Finding Text
Finding Reference 2024-06
Assistance Listing Number 20.027 Coronavirus State and Local Fiscal Recovery Funds
Name of Federal Agency Department of Treasury
Compliance Requirement Procurement, Suspension and Debarment
Type of Finding: Material Weakness on Internal Control and Material Noncompliance
Condition:
As part of the audit procedures for Procurement, Suspension, and Debarment, the auditors tested a sample of two
procurements. One of the procurements tested involved a federally funded rehabilitation project in the Municipality
of Fajardo. However, when the auditors requested procurement documentation, management provided bidding records
for a different project located in the Municipality of Toa Alta.
Upon reviewing the bid, contract, and supporting documentation, the auditors found no reference to the Fajardo
project. Instead, the work was certified and billed to the Authority using an "extra work order" under the project
number assigned to the Toa Alta project. Since the Fajardo project was not competitively procured and was improperly
included under an unrelated procurement process, the Authority failed to comply with federal procurement regulations.
Criteria:
In accordance with 2 CFR §§ 200.318–200.327 (Procurement Standards), all non-federal entities must conduct
procurement in a manner that ensures full and open competition while adhering to established procurement procedures.
Cause:
The Authority did not conduct a separate competitive procurement process for the rehabilitation project in the
Municipality of Fajardo. Instead, they included the project as part of an existing procurement process for a different
project in the Municipality of Toa Alta. This occurred due to inadequate oversight and failure to ensure that federally
funded projects follow proper procurement procedures.
Effect:
By not competitively procuring the Fajardo project and instead billing it as an "extra work order" under an unrelated
project, the Authority did not comply with federal procurement regulations. This noncompliance could result in
questioned costs, potential repayment of federal funds, and increased scrutiny from oversight agencies.
Questioned Costs:
$421,462
Recommendation:
The Authority should strengthen its procurement controls to ensure that all federally funded projects undergo a proper
and independent competitive bidding process. Management should implement additional oversight mechanisms, such
as enhanced review procedures and staff training, to prevent the misallocation of contracts.
Views of Responsible Officials
Refer to Management’s unaudited corrective action plan.