Information on the federal program:
Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States; Special Education Preschool Grants
Assistance Listings Numbers: 84.027X; 84.173X
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP; 22619-042-ARP
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Qualified Opinion
Criteria:
2 CFR 200.313(d) states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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: . . .
(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. . . .”
(b) Formal Procurement Methods. When the value of the procurement for property or services under a
Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal
entity, formal procurement methods are required. Formal procurement methods require following
documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be
used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of
procurement are used for pro procurement of property or services above the simplified acquisition threshold
or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: .
. .
(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract
(lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material
terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred
method for procuring construction, if the conditions. . . .”
(2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is
awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . .
."
2 CFR 180.300 states:
“When you enter into a covered transaction with another person as 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 SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.”
Condition: The School Corporation did not have internal controls in place to ensure that the Cooperative
complied with the procurement and the suspension and debarment requirements. The Cooperative did not
have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold
and for small purchases were met for each applicable procured good or service or to ensure that vendors
were not suspended or debarred prior to entering into a covered transaction.
Cause: The Cooperative noted that ARP portion of the Special Education grant was new for the 2022-2023
and 2023-2024 school years. The ARP funding gave opportunity for types of expenditures that do not
typically get expensed using Special Education funding. The transactions noted within the Condition and
Context were from the ARP portion of the grant, which provided property or services that exceeded the
micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements
when property or services exceed the micro-purchase threshold. In addition, management of the
Cooperative was unaware of the Suspension and Debarment requirements when a covered transaction is
expected to equal or exceed $25,000.
Effect: Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the control
system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Without following the required methods for procurement, the Cooperative could be overpaying for services.
Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or
otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and terms and
conditions of the federal award could result in the reduction of future federal funding to the Cooperative. Questioned Costs: There were no questioned costs identified.
Context: The School Corporation is a member of the Northeast Indiana Special Education Cooperative
(Cooperative). During fiscal years 2022-2023 and 2023-2024, 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.
When the value of the procurement for property or services exceeds the simplified acquisition threshold
(SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are
required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive
threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require
adherence to documented procedures and formal methods such as sealed bids or proposals. When the
purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold,
a small purchase occurs. Small purchases require documented full and open competition or a documented
rationale for limited competition.
For fiscal year 2023, the Cooperative had one vendor, with disbursements totaling $379,313, which
exceeded the SAT threshold of $150,000. The Cooperative did not obtain sealed bids or competitive
proposals nor was there documentation detailing the history of the procurement, which must include the
reason for the procurement method used.
For fiscal year 2023, the Cooperative had one vendor with disbursements in the amount of $55,374, which
were less than the SAT threshold of $150,000, but exceeded the $50,000 micro-purchase threshold and
was selected for testing. The Cooperative did not obtain price or rate quotes nor was there documentation
detailing the history of the procurement, which must include the reason for the procurement method used.
For fiscal year 2024, three vendors with disbursements totaling $175,125, were identified as being less
than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold
and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three
vendors and there was no documentation detailing the history of the procurement, which must include the
reason for the procurement method used.
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 non-procurement 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
vendor, or adding a clause or condition to the covered transaction with that vendor.
Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with
which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the
Cooperative disclosed there were not any documented controls or procedures. Nine covered transactions
were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative
did not verify the suspension and debarment status of the tested vendors prior to payment.
The lack of internal controls and noncompliance were systemic throughout the audit period. Identification as a repeat finding: No.
Recommendation: We recommended that the Cooperative’s management design and implement a
system of internal controls related to procurement and suspension and debarment procedures to ensure
procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise
excluded or disqualified prior to entering into any covered transactions.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.