FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): OMB Approval #1505-0271 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 21 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The County had one vendor that was identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micro-purchase threshold. The one vendor was selected for testing. For the one vendor, the County did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction paid with SLFRF grant funds was identified during the audit period. The covered transaction totaled $66,000 with $46,752 paid in the audit period. The identified transaction was examined to determine if the County verified the suspension and debarment status of the vendor prior to payment. Upon review, the County had not performed procedures to ensure the vendor was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at any time during the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327 . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 23 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The County participated in a joint project with the City of Rochester (City) in which the City handled the procurement process. However, the County did not request copies of the quotes or bids obtained by the city, nor did the County document a sole source vendor situation. In addition, the County was unable to provide documentation to demonstrate they checked the vendor was not suspended or debarred prior to entering into the contract. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Pass-Through Entity: Indiana State Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Procurement The Indiana State Department of Health created the Health Issues and Challenges Grant Program to provide funding to local and statewide service providers and planning organizations through the American Rescue Plan Act. The funds were to be used to prevent or reduce the prevalence of health issues or improve the health and behavioral health of Indiana residents. The City applied for and was awarded the Health Issues and Challenges grant in the amount of $447,112. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Four vendors fell within the small purchase threshold. Two of the four small purchases were selected for testing. For the two vendors tested, totaling $71,889, the City did not obtain price or rate quotes. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the rationale for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish documented procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In additions, we recommended the City adhere to the procurement policies. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: According to 2 CFR 200.320(a)(2) price quotations must be obtained from an adequate number of qualified sources for the acquisition of property or services for which the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. Condition: During our testing of vendor procurement compliance, we noted price quotations were not obtained for one of the three selected vendors with aggregate purchases exceeding the micro-purchase threshold. Cause: Per discussion with Management, they have been working with this vendor for years and when originally contracted, the amount was below the micropurchase threshold. Staff were not aware that they needed to monitor expenditures after the initial contract to ensure that once expenditures exceed this threshold, proper procurement policies are then followed. Effect: The auditee did not obtain price quotations for purchases from one vendor exceeding the micro-purchase threshold as required by 2 CFR 200.320(a)(2). Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization revisit its procurement policy and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of relevant procurement requirements. Staff should monitor vendors that start off as small purchases to ensure proper policies are followed once procurement thresholds are met.
Criteria: A nonfederal entity must meet the general procurement standards in 2 CFR section 200.320 relating to use of the micro-purchase method for procurements under $10,000, and section 180.220 relating to the prohibition of contracting with parties that are suspended or debarred if total annual transactions equal or are in excess of $25,000. Condition: Home Builders Care, Inc. does not have a policy or process to perform checks on suspension and debarment check for vendors they transact with and were unaware of this compliance requirement. In addition, Home Builders Care, Inc.'s procurement policy defines the micro-purchase threshold at $50,000 but does not qualify for raising this threshold from $10,000. As a result of this discrepancy, Home Builders Care, Inc. did not obtain price and rate quotations for two vendors from an adequate number of qualified sources to ensure the selection process was competitive. Cause: Home Builders Care, Inc. was not aware of the requirement to perform suspension and debarment checks. Also, Home Builders Care, Inc. was not aware of the requirements to be able to self-certify for an increased micro-purchase threshold to $50,000. Effect: There is a potential effect that Home Builders Care, Inc. could have utilized vendors that were suspended or debarred by the federal government. There is also a potential effect that Home Builders Care, Inc. could have utilized vendors that were not as competitive as others. Questioned Costs: None. Recommendation: We recommend that Home Builders Care, Inc. update its procurement policy as follows: (1) to state that the threshold for micro-purchases is $10,000; (2) to add wording relating to a required process to perform suspension and debarment checks on at least an annual basis; and (3) to add wording to describe the organization's process relating to purchases from Home Depot, Amazon, and other similar types of vendors. This description may, for example, state that for these types of vendors, at the time of purchase, organization personnel will perform online price checks prior to making purchases to ensure that the purchases are the most advantageous to the organization for price, quality and other factors considered. Views of responsible officials: Home Builders Care, Inc. concurs with the recommendation. See Corrective Action Plan.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: (1) Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. (2) For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non- Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215.When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). For one contract exceeding the simplified acquisition threshold, the County used the noncompetitive proposals method however, none of the four required circumstances applied. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for 22 out of 27 covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2023. These covered transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in procurement requirements not being met and suspended or debarred vendors receiving federal funds. The County should implement procedures to ensure federal procurement requirements are being met. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.
Compliance Requirement: Procurement and Suspension and Debarment Information on the Major Federal Program: Federal agency: U.S. Department of Health and Human Services Pass-through entity: Council of Medical Specialty Societies Assistance listing number: 93.083 Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Award number: 1NH231P922656-01-00 Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies Award year: 9/30/2021 – 9/30/2026 Criteria – The Uniform Guidance in 2 CFR 200.320 sets forth the standards for procurement by non-federal entities. Specifically, for small purchases, which are defined as those that exceed the micro-purchase threshold but do not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-federal entity. The entity must maintain records sufficient to detail the history of the procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, when the internal procurement thresholds set by the non-federal entity are lower than Uniform Guidance mandated thresholds, the more stringent or lower thresholds are to be followed. Condition – The College's federal procurement manual defines small purchases as acquisition of goods and services that exceed $3,000 but are under the simplified acquisition threshold of $150,000 in a fiscal year. It requires that for such purchases, the College must obtain current price and rate quotations from at least three or more adequate and qualified vendors/suppliers. However, for one procurement sample out of six tested, quotations were not obtained from at least three vendors and procurement was made based on prior experience with the chosen vendor. Cause – The College failed to comply with its internal control policies and procedures with regards to federal procurement, resulting in the College making a small purchase without ensuring that the procurement process was competitive and the best possible price was obtained for the purchase. Questioned Costs – There are $20,000 of known questioned costs related to the items presented in the condition above. Context – This is a condition identified per review of the College’s compliance with its federal procurement manual and requirements of procurement, suspension and debarment of the Uniform Guidance using a non-statistical sample. The prevalence of this finding is detailed in the condition section above. Effect – Failure to comply with the College’s internal procurement policies and with requirements under Uniform Guidance increases the risk of uncompetitive pricing and potential misuse of federal funds. Repeat Finding – This is not a repeat finding. Recommendation – The College should provide training to its procurement personnel on the requirements of the College’s own federal procurement manual as well as on the Uniform Guidance procurement requirements. Additionally, the College should implement a review process to ensure that all small purchases comply with the requirement to obtain price or rate quotations from an adequate number of qualified sources. Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will enhance federal grant personnel skills through re-training on procurement policies and Uniform Guidance. The Privacy and Research Compliance Officer will ensure quotes are obtained from qualified sources, and the Legal Department will draft contracts only after confirming compliance. These steps ensure informed purchasing and responsible use of federal funds.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". Furthermore, 2 CFR 200.320(b) states that "When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section.". Condition: During our testing, it was noted that the Organization was not performing suspension and debarment checks prior to entering into vendor contracts to ensure the vendor was not listed in the suspended or debarred database maintained by the General Services Administration. In addition, the Organization does not have an established procurement policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. Questioned costs: None. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: For procurement, a sample of 8 was made from a population of 30 procurement transactions charged to the major program that exceeded $3,000 (the Organization's procurement policy after 2023 and below the minimum micro-purchase threshold before it was increased by the FAR to $10,000 for those with a written established policy). Of the 8 sampled procurement selections, three did not retain an adequate number of price comparisons prior to exercising the procurement, four did not follow the formal procurement methods for proposals when required, and all lacked evidence of controls over procurement considerations. For suspension and debarment, a sample of 3 was made from a population of 3 (entire population) suspension and debarment transactions charged to the major program. Of the 3 sampled, all were not checked for suspension or debarment prior to entering into the transaction. Cause: Prior to completing the prior year’s audit, staff were not aware of the specific compliance requirements and procedures for procurement, suspension, and debarment status. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding number was 2022-002. Recommendation: We recommend the Organization ensure its current process to review potential contractors for suspension and debarment is taking place prior to entering into transactions with such entities. The Organization has already taken steps to address considerations around procurement by implementing a Procurement Approval form. CLA recommends the use of this form, including signature, and emphasizes the importance of retaining adequate price rate quotations, RFP documentation, sole-source evidence, and price analyses in accordance with their established thresholds. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-004 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… Section III – Federal Award Findings and Questioned Costs (Continued) Finding 2023-003 (Continued) (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The City entered into three contracts funded by the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant during the audit period. Two of those contracts were selected for testing and the City was unable to provide any procurement history. Upon inquiry of the City on their purchasing policies and procedures, it was verified the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. There were $237,044 in expenditures incurred on the contracts tested in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Compliance finding (Procurement and Suspension and Debarment) and Internal Controls over Compliance (Significant Deficiency over Procurement) Department of the Interior – Fish and Wildlife Coordination Act – Assistance Listing No. 15.517; Grant period: Year Ended December 31, 2023. Criteria – In accordance with 2 CFR 200.320, participants are required to perform an appropriate form of competition in their procurement process.Condition – Management did not perform an appropriate form of competition for a service contracted during the year ending December 31, 2023. The Trust did not solicit written responses from at least three vendors and if no such responses are available, a statement explaining the procurement. Questioned costs – There are known questioned costs of $27,386 representing the reimbursements claimed for the vendor during the audit period. No likely questioned costs are noted. Context – Inspection of procurement documentation showed one out of two vendors subjected to sampling required written responses from at least three vendors, consistent with Code of Federal Regulations; 2 CFR 200.320. Price or rate quotations were not obtained timely, nor formally documented and a formal assessment was not performed. Effect – By not obtaining price or rate quotations from qualified sources, this could result in the utilization of an unqualified vendor, an overspending of grant funding, and questioned costs. Cause – Management did not obtain rate quotations from an adequate number of vendors, and did not retain sufficient documentation nor perform a formal assessment to proceed with the contracted services. Repeat finding – First year program has been audited therefore this is not a repeat finding. Recommendation – We recommend management implement a control to ensure sufficient quotes are obtained and documentation is retained during the procurement of all vendors being reimbursed by federal awards and ensure compliance with the Uniform Guidance and other applicable procurement standards. Management's response – Management has implemented and adopted a new procurement policy effective May 2023 regardless of dollar value that will maximize open and free competition and that the Trust shall not engage in procurement practices which may be considered arbitrary or restrictive. Purchases will be reviewed by the Tule Trust Finance Committee to prevent duplication and to ensure that costs are reasonable.
Finding 2023-002 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Procurement, Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listing Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 2023 Compliance Requirement: Procurement, Suspension and Debarment Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The Town contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 nor did the City provide documentation supporting a noncompetitive procurement. There was no available history of the procurement process. Cause: The Town’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the Town does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The Town’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the Town at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The Town entered into three contracts funded by the Water and Waste Disposal Systems for Rural Communities (WWTP) grant during the audit period. Two of those contracts were selected for testing. For one of those contracts selected for testing, the Town was unable to provide any procurement history. There were $459,737 in expenditures incurred on the contract tested with exceptions in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the Town establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow specific procurement standards set out in 2 CFR sections 200.318 through 200.326, which includes documenting the procurement methods used for vendor selection. These procedures are designed to ensure fair competition, cost-effectiveness, and federal requirements. These procurement standards require, among other provisions, that a non-federal entity must: 1. Meet the general procurement standards in 2 CFR Section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to reliable contractors, and maintaining records to document the history of procurement. 2. Conduct all procurement transactions for the acquisition of property or services under a federal award in a manner providing full and open competition consistent with the standards of 2 CFR section 200.320. 3. Use documented procurement procedures, consistent with the standards of 2 CFR 200.317 to 320. 2 CFR 200.320 enumerates below the different procurement methods that a non-federal entity should use: a) The micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $50,000. b) Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. c) Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b) (1); the competitive proposals method under the conditions specified in 2 CFR section 200.320(b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” Condition During our audit, the Foundation was unable to provide supporting documentation to demonstrate that the required procurement methods under the Uniform Guidance were performed on three out of four vendors tested. The expenditures paid to these vendors ranged from $75,000 to $675,000 in 2023. Cause The lack of documentation is attributed to oversight in maintaining appropriate records of vendor selection and compliance with procurement standards. Effect The absence of procurement documentation raises the risk of non-compliance with federal regulations, which could lead to potential disallowances or unnecessary sanctions. Questioned Costs None Recommendation The Foundation should strengthen its internal controls over procurement by ensuring that all procurement activities, particularly significant expenditures, are properly documented. This includes retaining evidence that procurement methods required by the Uniform Guidance were followed, such as bids, contracts, or justifications for sole-source vendors. The Foundation should also conduct training for staff involved in procurement to ensure awareness and adherence to the policies. Regular internal audits may be implemented to verify compliance with procurement procedures. Views of Responsible Officials and Planned Corrective Action We value your guidance and are committed to enhancing our compliance with the Uniform Guidance. In response, we will: 1. Documentation Procedures: We will implement procedures to properly document procurement activities. This will help us maintain consistency and ensure compliance with the Uniform Guidance. 2. Monitoring and Accountability: Additionally, we will establish a system to regularly monitor our compliance with these policies and procedures. This will enable us to quickly address any issues that may arise. The Finance Department will be responsible for implementing these changes and will have everything ready before the end of 2024. We are dedicated to making these improvements and truly value your support as we work through this process. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
DURING MY AUDIT, I NOTED THAT THE NVK DID NOT PROPERLY DOCUMENT THE PROCUREMENT OF ONE PURCHASEE OVER 10K FOR THE DOT, COVID-19, CSLFR PROGRAM AND ONE PURCHASE OVER 10K FOR THE DENALI COMMISSION GRANT. PER 2CFR, SECTION 200.320 NVK'S STAFF MUST FOLLOW PROCUREMENT POLICIES AND OBTAIN COMPETITIVE BIDS FOR SIGNIFICANT PURCHASES OF EQUIPMENT/MATERIALS AND/OR CONTRACTS AND DOCUMENT THE FINAL SELECTION PROCESS, INCLUDING VENDORS CONTACTED, VARIOUS QUOTES/BIDS, AND FINAL ANALYSIS OF WINNING BID. IN ADDITION, THE SAM WEBSITE MUST BE REVIEWED TO ENSURE THE WINNING VENDOR/CONTRACTOR HAS NOT BEEN SUSPENDED/DEBARRED. THE PURCHASE WAS IN THE AMOUNT OF $40,031 FOR THE DOT, COVID-19, CSLFR PROGRAM AND $31,307 FOR THE DENALI COMMISSION GRANT. I TESTED THE ONLY ONE IN EXCESS OF THE PROCUREMENT THRESHOLD FOR THE DOT, COVID-19, CSLFR GRANT AND BOTH OF THE PURCHASES IN EXCESS FOR THE DENALI COMMISSION GRANT ONE OF ONE FOR THE DOT, COVID-19, CSLFR AND ONE OF TWO IN THE DENALI COMMISSION DID NOT CONTAIN PROPER PROCUREMENT. INTERNAL CONTROLS WERE NOT IN PLACE TO ENSURE THAT PRIOR TO PURCHASE, PROPER PROCUREMENT PROCEDURES WERE FOLLOWED AND/OR DOCUMENTED. MANAGEMENT SHOULD ENSURE THAT ALL STAFF KNOW THAT ALL MATERIAL PURCHASES MUST BE PROPERLY PROCURED, AND IF SOLE SOURCE, THAT MUST BE DOCUMENTED AS WELL. THIS WAS A REPEAT FINDING. THE FINDING WAS PREVIOUSLY REPORTED AS FINDING 2022-002
DURING MY AUDIT, I NOTED THAT THE NVK DID NOT PROPERLY DOCUMENT THE PROCUREMENT OF ONE PURCHASEE OVER 10K FOR THE DOT, COVID-19, CSLFR PROGRAM AND ONE PURCHASE OVER 10K FOR THE DENALI COMMISSION GRANT. PER 2CFR, SECTION 200.320 NVK'S STAFF MUST FOLLOW PROCUREMENT POLICIES AND OBTAIN COMPETITIVE BIDS FOR SIGNIFICANT PURCHASES OF EQUIPMENT/MATERIALS AND/OR CONTRACTS AND DOCUMENT THE FINAL SELECTION PROCESS, INCLUDING VENDORS CONTACTED, VARIOUS QUOTES/BIDS, AND FINAL ANALYSIS OF WINNING BID. IN ADDITION, THE SAM WEBSITE MUST BE REVIEWED TO ENSURE THE WINNING VENDOR/CONTRACTOR HAS NOT BEEN SUSPENDED/DEBARRED. THE PURCHASE WAS IN THE AMOUNT OF $40,031 FOR THE DOT, COVID-19, CSLFR PROGRAM AND $31,307 FOR THE DENALI COMMISSION GRANT. I TESTED THE ONLY ONE IN EXCESS OF THE PROCUREMENT THRESHOLD FOR THE DOT, COVID-19, CSLFR GRANT AND BOTH OF THE PURCHASES IN EXCESS FOR THE DENALI COMMISSION GRANT ONE OF ONE FOR THE DOT, COVID-19, CSLFR AND ONE OF TWO IN THE DENALI COMMISSION DID NOT CONTAIN PROPER PROCUREMENT. INTERNAL CONTROLS WERE NOT IN PLACE TO ENSURE THAT PRIOR TO PURCHASE, PROPER PROCUREMENT PROCEDURES WERE FOLLOWED AND/OR DOCUMENTED. MANAGEMENT SHOULD ENSURE THAT ALL STAFF KNOW THAT ALL MATERIAL PURCHASES MUST BE PROPERLY PROCURED, AND IF SOLE SOURCE, THAT MUST BE DOCUMENTED AS WELL. THIS WAS A REPEAT FINDING. THE FINDING WAS PREVIOUSLY REPORTED AS FINDING 2022-002
Finding 2023-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors. Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.
2023-004 – Procurement Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 9/1/23-8/31/25; 4/1/21-3/31/23; 6/1/19-5/31/23; 6/1/23-5/31/26; 12/1/22-5/31/23 Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: § 200.320 Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have a procurement policy in place which was consistent with the requirements of the Uniform Guidance. As a result, the organization could not provide supporting documentation showing that engaged vendors had gone through an appropriate procurement process. Questioned Costs: $50,649 . Context: Five of five vendors selected for procurement testing did not have documentation showing that the cost had been procured in accordance with the Uniform Guidance. Cause: Management turnover. Effect: Lack of appropriate procurement policies could result in the Organization engaging vendors who are not the most efficient or economical. Repeat Finding: Yes, 2022-004. Recommendation: We recommend the Organization revise its procurement policy to be consistent with the requirements of the Uniform Guidance and follow the stated procedures. Views of Responsible Officials: There is no disagreement with the audit finding.
2023-004 – Procurement Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 9/1/23-8/31/25; 4/1/21-3/31/23; 6/1/19-5/31/23; 6/1/23-5/31/26; 12/1/22-5/31/23 Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: § 200.320 Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have a procurement policy in place which was consistent with the requirements of the Uniform Guidance. As a result, the organization could not provide supporting documentation showing that engaged vendors had gone through an appropriate procurement process. Questioned Costs: $50,649 . Context: Five of five vendors selected for procurement testing did not have documentation showing that the cost had been procured in accordance with the Uniform Guidance. Cause: Management turnover. Effect: Lack of appropriate procurement policies could result in the Organization engaging vendors who are not the most efficient or economical. Repeat Finding: Yes, 2022-004. Recommendation: We recommend the Organization revise its procurement policy to be consistent with the requirements of the Uniform Guidance and follow the stated procedures. Views of Responsible Officials: There is no disagreement with the audit finding.
2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 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 Sections 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." During testing of the 2023 AL # 21.027 Covid 19 – Coronavirus State and Local Fiscal Recovery Funds, procurements from a vendor exceeded the micro-purchase threshold but did not exceed the Simplified Acquisition threshold, and the Village could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to adhere to the requirements of 2 CFR 200.320 could result in unallowable purchases, misuse of public funds, or Federal funding being used for purchases which are not subject to free and open competition. The Village should ensure they are following the appropriate Federal procurement methods when purchases fall within the small purchase threshold.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Titles: Community Funded Projects Assistance Listing Number: 93.493 Pass-Through Entity: N/A Award Numbers: H79FG001026 Award Periods: September 30, 2023 through September 29, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity 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. The procurement procedures must include the following: - Using 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 nonfederal 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)). - For acquisitions exceeding the simplified acquisition threshold, using 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 the circumstances are met, in accordance with 2 CFR section 200.320(c)). - Using Noncompetitive procurement only if one or more of the following circumstances apply: · The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; · The item is available only from a single source; · The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; · The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the nonfederal entity; or · After solicitation of a number of sources, competition is determined inadequate PDA’s procurement policy also requires a verification that vendors and sub-recipient are not suspended or debarred by checking the website of the System for Award Management and documentation of such verification maintained by the Finance Office. Condition/Context While PDA has established a procurement policy, it does not fully conform to Federal law and the Uniform Guidance for the following reasons: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $5,000. - The policy does not have clear provisions for maintaining detailed procurement records. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. During our testing of 2 procurement transactions out of a total of 18, we observed that, despite management's detailed historical background on each of the selected transactions, the necessary documentation evidencing compliance with PDA’s procurement standards was not retained. All the transactions tested were noncompetitive and thus single sourced. The total misstatement is the entire population amount $208,580 as PDA did not maintain sufficient documentation to evidence history of procurement for all procurements and not just the 2 samples we tested. Furthermore, for these two vendors, which represented a 100% sample, we found no evidence of documentation for suspension and debarment verification. Although discussions with management suggested that all these transactions were properly conceived and evaluated at the time, supporting documentation was not retained. Cause PDA’s procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Internal controls over maintaining sufficient records to detail the history of procurement including noncompetitive justification and suspension and debarment verification were found to be insufficient. Effect The absence of a policy that fully conformed to the Uniform Guidance resulted in noncompliance issues such as records sufficient to detail the history of procurement transactions not maintained. Questioned Costs $208,580 Repeat Finding Yes. Recommendation We recommend PDA implement measures to ensure that its procurement policy reflect applicable state and local laws and regulations conforming to applicable federal statutes and requirement in 2 CFR part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment.
Criterial or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The organization did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
Criterial or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The organization did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
Criterial or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The organization did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
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.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
Assistance Listing, Federal Agency, and Program Name - 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - All, including COVID 19 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 provides standards for acceptable methods of procurement which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals or rationale for the use of non competitive procurements such as single source and emergency procurements. Condition - During our testing we identified five contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs - $419,296 Identification of How Questioned Costs Were Computed - The sum of the expenditures incurred under the contracts for the five exceptions identified in our testing was used to calculated questioned costs. Context - There was one contract subject to the micro purchase method of procurement that had no evidence to support whether the price was reasonable based on research, experience, purchase history or other factors. There were two contracts subject to small purchasing procedures that had no evidence to support whether price or rate quotes were obtained. There were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals or noncompetitive procurements were used to support the contract price. Cause and Effect - The Organization experienced turnover in personnel that resulted in the Authority being unable to locate documentation to support compliance for the five exceptions identified in our testing. Recommendation - We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan - Implement a new internal controls checklist, and review process, along with procurement training for all management staff involved in the procurement process. In addition, TARTA will be moving to a new accounting ERP system in early 2025 that will automate the procurement workflow process to ensure proper approval and documentation has been obtained prior to procuring products and services, eliminating errors.
Assistance Listing, Federal Agency, and Program Name - 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - All, including COVID 19 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 provides standards for acceptable methods of procurement which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals or rationale for the use of non competitive procurements such as single source and emergency procurements. Condition - During our testing we identified five contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs - $419,296 Identification of How Questioned Costs Were Computed - The sum of the expenditures incurred under the contracts for the five exceptions identified in our testing was used to calculated questioned costs. Context - There was one contract subject to the micro purchase method of procurement that had no evidence to support whether the price was reasonable based on research, experience, purchase history or other factors. There were two contracts subject to small purchasing procedures that had no evidence to support whether price or rate quotes were obtained. There were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals or noncompetitive procurements were used to support the contract price. Cause and Effect - The Organization experienced turnover in personnel that resulted in the Authority being unable to locate documentation to support compliance for the five exceptions identified in our testing. Recommendation - We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan - Implement a new internal controls checklist, and review process, along with procurement training for all management staff involved in the procurement process. In addition, TARTA will be moving to a new accounting ERP system in early 2025 that will automate the procurement workflow process to ensure proper approval and documentation has been obtained prior to procuring products and services, eliminating errors.
Assistance Listing, Federal Agency, and Program Name - 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - All, including COVID 19 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 provides standards for acceptable methods of procurement which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals or rationale for the use of non competitive procurements such as single source and emergency procurements. Condition - During our testing we identified five contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs - $419,296 Identification of How Questioned Costs Were Computed - The sum of the expenditures incurred under the contracts for the five exceptions identified in our testing was used to calculated questioned costs. Context - There was one contract subject to the micro purchase method of procurement that had no evidence to support whether the price was reasonable based on research, experience, purchase history or other factors. There were two contracts subject to small purchasing procedures that had no evidence to support whether price or rate quotes were obtained. There were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals or noncompetitive procurements were used to support the contract price. Cause and Effect - The Organization experienced turnover in personnel that resulted in the Authority being unable to locate documentation to support compliance for the five exceptions identified in our testing. Recommendation - We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan - Implement a new internal controls checklist, and review process, along with procurement training for all management staff involved in the procurement process. In addition, TARTA will be moving to a new accounting ERP system in early 2025 that will automate the procurement workflow process to ensure proper approval and documentation has been obtained prior to procuring products and services, eliminating errors.
Federal Assistance Listing Numbers – 21.027 Federal Agency – Department of Treasury Federal Program Title – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award Period – 03/31/2021 through 12/31/2024, 10/01/2020 through 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Compliance Requirement: Procurement, Suspension and Debarment Condition: The County did not follow its procurement policy. Additionally, the procurement policy in place does not meet UG requirements, which includes having a policy on suspension and debarment verification. Criteria: 2 CFR 200 requires that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. 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. Further, the method of procurement, whether informal or formal, must follow the County’s written procurement policy on approval thresholds and controls. 2 CFR 200 states that 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 nonprocurement 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. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Questioned Costs: Unknown Context: During testing, it was noted that the County does have a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Furthermore, the County did not retain supporting documentation for the procurement method selected. All six of the transactions tested did not follow the required procedures in place. Cause: The County has a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Effect: The County is not in compliance with procurement or suspension and debarment requirements. Contracts for construction, nonconstruction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with the Uniform Guidance. Repeat Finding: This is a repeat finding of 2022-004. Recommendation: We recommend the County review and update procurement policies for the entire County to ensure it meets the minimum requirements of 2 CFR 200 for all federal grants and establish a procurement process in order to ensure this policy is followed which includes adding language over suspension and debarment. Views of Responsible Officials: There is no disagreement with the finding. The County is working on reviewing policies and procedures and updating as necessary. Further, training will be available to all those involved in grants.
Federal Assistance Listing Numbers – 21.027 Federal Agency – Department of Treasury Federal Program Title – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award Period – 03/31/2021 through 12/31/2024, 10/01/2020 through 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Compliance Requirement: Procurement, Suspension and Debarment Condition: The County did not follow its procurement policy. Additionally, the procurement policy in place does not meet UG requirements, which includes having a policy on suspension and debarment verification. Criteria: 2 CFR 200 requires that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. 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. Further, the method of procurement, whether informal or formal, must follow the County’s written procurement policy on approval thresholds and controls. 2 CFR 200 states that 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 nonprocurement 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. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Questioned Costs: Unknown Context: During testing, it was noted that the County does have a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Furthermore, the County did not retain supporting documentation for the procurement method selected. All six of the transactions tested did not follow the required procedures in place. Cause: The County has a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Effect: The County is not in compliance with procurement or suspension and debarment requirements. Contracts for construction, nonconstruction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with the Uniform Guidance. Repeat Finding: This is a repeat finding of 2022-004. Recommendation: We recommend the County review and update procurement policies for the entire County to ensure it meets the minimum requirements of 2 CFR 200 for all federal grants and establish a procurement process in order to ensure this policy is followed which includes adding language over suspension and debarment. Views of Responsible Officials: There is no disagreement with the finding. The County is working on reviewing policies and procedures and updating as necessary. Further, training will be available to all those involved in grants.
Federal Assistance Listing Numbers – 21.027 Federal Agency – Department of Treasury Federal Program Title – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award Period – 03/31/2021 through 12/31/2024, 10/01/2020 through 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Compliance Requirement: Procurement, Suspension and Debarment Condition: The County did not follow its procurement policy. Additionally, the procurement policy in place does not meet UG requirements, which includes having a policy on suspension and debarment verification. Criteria: 2 CFR 200 requires that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. 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. Further, the method of procurement, whether informal or formal, must follow the County’s written procurement policy on approval thresholds and controls. 2 CFR 200 states that 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 nonprocurement 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. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Questioned Costs: Unknown Context: During testing, it was noted that the County does have a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Furthermore, the County did not retain supporting documentation for the procurement method selected. All six of the transactions tested did not follow the required procedures in place. Cause: The County has a purchasing policy but not a procurement policy that follows Uniform Guidance (UG) nor does the County have a policy that covers suspension and debarment. Effect: The County is not in compliance with procurement or suspension and debarment requirements. Contracts for construction, nonconstruction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with the Uniform Guidance. Repeat Finding: This is a repeat finding of 2022-004. Recommendation: We recommend the County review and update procurement policies for the entire County to ensure it meets the minimum requirements of 2 CFR 200 for all federal grants and establish a procurement process in order to ensure this policy is followed which includes adding language over suspension and debarment. Views of Responsible Officials: There is no disagreement with the finding. The County is working on reviewing policies and procedures and updating as necessary. Further, training will be available to all those involved in grants.
Finding 2023-002 Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services (HHS) Pass-Through: State of Washington Department of Health (DOH) Program Title: HIV Prevention Activities Health Department Assistance Listing Number: 93.940 Award Number: CBO27200; CBO28119; 10248 PREV Award Period: July 01, 2022 through August 31, 2023; July 01, 2023 through December 31, 2023; April 01, 2023 through March 31, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Sections 200.318 through 200.320, require that a non-federal entity have documented procurement procedures that provide for full and open competition and follow the procurement methods required by Subpart D of 2 CFR Part 200. Condition/Context for Evaluation Although the Organization has a procurement policy, the policy does not cover the requirements in Subpart D which include the thresholds for micro-purchase awards, small purchases, and formal procurement methods such as sealed bids, proposals, and noncompetitive procurement. Nor does the policy cover solicitation procedures for procurements. Cause The Organization's procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Effect or Potential Effect The absence of a policy that fully conforms to the Uniform Guidance does not assure open and free competition among suppliers. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that its procurement policy reflect applicable requirements in 2 CFR Part 200 Subpart D. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Finding 2023-002 Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services (HHS) Pass-Through: State of Washington Department of Health (DOH) Program Title: HIV Prevention Activities Health Department Assistance Listing Number: 93.940 Award Number: CBO27200; CBO28119; 10248 PREV Award Period: July 01, 2022 through August 31, 2023; July 01, 2023 through December 31, 2023; April 01, 2023 through March 31, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Sections 200.318 through 200.320, require that a non-federal entity have documented procurement procedures that provide for full and open competition and follow the procurement methods required by Subpart D of 2 CFR Part 200. Condition/Context for Evaluation Although the Organization has a procurement policy, the policy does not cover the requirements in Subpart D which include the thresholds for micro-purchase awards, small purchases, and formal procurement methods such as sealed bids, proposals, and noncompetitive procurement. Nor does the policy cover solicitation procedures for procurements. Cause The Organization's procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Effect or Potential Effect The absence of a policy that fully conforms to the Uniform Guidance does not assure open and free competition among suppliers. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that its procurement policy reflect applicable requirements in 2 CFR Part 200 Subpart D. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 – 2021, SLFRP1045 – 2021, SLFRP0194 - 2021 Pass-Through Agency: Washington State Department of Commerce, City of Seattle, Snohomish County Pass-Through Number(s): (DOC) 23-F21400119-017, DC222308, CLFR-042 Award Period: Various Type of Finding: • Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: For grants and cooperative agreements, the procurement method used must be appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 or the entities policies, whichever is more restrictive. Condition: Procurement procedures were not followed in accordance with the Agency’s policy. Questioned costs: None Context: Eight vendors that were identified as requiring procurement procedures during testing did not have formal documentation of obtaining bids, the reason for final decision and justification for sole source. Cause: The Agency did not follow its procurement policy. Effect: The Agency is out of compliance with its procurement policy. Repeat finding: No Recommendation: We recommend the Agency's procurement policy is updated to reflect the current federal guidelines and that policies and procedures are implemented to ensure that the history of the procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection, and the basis for the contract price is documented as applicable (2 CFR section 200.318(i) and 48 CFR Part 44 and section 52.244-2). Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 – 2021, SLFRP1045 – 2021, SLFRP0194 - 2021 Pass-Through Agency: Washington State Department of Commerce, City of Seattle, Snohomish County Pass-Through Number(s): (DOC) 23-F21400119-017, DC222308, CLFR-042 Award Period: Various Type of Finding: • Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: For grants and cooperative agreements, the procurement method used must be appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 or the entities policies, whichever is more restrictive. Condition: Procurement procedures were not followed in accordance with the Agency’s policy. Questioned costs: None Context: Eight vendors that were identified as requiring procurement procedures during testing did not have formal documentation of obtaining bids, the reason for final decision and justification for sole source. Cause: The Agency did not follow its procurement policy. Effect: The Agency is out of compliance with its procurement policy. Repeat finding: No Recommendation: We recommend the Agency's procurement policy is updated to reflect the current federal guidelines and that policies and procedures are implemented to ensure that the history of the procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection, and the basis for the contract price is documented as applicable (2 CFR section 200.318(i) and 48 CFR Part 44 and section 52.244-2). Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 – 2021, SLFRP1045 – 2021, SLFRP0194 - 2021 Pass-Through Agency: Washington State Department of Commerce, City of Seattle, Snohomish County Pass-Through Number(s): (DOC) 23-F21400119-017, DC222308, CLFR-042 Award Period: Various Type of Finding: • Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: For grants and cooperative agreements, the procurement method used must be appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 or the entities policies, whichever is more restrictive. Condition: Procurement procedures were not followed in accordance with the Agency’s policy. Questioned costs: None Context: Eight vendors that were identified as requiring procurement procedures during testing did not have formal documentation of obtaining bids, the reason for final decision and justification for sole source. Cause: The Agency did not follow its procurement policy. Effect: The Agency is out of compliance with its procurement policy. Repeat finding: No Recommendation: We recommend the Agency's procurement policy is updated to reflect the current federal guidelines and that policies and procedures are implemented to ensure that the history of the procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection, and the basis for the contract price is documented as applicable (2 CFR section 200.318(i) and 48 CFR Part 44 and section 52.244-2). Views of responsible officials: There is no disagreement with the audit finding.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.
Information on the federal program – All federal programs Criteria or specific requirement – 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 the 2022 audit, the predecessor auditor determined that the Organization 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. The matter has not been resolved in 2023. Cause – Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or potential effect – Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Organization's internal procurement policy. Questioned costs – None Context – The predecessor auditor noted that several items 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, the predecessor auditor noted that several items 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, if applicable – Is a repeat finding (2022-007) Recommendation – We recommend the Organization retain sufficient procurement documentation to meet the requirements noted in the Criteria section above. Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.