Finding Text
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency, Capitalization Grants for Clean Water State Revolving Funds
Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024
Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section (EGLE)
Type: Material weakness in internal control and material noncompliance with laws and regulations
Repeat Finding: No
Criteria: Per 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, per 2 CFR 200.318 (i), the non-Federal entity must maintain records sufficient to detail the history of procurement.
Condition: The Township did not utilize federal procurement requirements cited above for the engineering services for the State Clean Water Revolving Fund project.
Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the June 18, 2022 through March 31, 2023 period as summarized from the request for disbursement of funds submitted to EGLE.
Known Questioned Costs: $295,854
Context: We tested the procurement of four contracts, 100% of the contracts, and identified one contract that did not follow federal procurement requirements. Cause/Effect: A number of years ago the Township bid engineering services and selected an engineer firm however there were issues with that firm therefore the Township replaced the original engineer with a local engineering firm that they have utilized on other Township projects. Therefore, they did not belief they need to bid engineering services for this project. The Township did not utilize federal procurement requirements to ensure fair and open competition and reasonable cost for engineering services for the State Clean Water Revolving Fund project.
Recommendation: We recommend the Township follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds.
View of responsible officials and planned corrective action plan: See attached corrective action plan.