Finding Text
Finding 2023-003: Material Weakness - Procurement, Suspension and Debarment
Federal Program: Water and Waste Disposal Systems for Rural Communities
Federal Agency: U.S. Department of Agriculture
Assistance Listing Number: 10.760
Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred.
Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample.
Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors.
Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds.
Questioned Costs: None noted.
Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications.
Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.