Finding Text
U.S. Department of Transportation
Federal Audit Cluster
20.507 Federal Transit Formula Grant (applies to all grants)
2023-004 Procurement and Suspension and Debarment
Criteria: The Uniform Guidance regulations (2 CFR section 200.320) require, among
other things, that procurement for purchases of goods and services follow
certain procedures related to obtaining and awarding of contracts based on
sealed bid, competitive-, and non-competitive proposals. Additionally, 2 CFR
Section 200.318(d) provides that written policies and procedures must
document the avoidance of the acquisition of unnecessary or duplicative
items and 2 CFR section 200.303(a) regulations require the entity to establish
and maintain effective internal control over compliance with Federal statues,
regulations, and the terms and conditions of grant awards.
In addition, non-federal entities are prohibited from contracting with parties
that are suspended or debarred. “Covered transactions” include contracts
for goods and services awarded under a non-procurement transaction (e.g.,
grant or cooperative agreement) that are expected to equal or exceed
$25,000 or meet certain other criteria as specified in 2 CFR section 180.220.
When a non-federal entity enters into a covered transaction with an entity at
a lower tier, the non-federal entity must verify that the entity, as defined in 2
CFR section 180.995 and agency adopting regulations, is not suspended or
debarred or otherwise excluded from participating in the transaction. This
verification may be accomplished by (1) checking the System for Award
Management (SAM) Exclusions maintained by the General Services
Administration (GSA) and available at SAM.gov, (2) collecting a certification
from the entity, or (3) adding a clause or condition to the covered
transaction with that entity (2 CFR section 180.300).
Condition: The portion related to procurement is a repeated finding from 2019, 2020,
2021, and 2022. During our testing of purchases under the procurement
regulations, for 3 out of 8 vendors selected for testing, the System was
unable to provide supporting documentation that these vendor services or
supplies were procured in accordance with the standards in 2 CFR section
200.320. Additionally, while the System does maintain written policies and
procedures related to procurement standards, these procedures were
followed for items procured directly through the procurement department,
however, FTA expenditures procured by the maintenance department did
not follow the approved procedures and internal controls in accordance with
the regulations referenced in the criteria above.
During our testing of compliance with the suspension and debarment
regulations, for 3 out of 8 vendors selected for testing (same vendors
selected for procurement testing above), the System was unable to provide
documentation of its conclusions that these vendors were not suspended or
debarred. Based on a review of SAM.gov, none of these vendors were
suspended or debarred.
Questioned
Costs: Known - $214,478, Likely - $561,548 for Procurement but not Suspension
and Debarment.
Cause: A significant deficiency exists in the internal controls over procurement and
suspension and debarment for expenditures procured outside the normal
processes of the procurement department. The System does not have
adequate controls in place to ensure that appropriate supporting
documentation is maintained for purchases made under the procurement
standards to support the System’s consideration and/or conclusion for
obtaining and awarding of contracts based on sealed bid, competitive, and
non-competitive proposals or its determination of whether the vendor is
suspended or debarred, when procured outside of the procurement
department.
Effect: The System may not be receiving the overall lowest cost for services and
supplies procured by the agency. Without ensuring documentation is
maintained over whether a vendor is suspended or debarred, the System
may enter into contracts with unauthorized parties.
Recommendation: We recommend the System implement internal controls to ensure that
supporting documentation is maintained for the procurement of goods and
services in accordance with 2 CFR Section 200.320. Additionally, we
recommend that the System enhance its written policies and procedures to
ensure that documentation is included regarding the avoidance of the
acquisition of unnecessary or duplicative items. Documentation and policies
should include procedures for the competitive bidding of bus parts on a
annual basis and evidence that purchases are from these bid responses and
from the lowest qualified vendor. A review of all contracts to ensure the
appropriate language exists regarding suspension and debarment regulations
or the System should consider an annual review of SAM.gov for all vendors.
View of
Responsible Official:
The Agency will implement internal controls to ensure that supporting
documentation is maintained for the procurement of goods and services in
accordance with 2 CFR Section 200.320. The Agency will update our written
policies and procedures to ensure that documentation is included regarding
the avoidance of the acquisition of unnecessary or duplicative items.
Documentation and policies will include procedures for the competitive
bidding of bus parts on a quarterly basis and evidence that purchases are
from these bid responses and from the lowest qualified vendor. Procurement
will perform an annual review of SAM.gov for all vendors.