Finding 1075307 (2023-002)

Finding No. 2023-002: Procurement – Significant Deficiency in Internal Control Over Compliance U.S. Department of Health and Human Services, Teenage Pregnancy Prevention Program, Assistance Listing Number 93.297 Criteria Federal award recipients must comply with procurement standards as outlined in the Uniform Guidance which requires recipients to conduct procurements in a manner that provides full and open competition. Exceptions to this requirement, such as sole-source procurements, must be adequately justified and documented in accordance with federal regulations. Context The Organization received a federal award which included funding for specialized services. Certain vendors were chosen as the sole-source providers for these services. However, as an exception to the Organization’s procurement policy, there was no written justification as to why no other vendors were considered or how these vendors were uniquely qualified to meet the project’s needs. Upon inquiry of management, there was supported justification for the selection of these vendors which provided a reasonable basis, but there was nothing formally maintained to support this selection. Cause The finding suggests a gap in the Organization's procurement policies and procedures, which failed to ensure that proper documentation for sole-source justifications be retained. Effect The lack of adequate documentation for sole-source procurements raises concerns regarding the propriety of the procurement process and whether the organization obtained the best value for the federal funds expended. This deficiency could potentially result in questioned costs and might impact the Organization's eligibility for future federal funding. Questioned Costs None Recommendation We recommend that the Organization take the following actions to address this significant deficiency through review and reinforce training on federal procurement requirements for all staff involved in the procurement process: (1) Updating procurement policies and procedures to require documentation of sole-source justifications, including evidence of the unique qualifications of the vendor and the specific rationale for not considering other potential vendors; (2) Conducting a retrospective analysis of the procurement in question to determine if there were other qualified vendors that could have been considered; and (3) Developing and implementing a corrective action plan to ensure all future sole-source procurements are fully documented and comply with federal requirements. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.