Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster Assistance Listing Numbers: 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research 93.855 – COVID-19 Allergy and Infectious Diseases Research 93.RD – NIAID Centers of Excellence for Influenza Research and Response 75N93021C00014 9/1/2021-8/31/2024 Icahn School of Medicine at Mount Sinai 1U19AI171403-01 5/16/2022-4/30/2025 Emory University 1U19AI171443-01 5/16/2022-4/30/2023 The Scripps Research Institute 1U19AI171110-01 5/16/2022-4/30/2023 University of California at San Francisco 5R01AI134240-05 7/1/2022-6/30/2024 N/A 5R01AI134245-07 5/1/2023-4/30/2025 N/A 5R01AI170197-02 2/1/2023-1/31/2024 N/A 5P51OD011133-25 5/1/2023-4/30/2024 N/A 1R21AI170148-01 8/18/2022-7/31/2023 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 2 CFR 200.320 – Methods of procurement to be followed states, “the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Condition Texas Biomed did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect Texas Biomed did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned costs $94,637 in total as follows: $27,795 – Assistance Listing Number 93.351, Award Identification Number – 5P51OD011133-25 $7,727 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171443-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171403-01 $3,863 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 1U19AI171110-01 $1,909 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134240-05 $2,520 – Assistance Listing Number 93.855, Award Identification Number – 5R01AI134245-07 Questioned costs (continued) $18,404 – Assistance Listing Number 93.855 (COVID-19), Award Identification Number – 5R01AI170197-02 $24,693 – Assistance Listing Number 93.855, Award Identification Number – 1R21AI170148-01 $3,863 – Assistance Listing Number 93.RD NIAID Centers of Excellence for Influenza Research and Response, Award Identification Number – 75N93021C00014 Questioned costs were computed by using the total small purchase procurements that were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement. Context EY selected and tested 15 procurements over $10,000 with expenditures totaling $3,304,871 from a population of 86 procurements over $10,000 with expenditures totaling $5,901,397 charged to the Research and Development cluster during the year ended December 31, 2023. For 4 procurements with expenditures in the amounts of $12,715, $10,119, $27,795, and $24,693, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 1 procurement with expenditures in the amount of $19,315, Texas Biomed did not adequately document the history of the procurement, specifically the reason for the contractor selection, since the contractor selected did not provide the lowest quote. We consider the expenditures related to these procurements to be questioned costs due to lack of required supporting documentation for the procurements, as noted above. Identification as a repeat finding, if applicable This is not a repeat finding. Recommendation Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
Finding 2023-005: Procurement Federal Program: 19.124 Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that the Center did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, for noncompetitive procurements, there was no documentation to support which of the five criteria was met to allow for the noncompetitive procurement. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of the compliance requirement. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Center's internal procurement policy. Questioned Costs: None noted. Context: We noted one item selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that the item selected for testing for noncompetitive procurements did not maintain documentation of which of the five criteria were met to allow for the noncompetitive procurement. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Center retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Finding 2023-002 – Inadequate Design of Monitoring Controls over Procurement Policies, Assistance Listing 93.224 Health Center Program, Affordable Care Act Grants for New and Expanded Services Under the Health Center Program and Assistance Listing 93.526 Affordable Care Act (ACA) Grants for Capital Development in Health Centers, Continuation of Finding 2022-003 Criteria: 2 CFR 200.320 requires the non-Federal entity to have and use documented procurement procedures that are consistent with the standards of that section. Additionally, Management is responsible for the design, implementation, and maintenance of effective internal controls over compliance with requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements to prevent, or detect and correct noncompliance on a timely basis. When small purchase procedures are used, 2 CFR 200.320(a)(2) requires price or rate quotations to be obtained from an adequate number of qualified sources. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the methods prescribed by 2 CFR 200.320(b) or (c): the sealed bid method; the competitive proposals method; 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)). Condition: For three vendors tested during the prior year audit, procurement documentation was not prepared and/or retained to support compliance with the regulations above and the Center’s procurement policy. During 2023, the same three vendors continued to receive funding under these established contracts. No new vendors required procurement procedures. Context and Cause of Condition: Although the Center has established policies and procedures in place over the procurement process, there was a lack of documentation to support that the procurement process had been completed as required. In addition, it is not practical to follow the procurement process for existing vendors with contracts that were already in place from previous years. Potential Effect: Failure to perform and/or retain documentation of the procurement process resulted in noncompliance with the procurement requirement. Questioned Costs: None Recommendation: Recommend to consistently follow the existing procurement policy and to maintain documentation through the recommended terms outlined in the award. Views of Responsible Officials: Although Hamakua Health staff were not able to provide all the procurement records required by the auditors in the short period of time that was given, these procurement documents should have been scanned by those who initiated and completed the procurement processes and kept them in a ShareFile for easier access, especially for those contracts that are still active. This is now the new standard practice for all new procurement processes. See Management’s Response and Corrective Action Plans on page 33.
Finding 2023-002 – Inadequate Design of Monitoring Controls over Procurement Policies, Assistance Listing 93.224 Health Center Program, Affordable Care Act Grants for New and Expanded Services Under the Health Center Program and Assistance Listing 93.526 Affordable Care Act (ACA) Grants for Capital Development in Health Centers, Continuation of Finding 2022-003 Criteria: 2 CFR 200.320 requires the non-Federal entity to have and use documented procurement procedures that are consistent with the standards of that section. Additionally, Management is responsible for the design, implementation, and maintenance of effective internal controls over compliance with requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements to prevent, or detect and correct noncompliance on a timely basis. When small purchase procedures are used, 2 CFR 200.320(a)(2) requires price or rate quotations to be obtained from an adequate number of qualified sources. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the methods prescribed by 2 CFR 200.320(b) or (c): the sealed bid method; the competitive proposals method; 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)). Condition: For three vendors tested during the prior year audit, procurement documentation was not prepared and/or retained to support compliance with the regulations above and the Center’s procurement policy. During 2023, the same three vendors continued to receive funding under these established contracts. No new vendors required procurement procedures. Context and Cause of Condition: Although the Center has established policies and procedures in place over the procurement process, there was a lack of documentation to support that the procurement process had been completed as required. In addition, it is not practical to follow the procurement process for existing vendors with contracts that were already in place from previous years. Potential Effect: Failure to perform and/or retain documentation of the procurement process resulted in noncompliance with the procurement requirement. Questioned Costs: None Recommendation: Recommend to consistently follow the existing procurement policy and to maintain documentation through the recommended terms outlined in the award. Views of Responsible Officials: Although Hamakua Health staff were not able to provide all the procurement records required by the auditors in the short period of time that was given, these procurement documents should have been scanned by those who initiated and completed the procurement processes and kept them in a ShareFile for easier access, especially for those contracts that are still active. This is now the new standard practice for all new procurement processes. See Management’s Response and Corrective Action Plans on page 33.
Finding 2023-001 – Internal control deficiency and noncompliance over Procurement. Identification of the federal program: Assistance Listing Number 93.738: • PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • COVID-19 – PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • U.S. Department of Health and Human Services • Federal Award Identification Number – NU58DP006604 • Federal Award Year – September 30, 2018 to September 29, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards. The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements and noncompetitive procurements were not supported by effective internal controls and could potentially include unreasonable prices or rates. Questioned costs: $43,694 – Assistance Listing Number 93.738, Award Identification Number – NU58DP006604 Questioned costs were computed by taking the total small purchase procurements that were not supported by adequate documentation of $43,694. Context: During our testing over small purchase procurements, we obtained a listing of small purchase procurements and selected a sample of 6 which represented the entire population. The total value of the small purchase procurements was $236,269. There were 2 ($43,694) out of 6 ($236,269) selections where management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Identification as a repeat finding, if applicable: No. Recommendation: We recommend management develop and implement effective internal controls to ensure the compliance requirements over procurements are performed. In addition, management should review the items identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: This finding was due to two process failures. The first relates to a lack of adequate documentation whereby PHS entered into a contract with the New Mexico Department of Health to provide services under the REACH immunization program as a sole source procurement. The allowability of this cost is not in question. The scope of work was presented to and approved by the CDC before the procurement was initiated. However, the justification for use of the New Mexico Department of Health as a sole source contractor was not adequately documented. The second failure was due to a lack of awareness and ineffective communication regarding the applicability of Federal procurement requirements to certain advertising services procured for the REACH immunization program. This breakdown occurred as the PHS Communications and Brand Management Department coordinating the procurement of the services does not typically engage with Federally funded projects and was not made aware of the applicable requirements by the Community Health department who had received the funding and was requesting the services. The realization that advertising needs for the REACH immunization project would exceed the micro purchase threshold and trigger the need for a different process for the Communications department was overlooked and not communicated effectively. The advertising costs included in this finding are allowable. The finding occurred because the costs exceeded the micro purchase threshold and were not competitively bid. Presbyterian agrees that the lack of awareness in this situation created a scenario where the required efforts and documentation necessary to justify a sole source procurement were not met. It should be noted, however, that Presbyterian has awareness of the procurement requirements in the code of federal regulations governing such matters and strives to be compliant with those requirements. This is evidenced by the following: • A robust policy governing procurements under federal awards that aligns with the procurement requirements within 2 CFR 200. • Annual required training for all Leaders (Directors and above) that includes risks associated with grant funding and incorporates a link to the federal procurement policy. • A Federal Conflict of Interest policy to mitigate and remediate conflicts of interest that would be associated with procurements under federal awards. • A rigorous process to ensure compliance with subaward and contractual agreements. • No fraud has ever been detected or suspected with any of Presbyterian’s federal awards. • Internal processes in place to approve purchases made directly by programs with grant funding. • Monthly transactions reviews performed to confirm appropriateness and identification of any necessary corrections prior to closing the accounting period as well as budget to actual tracking. Presbyterian acknowledges that despite the processes and policies listed above, additional education and ongoing training and communication of Federal procurement requirements are necessary to mitigate future procurement issues. Presbyterian believes that enhancing training, education and communication as well as process revisions and written procedures will effectively mitigate this risk. A corrective action plan has been developed that will focus on four specific areas: 1) Communication & Awareness of process failures that led to the finding. 2) Training & Education, broadly at an enterprise level and targeted to areas engaged in federal funding. 3) Written Procedures and Toolkits to facilitate actions that result in compliant procurements under Federal funding and updates to the existing policy governing procurements under Federal funding to clarify the responsibilities for communication of applicability of Federal procurement requirements. 4) Collaboration with the Communications department to ensure processes exist to support competitive bids for advertising services as needed.
2023-002: U.S. Department of Environment Protection – Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures – Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: The Authority has not had any significant federal grant funding in many years. The current federal project is the first time that the Authority has been subject to the requirements of the Uniform Guidance. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however, the Authority was not aware that the Uniform Guidance requires these policies and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understands the potential effects of the condition described above and is currently consulting with their attorney to draft written policies and procedures as they relate to federal programs that are required by the Uniform Guidance.
FINDING 2023-003 Subject: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number (or Other Identifying Number): DW22168902 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The Town did not obtain price or rate quotes for the two vendors identified and tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the Town did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF CAMBRIDGE CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had properly procured services. The Town noted they were unaware professional services agreements for consultants were required to follow small purchase procurement guidelines. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not demonstrate it had obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the Town strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE
2023-003 – Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Interior Title: Bureau of Indian Affairs Self-Governance Assistance Listing Number: 15.022 Award Periods: January 1, 2023 – December 31, 2023 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2023, the Department’s procurement policy has a micro purchase threshold of $10,000. The Department’s policy states “Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals”. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Department does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we reviewed two vendors that were paid in excess of $10,000; however, we were not provided with procurement documentation for these purchases. Context: Two of thirty-five expenditures tested. Questioned Costs: None. Cause: The Department’s procurement policies and procedures were not enforced during the year. In addition, the Department did not have suspension and debarment policies and procedures established during the year. Effect: The Department is not always ensuring that all goods and services are obtained at a fair price and the Department is not in compliance with their procurement policy. Lastly, the Department is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors’ Recommendation: Enforce procurement policies and procedures at all times. In addition, the Department should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: Management believes that the procurement process has improved during the last year. The threshold for obtaining quotes was raised to $10,000 from $2,000, so there are significantly fewer transactions to monitor for compliance. The program managers are practicing more price comparison and obtaining quotes for purchases over $10,000, but not in every instance. The Finance Manager and the Accounts Payable Clerk will continue to monitor the documents submitted with purchase requests. Finance will not issue a check for payment to a vendor over $10,000, unless an adequate number of quotes and/or a sole source justification for the purchase has been submitted to document compliance with procurement standards. For purchase requests over $10,000, the Finance Manager will perform a search of the database records on Sam.gov to determine if a vendor has been suspended or debarred. The Finance Manager will note on the purchase request the status of the organization according to Sam.gov and the date of the search. For those entities that are determined to be suspended or debarred, the purchase will not be approved.
2023-003 – Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Interior Title: Bureau of Indian Affairs Self-Governance Assistance Listing Number: 15.022 Award Periods: January 1, 2023 – December 31, 2023 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2023, the Department’s procurement policy has a micro purchase threshold of $10,000. The Department’s policy states “Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals”. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Department does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we reviewed two vendors that were paid in excess of $10,000; however, we were not provided with procurement documentation for these purchases. Context: Two of thirty-five expenditures tested. Questioned Costs: None. Cause: The Department’s procurement policies and procedures were not enforced during the year. In addition, the Department did not have suspension and debarment policies and procedures established during the year. Effect: The Department is not always ensuring that all goods and services are obtained at a fair price and the Department is not in compliance with their procurement policy. Lastly, the Department is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors’ Recommendation: Enforce procurement policies and procedures at all times. In addition, the Department should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: Management believes that the procurement process has improved during the last year. The threshold for obtaining quotes was raised to $10,000 from $2,000, so there are significantly fewer transactions to monitor for compliance. The program managers are practicing more price comparison and obtaining quotes for purchases over $10,000, but not in every instance. The Finance Manager and the Accounts Payable Clerk will continue to monitor the documents submitted with purchase requests. Finance will not issue a check for payment to a vendor over $10,000, unless an adequate number of quotes and/or a sole source justification for the purchase has been submitted to document compliance with procurement standards. For purchase requests over $10,000, the Finance Manager will perform a search of the database records on Sam.gov to determine if a vendor has been suspended or debarred. The Finance Manager will note on the purchase request the status of the organization according to Sam.gov and the date of the search. For those entities that are determined to be suspended or debarred, the purchase will not be approved.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐:2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, ten (10) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,870 and likely questioned costs of $17,206 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐:2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, ten (10) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,870 and likely questioned costs of $17,206 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City did not obtain price or rate quotes for the one vendor tested that was less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to covered transactions. A population of nine covered transactions for goods or services were paid from SLFRF award funds during the audit period. A sample of three transactions were selected for testing. Of the three transactions tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of effective internal controls and noncompliance were isolated to the small purchase noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The system of internal controls as established by management of the City was not effective at ensuring all required aspects of a procurement policy were included and that small purchases adhered to the procurement requirements. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure their policy includes all the necessary elements and that the detailed history of procurement including the method utilized are retained for audit. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended management of the City establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the City adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2022-002) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement Non Federal entities other than states, including those operating Federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control Additionally, in accordance with Federal requirements, a non Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures were based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $10K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management’s review of the submitted quarterly report of expenditures did not identify the need for a reconciliation of incurred expenditures and purchase order balances reported to the Department and as such, as there is a variance between the amounts reported on the SEFA and the amounts reported to the Department on the quarterly reports of approximately $458 thousand. We noted, however that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure the tracking of each report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period based upon the general ledger and accounting records, used to prepare the annual SEFA, as compared to the purchase order balances. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor's recommendations and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation fro each bidding threshold in accordance with the Uniform Guidance.
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.
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.