to the policies. Regular internal audits may be implemented to verify compliance with procurement procedures. Views of Responsible Officials and Planned Corrective Action We value your guidance and are committed to enhancing our compliance with the Uniform Guidance. In response, we will: 1. Documentation Procedures: We will implement procedures to properly document procurement activities. This will help us maintain consistency and ensure compliance with the Uniform Guidance. 2. Monitoring and Accountability: Additionally, we will establish a system to regularly monitor our compliance with these policies and procedures. This will enable us to quickly address any issues that may arise. The Finance Department will be responsible for implementing these changes and will have everything ready before the end of 2024. We are dedicated to making these improvements and truly value your support as we work through this process. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
DURING MY AUDIT, I NOTED THAT THE NVK DID NOT PROPERLY DOCUMENT THE PROCUREMENT OF ONE PURCHASEE OVER 10K FOR THE DOT, COVID-19, CSLFR PROGRAM AND ONE PURCHASE OVER 10K FOR THE DENALI COMMISSION GRANT. PER 2CFR, SECTION 200.320 NVK'S STAFF MUST FOLLOW PROCUREMENT POLICIES AND OBTAIN COMPETITIVE BIDS FOR SIGNIFICANT PURCHASES OF EQUIPMENT/MATERIALS AND/OR CONTRACTS AND DOCUMENT THE FINAL SELECTION PROCESS, INCLUDING VENDORS CONTACTED, VARIOUS QUOTES/BIDS, AND FINAL ANALYSIS OF WINNING BID. IN ADDITION, THE SAM WEBSITE MUST BE REVIEWED TO ENSURE THE WINNING VENDOR/CONTRACTOR HAS NOT BEEN SUSPENDED/DEBARRED. THE PURCHASE WAS IN THE AMOUNT OF $40,031 FOR THE DOT, COVID-19, CSLFR PROGRAM AND $31,307 FOR THE DENALI COMMISSION GRANT. I TESTED THE ONLY ONE IN EXCESS OF THE PROCUREMENT THRESHOLD FOR THE DOT, COVID-19, CSLFR GRANT AND BOTH OF THE PURCHASES IN EXCESS FOR THE DENALI COMMISSION GRANT ONE OF ONE FOR THE DOT, COVID-19, CSLFR AND ONE OF TWO IN THE DENALI COMMISSION DID NOT CONTAIN PROPER PROCUREMENT. INTERNAL CONTROLS WERE NOT IN PLACE TO ENSURE THAT PRIOR TO PURCHASE, PROPER PROCUREMENT PROCEDURES WERE FOLLOWED AND/OR DOCUMENTED. MANAGEMENT SHOULD ENSURE THAT ALL STAFF KNOW THAT ALL MATERIAL PURCHASES MUST BE PROPERLY PROCURED, AND IF SOLE SOURCE, THAT MUST BE DOCUMENTED AS WELL. THIS WAS A REPEAT FINDING. THE FINDING WAS PREVIOUSLY REPORTED AS FINDING 2022-002
DURING MY AUDIT, I NOTED THAT THE NVK DID NOT PROPERLY DOCUMENT THE PROCUREMENT OF ONE PURCHASEE OVER 10K FOR THE DOT, COVID-19, CSLFR PROGRAM AND ONE PURCHASE OVER 10K FOR THE DENALI COMMISSION GRANT. PER 2CFR, SECTION 200.320 NVK'S STAFF MUST FOLLOW PROCUREMENT POLICIES AND OBTAIN COMPETITIVE BIDS FOR SIGNIFICANT PURCHASES OF EQUIPMENT/MATERIALS AND/OR CONTRACTS AND DOCUMENT THE FINAL SELECTION PROCESS, INCLUDING VENDORS CONTACTED, VARIOUS QUOTES/BIDS, AND FINAL ANALYSIS OF WINNING BID. IN ADDITION, THE SAM WEBSITE MUST BE REVIEWED TO ENSURE THE WINNING VENDOR/CONTRACTOR HAS NOT BEEN SUSPENDED/DEBARRED. THE PURCHASE WAS IN THE AMOUNT OF $40,031 FOR THE DOT, COVID-19, CSLFR PROGRAM AND $31,307 FOR THE DENALI COMMISSION GRANT. I TESTED THE ONLY ONE IN EXCESS OF THE PROCUREMENT THRESHOLD FOR THE DOT, COVID-19, CSLFR GRANT AND BOTH OF THE PURCHASES IN EXCESS FOR THE DENALI COMMISSION GRANT ONE OF ONE FOR THE DOT, COVID-19, CSLFR AND ONE OF TWO IN THE DENALI COMMISSION DID NOT CONTAIN PROPER PROCUREMENT. INTERNAL CONTROLS WERE NOT IN PLACE TO ENSURE THAT PRIOR TO PURCHASE, PROPER PROCUREMENT PROCEDURES WERE FOLLOWED AND/OR DOCUMENTED. MANAGEMENT SHOULD ENSURE THAT ALL STAFF KNOW THAT ALL MATERIAL PURCHASES MUST BE PROPERLY PROCURED, AND IF SOLE SOURCE, THAT MUST BE DOCUMENTED AS WELL. THIS WAS A REPEAT FINDING. THE FINDING WAS PREVIOUSLY REPORTED AS FINDING 2022-002
Finding 2023-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors. Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.
2023-004 – Procurement Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 9/1/23-8/31/25; 4/1/21-3/31/23; 6/1/19-5/31/23; 6/1/23-5/31/26; 12/1/22-5/31/23 Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: § 200.320 Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have a procurement policy in place which was consistent with the requirements of the Uniform Guidance. As a result, the organization could not provide supporting documentation showing that engaged vendors had gone through an appropriate procurement process. Questioned Costs: $50,649 . Context: Five of five vendors selected for procurement testing did not have documentation showing that the cost had been procured in accordance with the Uniform Guidance. Cause: Management turnover. Effect: Lack of appropriate procurement policies could result in the Organization engaging vendors who are not the most efficient or economical. Repeat Finding: Yes, 2022-004. Recommendation: We recommend the Organization revise its procurement policy to be consistent with the requirements of the Uniform Guidance and follow the stated procedures. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-004 – Procurement Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 9/1/23-8/31/25; 4/1/21-3/31/23; 6/1/19-5/31/23; 6/1/23-5/31/26; 12/1/22-5/31/23 Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: § 200.320 Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have a procurement policy in place which was consistent with the requirements of the Uniform Guidance. As a result, the organization could not provide supporting documentation showing that engaged vendors had gone through an appropriate procurement process. Questioned Costs: $50,649 . Context: Five of five vendors selected for procurement testing did not have documentation showing that the cost had been procured in accordance with the Uniform Guidance. Cause: Management turnover. Effect: Lack of appropriate procurement policies could result in the Organization engaging vendors who are not the most efficient or economical. Repeat Finding: Yes, 2022-004. Recommendation: We recommend the Organization revise its procurement policy to be consistent with the requirements of the Uniform Guidance and follow the stated procedures. Views of Responsible Officials: There is no disagreement with the audit finding.