U.S. Department of Health and Human Services 2022-002 Procurement and Suspension and Debarment Program Name of Federal Program (CFDA Number) Health Centers Cluster: Consolidated Health Centers (93.224) Grants for Newly Expanded Services under the Health Care Program (93.527) Criteria - Recipients of federal awards must follow the procurement standards set out at 2 CFR section 200.317 through 200.326. They must use their own documented procurement procedures, which reflect applicable State laws and regulations, provided that the procedures conform to applicable Federal law and the procurement requirements identified in 2 CFR part 200. Recipients ?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 200.318(i). The Center?s procurement procedures include the requirement to maintain sufficient documentation of the history of procurement. The Center also has procedures to identify procurement transactions requiring competitive bids or proposals. Context and Condition - We selected four contracts/purchases to test for compliance with procurement standards. Records for two contracts lacked documentation sufficient to detail procurement history. Cause - The Center did not follow its documentation policy for obtaining contracts or bids. Effect - A potential failure to conduct procurement transactions in a manner providing full and open competition exists. Questioned Costs - No costs were questioned. Repeat Finding - No. Statistically valid - Yes. Recommendation - We recommend the Center ensure it 1) maintains documentation of the history of procurement and 2) monitors compliance with documentation requirements. Views of responsible officials - The Center will review its procurement policies and internal controls and ensure timely action is taken when noncompliance is identified.
Finding No. 2022-006 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Criteria: Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They may use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements confirm to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Further, KCHC’s procurement policy requires the following: • For small purchases between $10,001 to $250,000, price or rate quotes must be obtained from an adequate number of sources (at least two) and all quotes, including phone calls, web searches, etc., must be documented and kept on file. • To be allowable under a federal award, costs must be reasonable, allocable, and adequately documented and consistent with federal cost principles. Condition: Of forty non-payroll expenditures tested, aggregating $234,183 of a total population of $770,029, the following were noted: 1. For six (or 15%), supporting procurement package was not sufficient to demonstrate price or rate quotes had been obtained from an adequate number of sources. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Condition, continued: 2. For one (or 3%), no contractual agreement between KCHC and the vendor was provided to the audit team (invoice nos. 1235 and 1351 totaling $3,000 and $1,200, respectively). 3. For one (or 3%), supporting procurement package was not sufficient to support open and fair competition for document no. 2834 totaling $1,215. 4. For 11 (or 28%), no purchase order was provided. Cause: KCHC did not enforce recordkeeping and monitoring controls over compliance with applicable procurement and suspension and debarment requirements. Effect: KCHC is in noncompliance with applicable procurement requirements and questioned costs of $126,567 result. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Effect, continued: Identification as a Repeat Finding: Finding No. 2021-006 Recommendation: Responsible personnel should establish a recordkeeping system whereby underlying support for each transaction is processed timely and is filed to facilitate easy retrieval substantiating procurement compliance. In addition, responsible personnel should enforce compliance with procurement regulations. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Refer to separate Corrective Action Plan.
Finding No. 2022-006 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Criteria: Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They may use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements confirm to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Further, KCHC’s procurement policy requires the following: • For small purchases between $10,001 to $250,000, price or rate quotes must be obtained from an adequate number of sources (at least two) and all quotes, including phone calls, web searches, etc., must be documented and kept on file. • To be allowable under a federal award, costs must be reasonable, allocable, and adequately documented and consistent with federal cost principles. Condition: Of forty non-payroll expenditures tested, aggregating $234,183 of a total population of $770,029, the following were noted: 1. For six (or 15%), supporting procurement package was not sufficient to demonstrate price or rate quotes had been obtained from an adequate number of sources. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Condition, continued: 2. For one (or 3%), no contractual agreement between KCHC and the vendor was provided to the audit team (invoice nos. 1235 and 1351 totaling $3,000 and $1,200, respectively). 3. For one (or 3%), supporting procurement package was not sufficient to support open and fair competition for document no. 2834 totaling $1,215. 4. For 11 (or 28%), no purchase order was provided. Cause: KCHC did not enforce recordkeeping and monitoring controls over compliance with applicable procurement and suspension and debarment requirements. Effect: KCHC is in noncompliance with applicable procurement requirements and questioned costs of $126,567 result. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Effect, continued: Identification as a Repeat Finding: Finding No. 2021-006 Recommendation: Responsible personnel should establish a recordkeeping system whereby underlying support for each transaction is processed timely and is filed to facilitate easy retrieval substantiating procurement compliance. In addition, responsible personnel should enforce compliance with procurement regulations. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Refer to separate Corrective Action Plan.
Finding No. 2022-006 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Criteria: Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They may use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements confirm to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Further, KCHC’s procurement policy requires the following: • For small purchases between $10,001 to $250,000, price or rate quotes must be obtained from an adequate number of sources (at least two) and all quotes, including phone calls, web searches, etc., must be documented and kept on file. • To be allowable under a federal award, costs must be reasonable, allocable, and adequately documented and consistent with federal cost principles. Condition: Of forty non-payroll expenditures tested, aggregating $234,183 of a total population of $770,029, the following were noted: 1. For six (or 15%), supporting procurement package was not sufficient to demonstrate price or rate quotes had been obtained from an adequate number of sources. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Condition, continued: 2. For one (or 3%), no contractual agreement between KCHC and the vendor was provided to the audit team (invoice nos. 1235 and 1351 totaling $3,000 and $1,200, respectively). 3. For one (or 3%), supporting procurement package was not sufficient to support open and fair competition for document no. 2834 totaling $1,215. 4. For 11 (or 28%), no purchase order was provided. Cause: KCHC did not enforce recordkeeping and monitoring controls over compliance with applicable procurement and suspension and debarment requirements. Effect: KCHC is in noncompliance with applicable procurement requirements and questioned costs of $126,567 result. Finding No. 2022-006, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: H8031624, H8F41048, H8D36529 Area: Procurement and Suspension and Debarment Questioned Costs: $126,567 Effect, continued: Identification as a Repeat Finding: Finding No. 2021-006 Recommendation: Responsible personnel should establish a recordkeeping system whereby underlying support for each transaction is processed timely and is filed to facilitate easy retrieval substantiating procurement compliance. In addition, responsible personnel should enforce compliance with procurement regulations. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Refer to separate Corrective Action Plan.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Pass-Through Agency: Feeding Our Future Award Period: February 2021 – December 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Adverse Opinion) Criteria or specific requirement: Nonfederal entities other than 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. Under these procurement standards, there must be written standards of conduct for employees involved in contracting, procurement transactions must be conducted in a manner providing full and open competition, and certain methods must be followed for soliciting bids or pricing. Additionally, under 2 CFR Part 180, which implements Executive Orders 12549 and 12689, nonfederal entities are prohibited from contracting with parties that are suspended or debarred and must follow certain procedures to verify that an entity is not suspended or debarred when it enters into a contract. Condition: The Organization does not have a procurement policy which complies with procurement requirements noted above. The organization did not have documentation supporting the selection of the vendors used for the program. Procurements did not provide full and open competition. There were not procedures to verify that an entity was not debarred, suspended, or otherwise excluded. Additionally, contracts did not contain required elements, such as pricing, type of meals, delivery, and schedule. The contract utilized for the largest vendor was very brief and did not follow the template contract that the State of Minnesota recommends. Questioned costs: Unknown Context: There were three vendors utilized for food purchases in the following amounts: (1) $2,276,877; (2) $325,801; and (3) $254,843. For all three vendors, no procurement or suspension and debarment procedures were performed. Cause: The Organization was not aware it was required to perform procurement or suspension and debarment procedures. Management indicated the contracting processes used were approved by its sponsor organization. Effect: It is unclear if the Organization received competitive pricing for its federal grant purchases. The auditors verified that vendors were not listed as suspended or debarred. Recommendation: We recommend the Organization familiarize itself with the procurement regulations prior to entering into any future federal grants and review state and federal guidance. Views of responsible officials: This program was initiated during the height of COVID, when guidelines on both state and federal levels were changing rapidly. Management provided auditors with documentation about vendors that had been approved by the sponsor organization. Management attended all trainings provided by the sponsor organization and followed all of the program sponsor guidelines. See the Corrective Action Plan for further details.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control 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 requirement 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 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)). - 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 non-Federal 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 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 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected 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 from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three 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, there was no contemporaneous documentation to support this. 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 policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. 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.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control 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 requirement 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 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)). - 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 non-Federal 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 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 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected 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 from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three 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, there was no contemporaneous documentation to support this. 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 policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. 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.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Pass-Through Agency: Feeding Our Future Award Period: February 2021 – December 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Adverse Opinion) Criteria or specific requirement: Nonfederal entities other than 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. Under these procurement standards, there must be written standards of conduct for employees involved in contracting, procurement transactions must be conducted in a manner providing full and open competition, and certain methods must be followed for soliciting bids or pricing. Additionally, under 2 CFR Part 180, which implements Executive Orders 12549 and 12689, nonfederal entities are prohibited from contracting with parties that are suspended or debarred and must follow certain procedures to verify that an entity is not suspended or debarred when it enters into a contract. Condition: The Organization does not have a procurement policy which complies with procurement requirements noted above. The organization did not have documentation supporting the selection of the vendors used for the program. Procurements did not provide full and open competition. There were not procedures to verify that an entity was not debarred, suspended, or otherwise excluded. Additionally, contracts did not contain required elements, such as pricing, type of meals, delivery, and schedule. The contract utilized for the largest vendor was very brief and did not follow the template contract that the State of Minnesota recommends. Questioned costs: Unknown Context: There were three vendors utilized for food purchases in the following amounts: (1) $2,276,877; (2) $325,801; and (3) $254,843. For all three vendors, no procurement or suspension and debarment procedures were performed. Cause: The Organization was not aware it was required to perform procurement or suspension and debarment procedures. Management indicated the contracting processes used were approved by its sponsor organization. Effect: It is unclear if the Organization received competitive pricing for its federal grant purchases. The auditors verified that vendors were not listed as suspended or debarred. Recommendation: We recommend the Organization familiarize itself with the procurement regulations prior to entering into any future federal grants and review state and federal guidance. Views of responsible officials: This program was initiated during the height of COVID, when guidelines on both state and federal levels were changing rapidly. Management provided auditors with documentation about vendors that had been approved by the sponsor organization. Management attended all trainings provided by the sponsor organization and followed all of the program sponsor guidelines. See the Corrective Action Plan for further details.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
2021-004: Procurement and Suspension and Debarment: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the procurement for five items selected for testing. Criteria: The requirements that apply to procurement under grants and cooperative agreements are contained in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and the terms and conditions of the award. The requirements that apply to procurement under cost-reimbursement contracts under the FAR are contained in 48 CFR parts 03, 15, 44 and the clauses at 48 CFR sections 52.244-2, 52.244-5, 52.203-13, 52.203-16, and 52.215-12; agency FAR Supplements; and the terms and conditions of the contract. Questioned Costs: There were six expenses that no support could be provided to support the expense took place during grant period as such there is a question cost of $2,447. Effect: The Organization could have expenses that were paid that did not meet their own procurement policy. Cause: The Organization did not have good controls on ensuring the procurement requirement was meet due to staff turn over and being unable to locate documentation. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Perspective: This is a systemic issue in that controls over the requirement are not being adhered to ensure no issues arise. Repeat: This is not a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control 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 requirement 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 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)). - 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 non-Federal 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 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 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected 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 from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three 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, there was no contemporaneous documentation to support this. 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 policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. 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.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control 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 requirement 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 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)). - 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 non-Federal 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 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 3 procurement transactions from a total of 20, we observed that, despite management's detailed historical background on each of the selected 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 from these three transactions amounted to approximately $56,000 out of a total population of about $186,491. Furthermore, for these three 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, there was no contemporaneous documentation to support this. 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 policy did not fully conformed to the Uniform Guidance resulting to noncompliance issues such as records not sufficient to detail the history of procurement transactions. Questioned Costs $186,491 Repeat Finding No. 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.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
Federal agency name: U.S. National Science Foundation Federal program title: Geosciences, Computer and Information Science and Engineering, Office of Cyber Infrastructure & Integrative Activities AL No.: 47.050, 47.070, 47.079, 47.080 & 47.083 Federal Award Identification No. & Award Period: EAR-1849458 (06/01/2019-05/31/2024), EAR-2012893 (10/01/2020 – 08/31/2025), EAR-2028793 (05/15/2020 – 04/30/2021), OAC- 1931278 (10/1/2019 – 09/30/2022), OAC-1829744 (09/01/2018 – 08/31/2023), OAC-1835592 (01/01/2009 – 12/31/2022), OAC-1835818 (10/01/2018 – 09/30/2022), OISE-1855654 (05/15/2019 – 12/31/2023), OAC-1664061 (10/01/17 – 09/30/2022) & OIA-1937099 (09/01/2020 – 08/31/2021) Pass Through Entity: Utah State University & University of Cincinnati MW2021-007 PROCUREMENT, SUSPENSION AND DEBARMENT Material Weakness Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. A covered transaction is a nonprocurement or procurement transaction in excess of $25,000 that is subject to the prohibitions noted in 2 CFR part 180. The covered transaction may be at the primary tier, between a federal agency and a person or a lower tier between a participant in a covered transaction and another person. Condition During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files for covered transactions. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2021. CUAHSI did not complete the verification of its 2021 vendors until 2024. Based on our testing, no contractors in covered transactions were deemed to be federally debarred, suspended or excluded. Material Weakness Cause & Context CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect As a result of noncompliance, there could be possible repayment of funds, loss of reputation and possible suspension or debarment. Questioned Costs None Prior Year Audit Finding Yes, previously reported as MW2020-007. Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-032 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. Condition: Of fifty-one nonpayroll expenditures tested, aggregating $3.1M of a total population of $6.7M expenditures subject to procurement, the following were noted: 1. For thirty-four (or 67%), no procurement documents were provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: Condition 1, continued: 2. For one (or 2%) (document no. 1718052 dated 08/10/21 amounting to $26,100), the contract and underlying procurement files were not provided, for which the amount is questioned. 3. For four (or 8%), vendor quotations were not provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: 4. For one (or 2%) (document no. 1719396 dated 08/17/21 amounting $764,345), the procurement method used was not specified and the P&S Director’s written determination were not provided, for which the amount is questioned. Cause: CNMI did not enforce compliance with established procurement regulations. Effect: CNMI is in noncompliance with established procurement regulations and questioned costs of $2,775,965 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement regulations, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 2, 3 for Doc No. 263066 and 4 – The CNMI Corrective Action Plan states agreement. Condition 1 – The Department of Finance – Procurement Services disagrees with this finding. No procurement documents were provided because these thirty-four transactions were for payments made out for Travel, Medical Referral Patients, etc. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Views of responsible officials: Condition 3 - The Department of Finance – Procurement Services disagrees with these findings. For 732176-000 OP $13,440 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). For 724870-000 OP $8,789 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). The Emergency Declaration suspended the procurement regulations and authorized the Expenditure Authority to procure any items/procure services exceeding the threshold without obtaining any price quotes. For PO #732176 & 728470, these are not part of the Gov’s Executive Order #2022-04. The Division of Procurement Services will accept the findings as noncompliance with the CNMI Procurement Regulations. Auditor Response: Condition 1 – No supporting documentation were provided to substantiate that the transactions pertain to travel and medical referral patients. In addition, based on the general ledger descriptions, Document Nos. 921922, 1727770, 1727772, 1735047, 1721009, 1717349, 261094, 1722328, 1722338, 261528, 1666323, 1665777 and 1732183 pertain to legal professional fees, Tourism Resumption Investment Plan (TRIP) program, professional services, postage meter, lease rental, air condition service, fuel, office supplies, Pelican LED rechargeable, project improvements, tents and picnic tables rental and vacuum purchases. Further, we were not able to determine the type of expenditure for document no. 1674103 as the only description stated was "JUN 2021". Condition 3 – Pursuant to § 70-30.3-220, if fewer than three vendors submit quotations, the expenditure authority shall certify, in writing, to the Director that fewer than three vendors responded and shall provide written proof of the request. If fewer than three of the solicited vendors submit quotes, the Director may either approve the request or instruct the expenditure authority to solicit additional quotes.
Finding No. 2021-037 Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding; (b) Competitive sealed proposals; (c) Architect-engineer services; and (d) Competitive selection procedures for professional services. • Emergency Procurement. o Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances. o A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority. o If the Procurement and Supply (P&S) Director is satisfied, he shall state his approval in writing. Condition: Of fourteen expenditures tested, aggregating $18.4M of a total population of $20.2M in nonpayroll expenditures subject to procurement, the following were noted: 1. For eleven (or 79%, either the procurement files, written justifications, and the P&S Director’s written approvals of the Emergency Procurement method used were not provided. In addition, the contracts for Document Nos. 904160, 912446, 922508 and 907725 indicated procurement methods used were for competitive sealed proposals; however, the procurement files support emergency procurement. Further, the procurement information page that specifies the procurement method used for Document Nos. 912931 and 913016 were left blank but were initialed by the Legal reviewer. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Condition, continued: Condition 1, continued: 2. For three (or 21%), purchase orders do not specify the procurement methods used. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Cause: CNMI did not enforce compliance with applicable procurement requirements. Effect: CNMI is in noncompliance with applicable procurement requirements and questioned costs of $18,353,963 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 1 – The CNMI Corrective Action Plan states agreement. Condition 2 - The Department of Finance – Procurement Services disagrees with this finding. For 715112-000 OP / 727492-000 OP / 730942-000 OP. These three purchase orders were provided in the list for ALN 97.030 and were available for testing during auditor’s fieldwork. Auditors failed to perform the required testing. Auditor Response: Condition 2 – Purchase orders do not demonstrate compliance with procurement regulations.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
2021-005 Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Department was able to provide a procurement policy, but it was dated in 2003 and not updated for the latest federal guidelines noted in the criteria paragraph. Cause: The Department does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management continue to implement additional control processes in order to ensure proper controls are in place and followed. Tribal Response: Management agrees with this finding.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-013 Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. • Based on Procurement Regulation 70-30.3-115(a), Contract Review, Processing, and Oversight, all contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with the procurement regulations codified in this subchapter, and that the proposed contract is for a public purpose that does not constitute a waste or abuse of public funds. All contract documents are to be complete, including attachments and exhibits, if they are incorporated into the contract by reference. Condition: Of fifty nonpayroll expenditures tested, aggregating $401,852 of a total population of $756,436 in nonpayroll expenditures subject to procurement, the following were noted: 1. For one (or 2%), the bid summary was not on file (document no. 1624129, dated 02/24/21, amounting to $35,990). Therefore, the CNMI was not able to substantiate the number of bids received and whether the procurement process for competitive sealed bids were properly followed, for which the amount is questioned. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Condition, continued: 2. For one (or 2%), the Bid Opening Summary report was not provided (document no. 1562306, dated 10/09/2020, amounting to $33,060) and no other documentations on file to substantiate that the selection was based on the lowest bidder. 3. For two (or 4%), expenditures were procured through sole source procurement methods. The written justification states that the CNMI NAP obtained quotations from two vendors. However, no documentation was provided to demonstrate efforts were made to contact and solicit from other vendors. Cause: CNMI did not enforce compliance with established regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $97,850 result. Identification as a Repeat Finding: Finding No. 2020-026 Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate compliance. Views of responsible officials: Condition 1 – The CNMI-NAP disagrees with the finding. This transaction was supposed to be processed in FY 2020 but because of the delay and completion date was done in FY 2021, a Change Order Contract No. 01 was processed, and the funds was carried over to FY 2021. The bid summary was not necessary because a change order was processed changing the account from A0551E to A1551L per NAP email dated 1/11/21 (Pending Change Order Contract) - CNC 01/13/21 Change Order #1 to charge $35,989.60 (Contract #707410-OC) to A1551L.64560 to extend the delivery period from thirty (30) days to ninety (90) days. Condition 2 – CNMI NAP disagrees with the finding. The Nutrition Assistance Program did follow the proper procurement method by processing Invitation to Bid and obtained the lowest bidder and processed the contract with a notice to proceed. Condition 3 – CNMI NAP disagrees with this finding. The CNMI NAP tried to obtain quotations to purchase perforator machines on island and there was none. However, the selected vendor submitted their price quotation stating that they are able to obtain the perforator machines from off-island and CNMI NAP can purchase from them. Finding No. 2021-013, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.539 CNMI Nutrition Assistance Federal Award No.: 7NM4004NM Area: Procurement and Suspension and Debarment Questioned Costs: $97,850 Auditor Response: Condition 1 – Although there was a change order from the original contract, all procurement records shall be retained for a period of five years after the completion of construction or full delivery of goods or services under a contract as per Section 70-30.3-285 of the Procurement Regulations. Condition 2 – Documentation substantiating that the selection was based on the lowest bidder was not provided. Condition 3 – Documentation demonstrating efforts were made to contact and solicit from other vendors was not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-032 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. Condition: Of fifty-one nonpayroll expenditures tested, aggregating $3.1M of a total population of $6.7M expenditures subject to procurement, the following were noted: 1. For thirty-four (or 67%), no procurement documents were provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: Condition 1, continued: 2. For one (or 2%) (document no. 1718052 dated 08/10/21 amounting to $26,100), the contract and underlying procurement files were not provided, for which the amount is questioned. 3. For four (or 8%), vendor quotations were not provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: 4. For one (or 2%) (document no. 1719396 dated 08/17/21 amounting $764,345), the procurement method used was not specified and the P&S Director’s written determination were not provided, for which the amount is questioned. Cause: CNMI did not enforce compliance with established procurement regulations. Effect: CNMI is in noncompliance with established procurement regulations and questioned costs of $2,775,965 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement regulations, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 2, 3 for Doc No. 263066 and 4 – The CNMI Corrective Action Plan states agreement. Condition 1 – The Department of Finance – Procurement Services disagrees with this finding. No procurement documents were provided because these thirty-four transactions were for payments made out for Travel, Medical Referral Patients, etc. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Views of responsible officials: Condition 3 - The Department of Finance – Procurement Services disagrees with these findings. For 732176-000 OP $13,440 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). For 724870-000 OP $8,789 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). The Emergency Declaration suspended the procurement regulations and authorized the Expenditure Authority to procure any items/procure services exceeding the threshold without obtaining any price quotes. For PO #732176 & 728470, these are not part of the Gov’s Executive Order #2022-04. The Division of Procurement Services will accept the findings as noncompliance with the CNMI Procurement Regulations. Auditor Response: Condition 1 – No supporting documentation were provided to substantiate that the transactions pertain to travel and medical referral patients. In addition, based on the general ledger descriptions, Document Nos. 921922, 1727770, 1727772, 1735047, 1721009, 1717349, 261094, 1722328, 1722338, 261528, 1666323, 1665777 and 1732183 pertain to legal professional fees, Tourism Resumption Investment Plan (TRIP) program, professional services, postage meter, lease rental, air condition service, fuel, office supplies, Pelican LED rechargeable, project improvements, tents and picnic tables rental and vacuum purchases. Further, we were not able to determine the type of expenditure for document no. 1674103 as the only description stated was "JUN 2021". Condition 3 – Pursuant to § 70-30.3-220, if fewer than three vendors submit quotations, the expenditure authority shall certify, in writing, to the Director that fewer than three vendors responded and shall provide written proof of the request. If fewer than three of the solicited vendors submit quotes, the Director may either approve the request or instruct the expenditure authority to solicit additional quotes.
Finding No. 2021-037 Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding; (b) Competitive sealed proposals; (c) Architect-engineer services; and (d) Competitive selection procedures for professional services. • Emergency Procurement. o Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances. o A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority. o If the Procurement and Supply (P&S) Director is satisfied, he shall state his approval in writing. Condition: Of fourteen expenditures tested, aggregating $18.4M of a total population of $20.2M in nonpayroll expenditures subject to procurement, the following were noted: 1. For eleven (or 79%, either the procurement files, written justifications, and the P&S Director’s written approvals of the Emergency Procurement method used were not provided. In addition, the contracts for Document Nos. 904160, 912446, 922508 and 907725 indicated procurement methods used were for competitive sealed proposals; however, the procurement files support emergency procurement. Further, the procurement information page that specifies the procurement method used for Document Nos. 912931 and 913016 were left blank but were initialed by the Legal reviewer. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Condition, continued: Condition 1, continued: 2. For three (or 21%), purchase orders do not specify the procurement methods used. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Cause: CNMI did not enforce compliance with applicable procurement requirements. Effect: CNMI is in noncompliance with applicable procurement requirements and questioned costs of $18,353,963 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 1 – The CNMI Corrective Action Plan states agreement. Condition 2 - The Department of Finance – Procurement Services disagrees with this finding. For 715112-000 OP / 727492-000 OP / 730942-000 OP. These three purchase orders were provided in the list for ALN 97.030 and were available for testing during auditor’s fieldwork. Auditors failed to perform the required testing. Auditor Response: Condition 2 – Purchase orders do not demonstrate compliance with procurement regulations.