Information on the federal program:
Subject: Special Education Cluster (IDEA) – Procurement
Federal Agency: Department of Education
Federal Program: Special Education Grants to States, Special Education Preschool Grants
Assistance Listing Number: 84.027
Federal Award Numbers and Years (or Other Identifying Numbers): H027A220084, H027A230084
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Significant Deficiency
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 200.318(a) (Uniform Guidance) states:
"The non-Federal entity must use its own documented procurement procedures which reflect applicable
State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal
law and the standards identified in this part."
2 CFR 200.318(a) (Revised Uniform Guidance) states:
"The non-Federal entity must have and use documented procurement procedures, consistent with State,
local, and tribal laws and regulations and the standards of this section, for the acquisition of property or
services required under a Federal award or subaward. The non-Federal entity's documented procurement
procedures must confirm to the procurement standards identified in §§ 200.317 through 200.327."
2 CFR 200.318(i) states:
"The non-Federal entity must maintain records sufficient to detail the history of procurement. These records
will include, but are not necessarily limited to the following: Rationale for the method of procurement,
selection of contract type, contractor selection or rejection, and the basis for the contract price."
2 CFR 200.320(b) (Uniform Guidance) states:
"Procurement by small purchase procedures. Small purchase procedures are those relatively simple and
informal procurement methods for securing services, supplies, or other property that do not cost more than
the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must
be obtained from an adequate number of qualified sources."
2 CFR 200.320 (Revised Uniform Guidance) 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.
Indiana Code 5-22-8-3 states in part:
"(a) This section applies only if the purchasing agent expects the purchase to be:
(1) at least fifty thousand dollars ($50,000); and
(2) not more than one hundred fifty thousand dollars ($150,000). . . .
(d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the
lowest responsible and responsive offeror for each line or class of supplies required. . . ."
Condition: An effective internal control system was not in place at the School Corporation in order to
ensure compliance with requirements related to the grant agreement and the Procurement and Suspension
and Debarment compliance requirement.
Federal regulations allow for informal procurement methods when the value of the procurement for property
or services does not exceed the simplified acquisition threshold, which is set at $250,000. However, Indiana
Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may
be used. This informal process allows for methods other than the formal bid process. The informal process
is divided between two methods based on thresholds. Micro purchases, typically for those purchases
$10,000 or under, and small purchase procedures for those purchases above the micro purchase threshold,
but below the simplified acquisition threshold. Micro purchases may be awarded without soliciting
competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must
be obtained from an adequate number of qualified sources.
Cause: Management had not developed an effective system of internal controls that would have ensured
compliance with the grant agreement and the Procurement and Suspension and Debarment compliance
requirement.
Effect: The failure to establish an effective system of internal controls, as well as adequately document the
procurement process for small purchases, prevented the determination of the School Corporation's
compliance with the procurement requirements of the Procurement and Suspension and Debarment
compliance requirement.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation did not obtain price or rate quotes for one out of four vendors tested that
were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase
threshold. Documentation of vendor contract, bids or the School Corporation's process and rationale for the
chosen vendor was not available for audit. Further, the School Corporation could not provide evidence that
a suspension and debarment check had been performed on the vendor prior to entering into contract.
Identification as a repeat finding, if applicable: Yes. See finding 2022-006 in the prior audit report.
Recommendation: We recommended that the School Corporation's management establish a system of
internal controls to ensure that documentation will be maintained and the system of internal controls outlines
how the School Corporation will comply with their procurement policy, requirements of the grant agreement
and the Procurement and Suspension and Debarment compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.