Finding Text
2 CFR 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220. All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. District Policy DECA, Administration of Federal Grant funds – Procurement, states in part, effective July 1, 2018, all purchases for property and services made using federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. In addition, the District’s purchasing records are sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District did not have the proper internal controls in place to verify that all entities, with whom the District had entered into covered transactions, had not been suspended or debarred. During testing of Procurement and Suspension and Debarment Procedures for Nutrition Cluster, we noted three out of five (60%) in which the program had a payment to a vendor of more than $25,000 and there was no evidence the District verified the contracted service was not suspended or debarred. For the same vendor, the District did not provide documentation showing the service was awarded using federal procurement standards nor did the District obtain approval from the Ohio Department of Education (ODE) for this vendor as a sole service provider. Due to the deficient internal control structure, the required verification was not completed for the only covered transaction in the Nutrition Cluster during Fiscal Year 2023. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred.
Prior to contracting with vendors that will be paid with federal funds, the District should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. In addition, the District should follow their policy and federal regulations regarding procurement and, if necessary, obtain approval from ODE for a vendor the District believes is a sole service provider.