Finding Text
Finding No. 2024-002: Procurement – Material Weakness in Internal Control Over Compliance
Agency: U.S. Department of Housing and Urban Development
ALN: 14.251
Federal Award Identification Number: B-22-CP-PA-0807
Criteria: According to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 200.213, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. The non-federal entity must verify that the contractor or subrecipient is not suspended or debarred through the System for Award Management (SAM), which includes reviewing the Excluded Parties List System (EPLS), or by collecting a certification from the entity. In addition, the Organization must conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319.
Condition and Context: We tested two vendors as part of procurement testing. The Organization failed to perform the required search for suspension and debarment in SAM for both vendors. The search should have been performed to ensure that the contractors were not suspended or debarred. For one of the two vendors tested, the Organization did not conduct a full and open competition for the services provided prior to awarding a contract under the federal program.
Cause: The Organization has a procurement policy. However, for the one vendor that did not go through a competitive bidding process, the Organization did not follow that policy. The selection was based on relationship, qualifications, and competitive fee.
Repeat Finding: No
Recommendation: We recommend that the Organization implement and adhere to a strict protocol for verifying suspension and debarment status and conduct an open and competitive bidding process prior to awarding any contracts or subawards under federal programs. We also recommend that suspension and debarment be included in the Organization’s procurement policy. In addition, the Organization should maintain documentation of the results of the searches, and the competitive bidding process and results to be in compliance.
Views of Responsible Officials and Planned Corrective Action: See attached corrective action plan.
Questioned Costs: None