FINDING 2024-005
Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States
Assistance Listings Number: 84.027
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-053-PN01; 22611-053-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The School Corporation is a member of the South La Porte County Special Education Cooperative
(Cooperative). The Cooperative operated the special education program and spent the federal money on
behalf of all its members. As the grant agreement was between the Indiana Department of Education
(IDOE) and each member school, the School Corporation was responsible for ensuring and providing
oversight of the Cooperative.
Procurement - Small Purchase
When the value of the procurement for property or services is within the small purchase
threshold, or a lower threshold established by a nonfederal entity, quotes and a contract are
required. The small purchase threshold is between $10,000 and $150,000; however, the
threshold between $10,000 and $50,000 require quotes from an adequate number of qualified
sources. Indiana Code 5-22-8 has more restrictive requirements for the small purchase
threshold between $50,000 and $150,000, which require three quotes and a contract to be
awarded.
INDIANA STATE BOARD OF ACCOUNTS
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NEW PRAIRIE UNITED SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
In fiscal year 2022-2023, the Cooperative had five vendors which fell within the small purchase
threshold and all five vendors were tested. The Cooperative did not obtain quotes or competitive
proposals, nor was a circumstance met that would have allowed for a noncompetitive
procurement for the purchases. The total amount spent with all five vendors was $292,806.
The lack of internal controls and noncompliance was isolated to 2022-2023.
Suspension and Debarment
Prior to entering into subawards and covered transactions with federal award funds, recipients
are required to verify that such contractors and subrecipients are not suspended, debarred, or
otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods
and services awarded under a nonprocurement transaction (i.e., grant agreement) that are
expected to equal or exceed $25,000. The verification is to be done by checking the SAM
exclusions, collecting a certification from that person, or adding a clause or condition to the
covered transaction with that person.
Six vendors paid from the grant funds were identified as being covered transactions during the
audit period. Three vendors each fiscal year provided goods or services which equaled or
exceeded $25,000 and were selected for testing. The total amount spent on covered
transactions was $266,063 and $142,639 for 2022-2023 and 2023-2024, respectively. For all
six vendors, the Cooperative did not verify the vendors' suspension and debarment status prior
to payment.
The lack of internal controls and noncompliance was isolated to the 22611-053-PN01 and
22611-053-ARP grant awards.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.320 states in part:
"The non-Federal entity must have and use documented procurement procedures, consistent
with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or
services under a Federal award does not exceed the simplified acquisition threshold (SAT),
as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal
procurement methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and minimize the
associated administrative burden and cost. The informal methods used for procurement
of property or services at or below the SAT include: . . .
INDIANA STATE BOARD OF ACCOUNTS 25
(2) Small purchases—
(i) Small purchase procedures. The acquisition of property or services, the
aggregate dollar amount of which is higher than the micro-purchase threshold but
does not exceed the simplified acquisition threshold. If small purchase procedures
are used, price or rate quotations must be obtained from an adequate number of
qualified sources as determined appropriate by the non-Federal entity. . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the SAM.gov Exclusions, or
(b) Collecting a certification from that person, or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
The Cooperative noted they were unaware of the procurement requirements of expenditures within
the small purchase threshold and for suspension and debarment. They stated they have used the same
vendors to provide professional services for several years but only recently started using federal grant
award funds for the services.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
Cooperative cannot ensure the vendors paid with federal award funds are procured using the required
methods and are not suspended or debarred from receiving federal funds. Without following the required
methods for procurement and suspension and debarment, the Cooperative could be overpaying for services
or could be paying vendors who are precluded from receiving federal funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
Management of the Cooperative should develop written policies and procedures which would
require that appropriate procurement methods are used for vendors that are within the small purchase
threshold and to ensure vendors are not suspended or debarred. Appropriate documentation should be
maintained to ensure compliance with procurement and suspension and debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.