Finding Text
2023-001 Verification of Suspension and Debarment (Material Weakness)
Federal Agency: Department of Treasury
Pass-through Agency: N/A
Cluster/Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number: 21.027
Passed-through Identification: N/A
Compliance Requirement: Suspension and Debarment
Type of Finding:
Internal Control over Compliance – Material Weakness
Material Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 180.300, recipients of federal funds are required to ensure that contractors, subcontractors, or vendors are not suspended or debarred from participating in federal programs before awarding any contract or procurement that exceeds $25,000. This verification must be conducted through the System for Award Management (SAM) or equivalent records.
Condition: During our review of the Town’s procurement process, we noted that the Town awarded a contract to a construction company for a federally funded project without verifying whether the contractor was suspended or debarred prior to the execution of the contract. No evidence was provided covering whether the Town checked the SAM website, collected a certification from the company, or adding a clause or condition in the contract.
Cause: The Town’s procurement procedures did not include a step to verify the suspension or debarment status of contractors before contract award.
Effect: Failure to verify the suspension or debarment status of the contractor could lead to the improper use of federal funds. If the contractor had been suspended or debarred, the Town could be subject to disallowance of costs and potential penalties, impacting future federal funding opportunities.
Questioned Costs: $657,939.17, which represents total amount paid to construction company in fiscal year 2023.
Identification as Repeat Finding: This is not a repeat finding from the prior year.
Recommendation: We recommend that the Town update its procurement policies to include specific procedures for verifying the suspension and debarment status of all contractors and vendors for federally funded projects. This should be done through the three (3) available options allowed under 2 CFR 180.300.
Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.